Matt Yglesias has a very good post on Robert Barro's latest. Brad DeLong seems to agree with Matt. Paul Krugman uses the word "boneheaded" to describe the Barro piece.
This exchange is a good micro-cosm of how the stimulus debate has proceeded. A highly respected anti-stimulus economist puts up some anti-stimulus evidence in a highly imperfect test (in Barro's defense, he did cover more than just WWII). The anti-stimulus economist is attacked by pro-stimulus economists. But the pro-stimulus proponents are focused on attack. They are not putting up comparable empirical evidence of their own for the efficacy of fiscal policy and there is a reason for that, namely that the evidence isn't really there.
(Emphasis mine). Cowen, like me, seems concerned but undecided on the debate, calling it a "hail Mary pass" - but whether he is or not, he does not agree with the ridiculous accusations of the Krugman crowd. Ditto for Arnold Kling:
I don't think that the proponents of a stimulus can claim superior intellectual firepower. . .
Huizinga, Krugman, Bernanke and I took the same macro courses from the same professors. I spent a year as "forecast co-ordinator" for the staff of the Federal Reserve, which gives me the most experience of anyone in this debate with what Greg Mankiw calls the engineering approach to macro. The engineering approach is what is being implicitly adopted by stimulus advocates.
We also have several U Chicago economists opining, including Kevin Murphy (via David Henderson):
He laid out an equation that everyone could agree to so as to see if increases in government spending could have a good effect. The disagreements, he noted, would be on the various magnitudes and on one sign. . . Bottom line: if you share Kevin's view about the magnitudes, you will conclude that this Obama fiscal policy will be horrible. And you have to have a pretty extreme view of the magnitudes of the parameters to conclude that it will be on net good.
Would you like another? Ian Bremmer (I've mentioned him before - brilliant) and Nouriel Roubini (ditto) with a great (but worrying) piece in the WSJ:
Politics will make matters worse, primarily because governments in both the rich and the developing worlds are intervening in their economies more broadly and deeply than at any time since the end of World War II. Policy makers around the world are hard at work crafting stimulus packages filled with subsidies and protections they hope will breathe new life into their domestic economies, and preparing to rewrite the rules and regulations that govern global markets.
Why is this dangerous? At the G-20 summit a few weeks ago, world leaders pledged to address the crisis by coordinating their economic policy responses. That's not going to happen, because politicians design stimulus packages with political motives -- to satisfy the needs of their constituents -- not to address imbalances in the global economy. This is as true in Washington as in Beijing. That's why politics will drive the global economy more directly (and less efficiently) in 2009 than at any point in decades. Its politics that is creating the biggest risk for markets this year. . . .
New York, once the financial capital of the world, is no longer even the financial capital of the U.S. That honor falls on Washington, where lawmakers are now injecting populist politics into economics decisions.
Emphasis mine; keep in mind that both Bremmer and Roubini have jobs that require them to accurately assess market and political risks (Bremmer at Eurasia Group and Roubini at RGE Monitor). This is what they do.
Nate Silver (not an economist, but Krugman isn't really anymore either) asks, is there a serious conservative argument against the stimulus? The question Cowen, Kling, and Barro seem to be asking is, is there a Team Obama argument that includes something other than accusations without evidence (or content newer than Keynes' 1936 book)? The difference is that Cowen really wants to know, while the Silver people are asking the question rhetorically: how could anyone dare disagree with His Hopeness!?! Obama's disciples seem now to think that their assertions are backed up by what math people would call "proof by deity" - no need to provide evidence for arguments if Obama Omnipotent is on your side. After all, anything Bush would have done must be flawed!
The problem here is that this has become a team issue - in this case, the Church of the Changemaker wants to label any skeptics as Republican partisans. A better approach would be for all the sides to present evidence, and for Obama to make his decisionmaking process transparent. He hasn't done that, so careful thinkers are still unconvinced.
UPDATE: Mark Thoma responds to Cowen's request for evidence by quoting the Murray econometrics text, which references David Aschauer's findings:
Aschauer finds no evidence of public military capital raising output or productivity, nor does he find the flow of spending goods to have any effect on output or productivity.. Public spending raises private sector productivity to the extent that public sector spending is on nonmilitary capital goods. How government spends its money matters! It is not government spending, as such, that spurs private productivity, but rather specific government investments in capital goods that makes the private sector more productive.
So, as I have argued before, this partly depends on the government's ability to spend money efficiently.
UPDATE II: on the subject of efficient government spending, David Brooks discusses the pork process for Obama's precious bill:
The bill marked up Wednesday in the Appropriations Committee is a muddled mixture of short-term stimulus haste and long-term spending commitments. It is an unholy marriage that manages to combine the worst of each approach — rushed short-term planning with expensive long-term fiscal impact. . .
A study by the Congressional Budget Office found that less than half of the money for infrastructure and discretionary programs would be spent by Oct. 1, 2010. . .
President Obama is clearly going to have to show the hard way that he meant what he said about bringing change. He didn’t run for president just to sign whatever bills the Old Bulls put on his desk.
It should surprise nobody that the stimulus bill is turning into a porkfest - nobody, that is, except the Obama disciples who drank the Yes We Can Kool-aid about his ability to fix government and pass the bill via, as Brooks once said, Immaculate Conception. It turns out that, like we were saying all along, Washington isn't as easily changed as Obama wanted his minions to believe. His supporters will defend his actions by saying, it's not his fault that Washington is so corrupt. But not only was he part of the corruption before; his critics (like me) were saying all along that his promises of change were unrealistic. We were rebuffed with chants of Yes We Can (and Bill Clinton was even accused of racism for calling the whole fairy tale a fairy tale).
More importantly, the chances of getting an effective stimulus bill through Congress are, as I've been saying all along, basically zero - even if Keynesian economics were 100% accurate. Hence Roubini's assertions about government involvement (by the way, in case you think Roubini is a crazy right-winger, recall some of my old posts quoting him). It seems my skepticism of Obama-style Keynesianism is warranted.
Obama is in a fix now; all his promises of big changes can now be put to the test, starting with his promises about greater government transparency and changing Washington.
