Zach Carter quotes former U.S. Treasury Secretary Lawrence Summers as saying “$2,000 checks would be a pretty serious mistake” because larger stimulus checks to Americans could risk overheating the economy. Carter replies, “he’s right about there being conceptually better uses for the money, but the idea that we risk ‘a temporary overheat’ of the economy from a round of $2k checks is just silly.”
Linking to this discussion, Duncan Black writes:
The important thing about this is that Summers is lying. It isn’t that he’s wrong about this, it’s that he doesn’t believe it. He does not think that $2000 checks relative to any baseline or other policies will “overheat” the economy.
That was just a reason he grabbed for. If it was some other policy he didn’t like he’d put on his frowny economist face and say it had a “low fiscal multiplier,” arguing essentially the opposite, that the spending wouldn’t boost the economy enough. For something else, he might go full concern troll and argue that the policy wasn’t progressive, relative to some other policy he also wouldn’t support if it was being offered.
“Lying” seems a bit strong—I have no idea what Summers’s reasoning is here—but I agree with Black’s general point that when someone like Summers wants to oppose a policy, he can do it from both directions, either arguing that it won’t be effective enough or that it will be too effective. By “someone like Summers,” I mean someone with some policy-related credentials who’s in a position to make authoritative statements without having to defend them.
Black also quotes Summers as saying several years ago that “One of the reasons that inequality has probably gone up in our society is that people are being treated closer to the way that they’re supposed to be treated.” That’s kind of an obnoxious quote but I guess the point is that Summers could well believe that average Americans don’t really deserve $2000 in free money. This sort of normative position is orthogonal to econ arguments having to do with multipliers, unemployment, spending, overheating of the economy, etc., but the normative position could be a starting point.
Put it this way: consider two economists. Economist A generally supports more equality; in general he’d rather take from the rich and give from the poor; redistribution is a feature, not a bug. Economist B generally supports inequality; in general he’d rather let the rich keep what they have and let the poor fend for themselves; redistribution is a tool to be used sparingly. There are arguments in favor of either of these perspectives. The point is, if Summers is an “Economist B” type, as illustrated by his quite about the way that people are “supposed to be treated,” then this will push him to find arguments against any particular redistribution policy, and that’s what Black is getting at.
This all reminds me of the classic book by another economist, Albert Hirschman, The Rhetoric of Reaction. In that book, Hirschman identified three forms of arguments that are used to oppose reforms: Perversity, Futility, and Jeopardy. We’ve discussed this connection before. What’s interesting is that all three arguments get used even though they contradict each other.
This is not to say that reforms are always or even mostly a good idea, or that Summers is wrong (or right) on the merits. Here I’m just interested in the idea that Summers-like academics and pundits have an arsenal of contradictory arguments that they can bring to bear to support whatever policy position they currently have.
I don’t have any solutions to offer here—I assume that there are times when a policy really can do damage by overheating the economy, or by having an insufficient multiplier, or whatever. I just think we should be aware of this problems
Remember how we said that economics today is like Freudian psychology in the 1950s? A key point in common is that there’s credentialed guild that’s listened to by policy makers and the news media and that has a set of flexible tools that gives them the ability to argue any point—or its opposite.