Noah Smith & Brad DeLong Record the Podcast We, at Least, Would Like to Listen to!; Aspirationally Bi-Weekly (Meaning Every Other Week); Aspirationally an hour...
So Brad thinks we have "a very nice economy" at the moment. But what about the deficit and overall national debt? It seems to me anyone can generate a "very nice economy" if you have the ability to print, spend, or borrow money indefinitely. Does the debt EVER matter? Can we just rack up debt forever with the unstated assumption that we can slowly pay the money back someday with inflated dollars? Won't such a strategy drive up interest rates and fail in the long run? (But as Keynes pointed out, in the long run we're all dead.) I would appreciate a serious discussion on this issue.
Another macro issue worth discussing is "growth." Virtually all economists think growth is good, and more growth is even better. With the exception of solar energy, there is only a finite amount of resources in the world. As Gandhi once asked "How many Earths would it take if everyone lived like the English?" The U.S. has a housing shortage and many places in the world have a food shortage. Are there any limits to growth? If so, can such limits be enforced given the flaws of human nature? Or will a Malthusian solution impose itself to bring about a sustainable world and an end to constant growth?
Debt, deficits, actually, should be discussed. There has been a reluctance of Democrats to do so because Republicans have pretty successfully made "deficit reduction" synonymous with reducing re-distribution and raise the issue only when Democrat's would have to do the spending cuts.
But .... yes deficits are as a rule of thumb, bad. Most things that increase deficits Tax cuts and spending on things with NPV<0 have the effect of shifting resources from private investment to consumption which reduces growth. We would be much better off both on growth ns equity, if we raised revenue collections from the highest income earners enough to nearly zero out the deficit. What kind of tax reform would do that best should be part of the discussion.
Put me down as one of those economists who thinks growth is good and more growth is better. You seem to think there is some near-term (next few centuries) physical limits to growth, specifically energy. This i think underestimates both the possibilities of extracting more productive use from energy as well as the possibilities of producing much more al low marginal cost. There are limits to solar, nuclear and geothermal energy, but they are not physical.
I could not find my concern on the list: that we are not using the correct instruments of "industrial policy" to address the externalities identified. The emission of net CO2 and methane into the atmosphere is a clear negative externality but subsidizing the capital expenditures for technologies that generate store or transport zero CO2 energy is not even a second-best policy. If taxation of net emissions of CO2 and methane is not immediately feasible, the next best thing would be to subsidize the amount of such energy produced, transported, or stored.
Likewise supply chain externalities. A group of individual firms may be more vulnerable to supply disruption by China of a key input, say "chips," than any one firm can see and hedge against. But again, subsidizing supply from within the US of the input is not the correct instrument, which would be a tax on imports from the uncertain source.
In addition, if subsides are not "paid for" with new revenue, the resources for the subsidized investments will mainly reduce other private investment.
So Brad thinks we have "a very nice economy" at the moment. But what about the deficit and overall national debt? It seems to me anyone can generate a "very nice economy" if you have the ability to print, spend, or borrow money indefinitely. Does the debt EVER matter? Can we just rack up debt forever with the unstated assumption that we can slowly pay the money back someday with inflated dollars? Won't such a strategy drive up interest rates and fail in the long run? (But as Keynes pointed out, in the long run we're all dead.) I would appreciate a serious discussion on this issue.
Another macro issue worth discussing is "growth." Virtually all economists think growth is good, and more growth is even better. With the exception of solar energy, there is only a finite amount of resources in the world. As Gandhi once asked "How many Earths would it take if everyone lived like the English?" The U.S. has a housing shortage and many places in the world have a food shortage. Are there any limits to growth? If so, can such limits be enforced given the flaws of human nature? Or will a Malthusian solution impose itself to bring about a sustainable world and an end to constant growth?
Debt, deficits, actually, should be discussed. There has been a reluctance of Democrats to do so because Republicans have pretty successfully made "deficit reduction" synonymous with reducing re-distribution and raise the issue only when Democrat's would have to do the spending cuts.
But .... yes deficits are as a rule of thumb, bad. Most things that increase deficits Tax cuts and spending on things with NPV<0 have the effect of shifting resources from private investment to consumption which reduces growth. We would be much better off both on growth ns equity, if we raised revenue collections from the highest income earners enough to nearly zero out the deficit. What kind of tax reform would do that best should be part of the discussion.
Put me down as one of those economists who thinks growth is good and more growth is better. You seem to think there is some near-term (next few centuries) physical limits to growth, specifically energy. This i think underestimates both the possibilities of extracting more productive use from energy as well as the possibilities of producing much more al low marginal cost. There are limits to solar, nuclear and geothermal energy, but they are not physical.
Did someone buy Noah a mic? Huge improvement in sound recently
I could not find my concern on the list: that we are not using the correct instruments of "industrial policy" to address the externalities identified. The emission of net CO2 and methane into the atmosphere is a clear negative externality but subsidizing the capital expenditures for technologies that generate store or transport zero CO2 energy is not even a second-best policy. If taxation of net emissions of CO2 and methane is not immediately feasible, the next best thing would be to subsidize the amount of such energy produced, transported, or stored.
Likewise supply chain externalities. A group of individual firms may be more vulnerable to supply disruption by China of a key input, say "chips," than any one firm can see and hedge against. But again, subsidizing supply from within the US of the input is not the correct instrument, which would be a tax on imports from the uncertain source.
In addition, if subsides are not "paid for" with new revenue, the resources for the subsidized investments will mainly reduce other private investment.