It Ain’t 1945: Yesterday’s Solutions Can’t Fix Today’s Economy
“In the absence of other information, the best predictor of the future is data from the past.” So said my graduate school statistics professor on the first day of class. While he modified that statement as the course progressed, his original dictum is apparently being followed by policymakers seeking to fix the current sluggish high unemployment economy. Both the public policymakers in charge and their critics are considering only two tools as they seek to make the needed fix: fiscal policy (i.e. the stimulus program) and monetary policy (i.e. augmenting the money supply and driving down interest rates). Some economists, such as Paul Krugman, argue for adding more public dollars, as suggested by the Keynesian recipe for re-invigorating a stagnant economy; others, such as political analyst Gary Wills, suggest further deficit spending will weaken the confidence of the private sector, overburden the future with too much debt and increase the threat of destabilizing inflation.