Rizzo Batting .900
Folks, I am waiting for Mario Rizzo to slip up and post something dumb, just so I can pounce on him and prove I’m independent. But alas, he keeps knocking it out of the park:
The over-all theme of [Krugman’s] article is that big government is our salvation. “[U]tter catastrophe no longer seems likely…Big Government, run by people who understand its virtues, is the reason why.”
Post hoc ergo propter hoc?
How do we know that fiscal stimulus played a non-trivial or any helpful role in the apparent easing of the rate of decline in economic activity? I think we need a theory and evidence.
Now, of course, there is no dearth of Keynesian theories – all leading to [the] same policy conclusion. If recession, then more (government) spending. But what is the mechanism by which about $70 billion in extra spending (this is the amount of the total stimulus package now spent) reduces the rate of increase in unemployment and reduces the rate of decrease in output in a $14 trillion economy? If my advanced arithmetic is correct this is ½ of 1 percent of the GDP. What kind of Super Multiplier is that?
However, things are more disturbing than that. Just a couple (or so) weeks ago President Obama said that not enough of the stimulus had been spent yet and so it was too early to expect results. But mirabile visu! The Almost Recovery has appeared. (It seems more like political opportunism instead.)
Indeed, I think the only real goof Rizzo has made since starting his blog, was apparently giving Gene Callahan unrestricted posting privileges. Rookie mistake.
