They call the feature "Blog War," although it is friendlier than that. The first installment is here (alternatively Brad's first full post is here and mine here) and there is more to come, some of it already in the can. I cannot promise we will be rational in the Hansonian sense, but I do believe we will get to the bottom of where the disagreement lies.
Addendum: Matt Yglesias comments.
DeLong: “Financial markets are thus voting that the Obama deficit-spending package will succeed: that its implementation will not raise Treasury interest rates and lower bond prices; and that the increase in government spending will not be neutralized by a corresponding fall in private spending.”
Financial markets are short-term oriented. I hope the long run where we are all dead isn’t 6-9 months.
Also, we have a re-aligning of the risk spreads. There is no risklessier rate to run to other than Treasurys, so we may be at the point of diminishing return for extracting coherent information from bond prices.
Besides, the market has been wrong before.
After only reading your abstract, I would say that people never have the same priors. Some of these guys equate banks with corporatism and are only concerned about the taxpayer insofar as they are concerned for the government. I equate banks with the government and am only concerned about them as far as these parasites are wrapped around the heart of capitalism.
Not that DeLong is a bastard.
However, the establishment types seem psychologically incapable of seeing the real problems.
For example: http://news.yahoo.com/s/ap/20090407/ap_on_he_me/veterans_colonoscopies
Defensive medicine is keeping doctors as far away from you for as long as feasible.
In the case of finances, it is not that the banks are screwing the government. They are just the endoscope. The government is the doctors and the taxpayers are getting the dirty probel
The more annoying part of DeLong’s argumentation style is his insistence on framing the “problem” — for him there are very few and very narrow ways in which you “should” see a problem. After the dubious –an euphemism for nonsensical–framing job, he goes on with alacrity to dismiss what he sees as the wrong view.
I think the framing job should be challenged explicitly, if that’s where the disagreement lies.
What Slocum sad.
And, it seems baffling to me that the people pushing for aggregate demand don’t seem to acknowledge that we are here due to the fact that we simply ran out of debt sources.
I know, I know, this is the same argument the Austrians are making, which makes it suspect a priori, but this time (at least) it is so obviously correct that the Keynesian psychological impasse is glaringly obvious to even the stock market pros who usually beg for more Fed easing.
I’d like to consider the argument that the fiscal stimulus will not employ idle resources. It seems to me that the big problem with infrastructure spending as fiscal stimulus is that once you start targeting stimulus money at technical and regional problems, the odds of employing idle resources go way down. For example, 20 billion for health care digitization will not stimulate anything, because the kinds of resources which would need to be employed in the first few years of such a project are almost certainly going to be employed already (high level system architects, hospital administrators, and other in-demand specialists). Highway projects cannot be staffed by unemployed assembly-line workers. You need people who know how to do surveying and run asphalt machines and such. Even unemployed home builders won’t be able to do the job.
This is going to be true for any large, technical infrastructure project. In the early stages, the people who will be absorbing the money will be high-quality, highly trained, experienced people who are the last to be left unemployed in a recession. The low-level people like database programmers, truck drivers, and carpenters would join a project once it’s already been underway for a long time.
I’m looking out my office window at a high-rise construction project. It’s been going on for two years. Even now, there are relatively few workers on the site – the early work was in surveying, then there was a handful of heavy equipment operators excavating and pouring foundations. It won’t be until the tower is actually starting to be erected that large numbers of workers will be on site building out electrical, interior walls, plumbing, carpeting, etc. And the type of people on the job now are high-value and in demand. That’s a typical trajectory for a large construction project.
I don’t see too many people talking about this aspect of the stimulus package. It seems to me that if you were really about stimulus, a better plan would have been to raise unemployment benefits, give out of work people tuition subsidies for retraining, and in other ways spend the money such that it truly goes to idle resources. Using infrastructure as stimulus seems to me to be far more likely to cause crowding out, and the real money won’t be spent until after the recession is long over (at least according to the Obama administration).
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