Welcome to Behind the Lines, a weekly conversation with Salt Lake Tribune cartoonist Pat Bagley and BYU economist Val Lambson.
Bagley: So, what are your plans for the Mayan Apocalypse? I’m thinking a quiet night at home watching Bruce Willis and Billy Bob Thornton in "Armageddon." I’ll probably make some popcorn. I like popcorn with my apocalypse.
Lambson: I confess that it slipped my mind. I have been more concerned about the so-called fiscal cliff. I suppose there is a connection.
Bagley: Well, if you’re talking about Washington, I’m a veritable Nostradamus. Here, let me prognosticate: They will kick the can down the road.
Lambson: Indeed they will. The deficit is astoundingly large, and it is probably grossly understated due to various accounting tricks. We are behaving increasingly like Greece or Argentina.
Bagley: I was hoping to mock the-end-is-near enthusiasts, but I’ll go along with your deficit concerns. On my office wall I have tacked an article from a 1935 Salt Lake Tribune. It is about the appointment of Utah native Marriner Eccles to head the Federal Reserve. It says, "Eccles has expounded the belief that monetary control must be from a ‘national viewpoint,’ that the government should spend heavily in bad times to create employment and expand credit, and that it should tax in good years to reduce debt and prevent the excessive accumulation of income." We know this as Keynesian economics. But Eccles, a hard-nosed Republican banker, intuited that austerity and cutting government spending in bad times was a bad idea, years before John Maynard Keynes published his ideas. Your colleague, Paul Krugman, has fleshed out this approach in his new book, "End This Depression Now." Austerity is cutting the ground out from under any hope for Greek economic recovery. It would do the same to us.
Lambson: Keynesianism is wishful thinking in an academic wrapping. It provides an excuse for politicians to do what they want to do: Spend money on their pet interest groups. Creating employment is easy: Hand everyone a shovel and have them dig holes and then fill them again. Or just hand out shovels and forego the hole-digging activity. Indeed, why bother with the shovels? Just create a hole-digging industry and then pay people not to dig holes? Then we have full employment. The downside is we have nothing to eat. Similarly, running up large deficits is easy; reducing them sufficiently in good times is harder. I am not advocating austerity, but the reckless abandon that we are now witnessing can’t be good in be long run. Paul Krugman’s point of view is not shared by all Nobel Laureates in Economics.
Bagley: We don’t need holes, but we need roads and bridges and infrastructure. The national power grid is a dangerous joke and could use a top to bottom overhaul. People need jobs. The cost of borrowing is the lowest it’s been in our lifetimes. It’s an opportunity that’s being squandered because Republicans apparently believe in creating deficits in good times then trying to pay them off in recessions.
Lambson: What we need is stability. Spending on infrastructure is fine, but not as short term economic stimulus. It needs to be part of a long-term vision. Long-term vision is in short supply among politicians with four-year horizons. Perhaps that is why the Mayans created their calendar to last until 2012.
Lambson: Last week’s top comment is from dernge: I realize there is bullying, etc, and that it is exacerbated by social sites, but overall I have seen much better treatment of others from my kids’ age groups than I have from adults.
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