Who’s Being Dogmatic?
My op ed in the San Diego Union-Tribune generated some hate mail. The best was this:
Mr. Murphy, in your article published in the San Diego Union Sunday Oct. 25,2009 the first conclusion you come to is that the Obama economic stimulus was a failure and you use the predictions of the administration to support this conclusion. Predictions of anyone do not substantiate anything other that the predictions were wrong. Your second point was that TARP was not needed because business loan activity decreased after Oct 2008 when the rescue was initiated. Oct. 2008 was when the banking almost came to a complete halt whether tarp was introduced or not, so it seem obvious that loan activity would decline, that fact doesn’t tell us anything about TARP. I think you come to your conclusions from a dogma and no real interest in the truth. Any small understanding of the great depression will give you actual facts of what government intervention does. I get tired of reading editorials in the Union Tribune with no real facts to support the opinion.
I put the bold in the above. What’s funny is that in my op ed, I pointed out:
(1) After passage of the Obama stimulus package, unemployment is now higher than they predicted (a) with the stimulus and even (b) without the stimulus. In other words, we are now in a situation that is even worse than what Obama’s economic team used to scare people into supporting the stimulus.
(2) Even though TARP was pushed through with the promise of getting banks lending again, lending was at an all-time high when TARP was passed, and since has plummeted 12% in less than a year.
I didn’t mention this in the op ed, but since he brought it up:
(3) As far as the Great Depression goes, we see that the period of the greatest federal intervention into the US economy (at least during peacetime) was also by far the worst economic performance in US history.
So my question is this: What would the empirical evidence have to look like, in order for my pessimism about government intervention to be well-founded, rather than dogmatic?
And notice that for my correspondent, he uses a priori theory to explain away the ostensible failure of the stimulus and TARP. He relies on the trusty counterfactual: Even though the objective measures got worse after his programs passed, nonetheless he is confident that things would have been even worse had the government done nothing.
Maybe the guy is right; I’m certainly not knocking a priori theory in economics. But it’s a bit absurd for him to criticize me for clinging to dogma in this case.
