Bill Gates jumps into keynsian stimulus / Deficit Reduction debate -on the side of deficit reduction through spending cuts and higher taxes.
http://www.thegatesnotes.com/Personal/Can-USA-Inc-Avoid-Bankruptcy?WT.mc_id=8_1_USAinc_TW&WT.tsrc=Twitter
I admit my intuition is that the DeLong/Romer camp of macroeconomists is right, and the Deficit reductionists are either dumb or pandering to the dumb.
So I'm kind of surprised by Bill Gates' stance here. Is it good faith? I can't think of many bigger beneficiaries of the US getting its policy right than young, pinnacle wealthy Bill Gates. So is he promoting a policy that increases future instability? It's not just that he's being quiet about promoting for Keynsian stimulus to avoid stigma or to avoid tainting the idea -he's actively promoting deficit reduction in a way I think keynsians would think of a pro-cyclical.
What are your thoughts?
Maybe he's thinking about the long run. The macroeconomists I read tend to argue that AD interventions are effective in the short run but in the long run things go back to their previous path.
ReplyDeleteHe joined with Buffet and his own father in endorsing higher taxes on the rich a couple years back, but he seemed the least openly enthusiastic.
TGGP, My intuition is that he isn't thinking about the long run -that doesn't seem to me to be the language on his blog, at least as of when I wrote the OP.
ReplyDeleteWho are the macroeconomists you read? How do they place in the distribution of macroeconomic expert opinion on this topic? -specifically on what best strategy is to maximize human welfare.
I didn't even know about Gates' blog before your post.
ReplyDeleteScot Sumner has taken a large chunk of macro mindshare as of late, along with some other "quasi-monetarists" with Worthwhile Canadian Initiative being the most notable other blog. I think Tyler Cowen has most often emphasized the long-run vs short-run in arguing that the problem is not just nominal, I actually don't recall the quasi-monetarist response.