Tuesday, August 14, 2012

Paul Ryan's false virtue

With the unfolding narrative that seems to take shape in the media that Paul Ryan is a "fiscal conservative" who tries to face reality and bring the United States Federal Government on a sustainable fiscal path is really annoying.  The message of these pundits, as Paul Krugman calls them, Very Serious People, is that Paul Ryan has looked at the budget numbers and that the Federal budget deficit is unsustainable and is determined to "do something about it".  In theory, that's kinda almost sorta right.  He has proposed to cut government spending (in many unspecified ways, in addition to the draconian cuts to programs that help the poor and the elderly), but his cuts seem completely unreasonable and there is no accounting for the fact that the United States is mired in a depression, from which it needs to recover (and I'd advocate any action that is likely to get Aggregate Demand up, so we can have full employment within a reasonable timeframe).  The way Ryan is portrayed reminds me of this quote by John Maynard Keynes, in his General Theory of Employment, Interest and Money:


That it reached conclusions quite different from what the ordinary uninstructed person would expect, added, I suppose, to its intellectual prestige. That its teaching, translated into practice, was austere and often unpalatable, lent it virtue. That it was adapted to carry a vast and consistent logical superstructure, gave it beauty. That it could explain much social injustice and apparent cruelty as an inevitable incident in the scheme of progress, and the attempt to change such things as likely on the whole to do more harm than good, commended it to authority. That it afforded a measure of justification to the free activities of the individual capitalist, attracted to it the support of the dominant social force behind authority. (General Theory, Book 1, Chapter 3, Section III)

In that passage, John Maynard Keynes is talking about the basically Ricardian way of viewing the economy which was dominant in economics at the time.  The idea was that full employment is natural and holds for all time, thus, even in a depression, the U.S. economy was at full employment (reminds you of the idea of the Great Vacation?)  In fact, there is a lot of similarity between that view and Paul Ryan's views on the economy.  He said in March that, "We don't want to turn the safety net into a hammock that lulls able-bodied people into lives of dependency and complacency, that drains them of their will and their incentive to make the most of their lives", but I digress.  The point is that the reason why his views are being imbued with virtue are that they are "austere and often unpalatable," so it seems like it must be the "right thing to do," if not the most convenient thing to do.  But that's just wrong.  Out economy needs a good shot in the arm and any policy that can deliver should be tried.  It would be better if we could rely primarily on monetary policy, but, it turns out, Paul Ryan doesn't like that, either.  In fact, mid-2010, when unemployment wasn't far from its peak, Paul Ryan advocated increasing the Fed's target interest rate.  Economist Mark Thoma linked to a story in the Washington Post about his view on monetary policy and called Ryan a "policy idiot", with which I am inclined to agree.

Furthermore, when it comes to his plans for Medicare, they are largely cost-shifting and fail to slow the growth of health spending.  His plan was, more or less, endorsed by National Review, even though it removes the cost-effectiveness research programs which are integral to the Obama Healthcare plan to slow the growth of healthcare costs and doesn't replace them with anything equivalent.  Instead, it keeps Medicare for those 55 and over as is, but forces all those who follow to have an inadequate voucher, that gradually shrinks over time, and forces us into private health insurance plans.  The reason I say "us" is that I'm 29, so unless I can use a time machine in the future to bring myself back to before implementation when I'm 55, then I'm going to have to pay for much of that myself, even after having paid into the Medicare plan for today's seniors for several years already (and I'm not even near the cutoff).  Frankly, I'd like to have Medicare around when I am old enough to be eligible, but I digress, once more.

His great virtue, if there is any, is in finding ways to hurt the poor and the elderly (present, to some extent, but future, big-time), while, according to one rumor, trading on inside information that he gets from Congressional briefings?  Okay, unrelated?  Fair call, ump.

3 comments:

  1. Ryan isn't for cutting anything. He's for slowing the increase in growth. Learn the difference. There's not a dime's worth of difference between either party.

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  2. Maybe I should have specified, but here's a snippet from Paul Krugman's article "Ludicrous and Cruel" from April 2011 about Ryan's 2012 plan:

    "And about those spending cuts: leave health care on one side for a moment and focus on the rest of the proposal. It turns out that Mr. Ryan and his colleagues are assuming drastic cuts in nonhealth spending without explaining how that is supposed to happen.

    How drastic? According to the budget office, which analyzed the plan using assumptions dictated by House Republicans, the proposal calls for spending on items other than Social Security, Medicare and Medicaid — but including defense — to fall from 12 percent of G.D.P. last year to 6 percent of G.D.P. in 2022, and just 3.5 percent of G.D.P. in the long run."

    http://www.nytimes.com/2011/04/08/opinion/08krugman.html

    I think cutting the discretionary budget, which includes military spending, from 12% of GDP to 6% of GDP in about 10 years is pretty draconian.

    And I might point out that the slowed growth for Medicare is the same as Obama's plan, except that Obama's plan has a way to get there and Ryan's is just cost shifting and privatizing.

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  3. Anonymous, that may be the sales pitch, but unless you believe Doctors' salaries will not grow as the economy grows, or that health care can generally be provided with an arbitrarily small amount of doctors' time, any proposal that doesn't keep a consistent fraction of the economy devoted to health care means reduction in service. Historically health care costs have grown as fast as the economy and Ryan has no proposal for slowing the growth of health care costs, all he has is a proposal to shift the cost from government to individual seniors.

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