Tuesday, December 07, 2010
Tough economic times require tough fiscal choices too
One of the arguments that I keep hearing from the political left is that governments are supposed to spend their way through tough economic times. There's only one problem with that argument: That's what we do during good economic times, too, which is the opposite of what Keynes prescribed. That's, of course, if you think Keynes was right.
So, we usually only get half of the equation right. In other words, we spend all the time, instead of only doing so as a boost when needed. The reality is that we'll only ever have the political will to make hard choices during hard times. If we don't do it now, we never will.
UPDATE: By the way, it tends to be the same thing with infrastructure spending, which is primarily done as a stimulus during recessionary times. Again, although we shouldn't wait for stimulus spending to fix roads and sewers, it's the only time this work tends to get done on a large scale. It's the political reality that dictates the fiscal policies, so to speak.
In a sense, it's not such a bad thing — as long as people remember that politics prevails in good times and bad. That way, everything eventually evens out, we hope.
Whether or not big stimulus programs are right in the first place, of course, is a debate to engage in for another time.