The Stimulus Wars Get Friendly
To stimulate or not to stimulate: that's the question business and economic writers can't seem to agree on. One way to divide the opposing sides is into the Paul Krugman camp and the Niall Ferguson camp. Krugman, a Princeton economist and Nobel Prize-winner wants an additional stimulus to boost job growth and fend off another recession. Ferguson, a Harvard economic historian, says this kind of debt-fueled government spending will lead to high inflation or, even worse, default.
It seems unlikely that Krugman and Ferguson loyalists will ever concede to one other. But is there a middle way? The following pundits spent some time this week trying to find consensus between the two extremes.
It seems unlikely that Krugman and Ferguson loyalists will ever concede to one other. But is there a middle way? The following pundits spent some time this week trying to find consensus between the two extremes.
- Let's Be Pragmatic, writes David Brooks at The New York Times: "So you have your doubts, but you are practical. You want to do something. Too much debt could lead to national catastrophe. Too much austerity could lead to stagnation. Well, there's a few short-term things you can do. First, extend unemployment insurance; that's a foolish place to begin budget-balancing. Second, you need to mitigate the pain caused by the state governments that are slashing spending. You need a program modeled on Race to the Top. You will provide federal money now to states that pass responsible long-term budget plans that will reduce spending and pension commitments."
- Both Sides Have Something to Offer, writes Henry Blodget at Business Insider: "Where are we on this fight between Krugman (Keynesians) and Niall Ferguson, et al (who argue that our ballooning debts and deficits will kill us in the end)? In the middle. We think Krugman is right about the short-term impact 'austerity' will have on the global economy, and we never hear the Tea Party and other austerity pundits acknowledge that. At the same time, we don't think
