Lastly, in the long run we are most certainly dead. If you don’t see that, then you are simply not thinking long term enough. ~Karl Smith
In that post, Karl yet again reiterates what I think is probably the most sensible and least likely stimulus policy possible right now: tax relief or suspension coupled with funding government expenditures entirely with T-bill sales. I say most sensible because real interest rates are below 0. I say least likely because debt is such a big deal right now that it crowds out all rational thinking.
But back to the long run.
I find it extremely convenient and intriguing that the Structs and Austrians are aligned with the right. These are the people who think the right medicine for the economy is the infliction of pain and suffering. These are also the people who tend to infuse their rhetoric with the most religious thinking. Do you see where I am going with this?
We have an equilibrium where some of the strongest advocates for structural reform and pain have a general worldview imbued with the idea that salvation is not for the temporal world – but that suffering through this life is the proper trajectory toward it. These ideas are strange bedfellows because these economic ideas, as far as I am aware, are not the product of religious thinking. But bedfellows nonetheless.
The same with the converse – the most liberal minded individuals are Cycs. They are those who understand that this world is extremely important and that in fact people are suffering and even dying, right now, because of an unnecessary crucible.
So when Karl yells from the mountaintops that in the long run we are dead, I wonder if that doesn’t even undermine his case with the kind of people who would toss the economy into the abyss rather than vote to take on more debt today. Death is when we get the rewards.
PS I am not trying to shoehorn people. One reason why I like market monetarism so much is that you have right-minded people with an eye toward structural reform who nevertheless understand the need for a robust stimulus. I’m just looking at who tends to move under the same tent these days.