Wednesday 26 Sep 2018 | 09:12 | SYDNEY
Wednesday 26 Sep 2018 | 09:12 | SYDNEY

Stimulus response? Don't you ever think?


Sam Roggeveen


6 February 2009 14:12

Mark Thirlwell disagrees with the Megan McArdle quote I cited, arguing that in both the Great Depression and Japan's recession of the 1990s, stimulus spending failed because there was just not enough of it. McArdle actually addresses that argument further down in the post I linked to, saying that Mark's argument is:

...possibly true, but not really satisfying, because first, how do we know this package is enough, and second, that leaves us with a belief in the virtues of stimulus that is essentially non-falsifiable.

I should reiterate that I really have no dog in this fight, as I know too little about the subject to come down on one side or the other. As is so often the case, this leaves me in agreement with Andrew Sullivan:

One reason I find this debate hard to enter decisively is because I don't know what the solution is...Worse: I read all these economists and the "once-in-a-century event" we're experiencing seems to leave the honest ones among them flummoxed as well — or at a minimum open to debate. More importantly, some kind of decision is necessary since the economy is indeed in flux and inaction could be as momentous as action.

That last line brings us back to the other discussion we've been having about what Hugh White described as the Rudd Government's 'Get out of my way, this is too important to think carefully about' tone. I'm uncomfortable with that posture too, since it inhibits proper democratic scrutiny and even rational thought.

But given that respectable, independent voices are saying time is of the essence (while others are saying 'calm down'), we have to at least remain open to the possibility that time spent debating the wisdom of economic stimulus might only make the situation worse.

BTW, my rather cryptic title is a reference to this Gary Larson cartoon.