Today, Karl reminds us that he has been harping for a long time on the fact that we could borrow money very cheaply during the recession — actually, with negative real costs — and put it to use in the economy.
This post is another example of why Karl Smith is a better public intellectual than Paul Krugman, and why we need to get Karl a top ten news media publication vehicle. In the end, no matter how many insights Krugman has had in the field, he is an ideologue advancing a METHOD for intellectual, and personal reasons, not a practical intellectual seeking meaningful solutions to tactical problems. Krugman is the proverbial hammer looking for a rusty Keynesian, government-expanding, nail.
Karl Smith is the real thing: a public intellectual with potential to be the rarest of creatures: a statesman. A “skeptical empiricist” who is willing to employ a far wider toolset, constantly seeking innovative means of altering the economy.
The only thing Karl needs to do is incorporate the practical reality of the use of political systems as the pursuit of power by interest groups, who have permanent, irresolvable, mutually exclusive, conflicting goals, not only because of differences in group preferences, ability and resources, but because of the conflict between the conservative constrained vision of hubristic human nature, and the progressive unconstrained vision of egoistic human nature. And the conflict between the conservative desire to regulate birth rates among the lower classes and to accumulate capital, and the progressive desire to expand the birth rates of the lower classes, and distribute and consume capital. Politics is the pursuit of power. Political systems exist to resolve conflicts between groups who compete for power. The “Common Good” is an accidental byproduct of the political competition between groups who seek expansion of power, rents, status, and opportunity.
Karl, like most sentimental Progressives, (in contrast to his Smithian intellectual framework) believes that the future is uncertain and we can and must adapt to it. Conservatives believe that the scope of the kaleidic future can be narrowed if we ‘do no harm’ in the short term.
One cannot make meaningful economic policy in a democratic polity without treating political powers as materially meaningful weights which must be applied to any model, and an integral part of any consequential recommendation for political action.
Ignoring politics is unscientific. Plain and simple.