A number of my recent blog posts have involved pointing out adding-up constraints: you can’t have some people spending less than their income unless others spend more than their income, all the world’s currencies can’t devalue against each other, etc..
And judging from the responses, basic arithmetic makes people very, very angry.
My point that if you expect debtors to pay down their debt, someone must be prepared either to increase debt or to reduce assets, leads to hysterical accusations of immorality. My point that a weak dollar is a strong euro and vice versa leads to accusations that I want everyone to become Zimbabwe.
It’s kind of funny; it would be even funnier if denial of arithmetic weren’t contributing, in a very real sense, to our economic problems.
To be fair, many of the hysterical attacks involve claiming that I said things I didn’t.No, asserting that someone needs to spend more doesn’t mean that debt never matters. No, declaring that competitive devaluation does no harm isn’t the same as claiming that you can always print money without limit, and never suffer inflation. But the way my correspondents slide away from the points I’m actually making is itself revealing: it shows that they can’t bring themselves to think clearly about the actual state of affairs in the world economy right now.
I guess if you want to think in terms of simple slogans — saving good! strong currency good! liberals bad! — arguments to the effect that the world right now won’t fit those slogans is disturbing. And the solution is to yell a lot.
In other words, it is hard to discern actual evidence for the extreme supply side proposition that tax rate cuts increase tax revenues, when examining the data (and knowing which data are relevant). Now, we know that many things are going on at the same time, but as a matter of fact one cannot say that income tax revenues rose immediately after the beginning of implementation of EGTRRA.*
. . .
I know there are some who believe argument by mantra is the way to go, but I think constructive debate should be informed by appeal to data.
What is striking is their final statements: well supported assertions that right-wingery has a pretty serious problem with reality.
* EGTRRA is the 2001 Bush Tax Cut. Chinn has a great graph.