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The Failure of Old Ideas

Bruce Bartlett's new book sounds pretty good:

As a domestic policy advisor to Ronald Reagan, Bartlett was one of the originators of Reaganomics, the supply-side economic theory that conservatives have clung to for decades.

In The Next Economics, Bartlett goes back to the economic roots that made Impostor a bestseller and abandons the conservative dogma in favor of a policy strongly based on what’s worked in the past. Marshalling compelling history and economics, he explains how economic theories that may be perfectly valid at one moment in time under one set of circumstances tend to lose validity over time because they are misapplied under different circumstances. Bartlett makes a compelling, historically-based case for large tax increases, once anathema to him and his economic allies. In The Next Economics, Bartlett seeks to clarify a compelling and way forward for the American economy.


That middle bit is rather insightful. Imagine a hungry person who comes up with the good idea that he should eat something. Midway through eating something, he finds himself full. Should he keep eating?

Thumbnail image for 41vV6fztLBL._SS500_.jpgProbably not. But political movements have a tough time recognizing when they're full. After all, eating worked so well last time. Elections were won on a pro-eating platform. Supporters were convinced of the virtues of eating. This movement is now about eating. Or, as the case might be, lower taxes. Bartlett argues that conservatives were right about the need for lower taxes and less regulation in the 80s. He, after all, was one of them. But then they succeeded in lowering taxes and dismantling regulations. They left the country full. Since then, the problems requiring policy solutions have changed. But the movement's prescriptions haven't.

Conversely, I don't think Robert Rubin's proteges get enough credit for the flexibility of their performance in the past few years. During the early-90s, when a large deficit seemed to be crowding out private investment, Rubin and his deputies embarked on an aggressive campaign of deficit reduction. This sparked some pretty serious wars in the Democratic Party, as many considered Rubin unhelpfully obsessed with deficits at the expense of, say, social investment.

A decade later, the Obama White House is almost entirely staffed by Rubin's deputies: Larry Summers, Timothy Geithner, Peter Orszag, and Jason Furman were all part of Rubin's circle. But in 2008, the problem wasn't deficits. It was insufficient economic demand. And so the team developed a stimulus policy that jacked up the deficit but, in theory, also kickstarted a sluggish economy. It was also the single most important social investment in a generation. They may have been right on that policy. Or they may yet prove wrong. But they were pretty clearly focused on the current moment, not the ideas they originally defended in public life.

By Ezra Klein  |  May 18, 2009; 12:00 PM ET
Categories:  Economic Policy  
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Comments

And they are all buds of Pete Peterson and we all know what his present gig is. Making himself richer at the expense of ordinary Americans. Hell, he wants to gut Social Security in the middle of a recession. What does that tell you about his priorities? And Geithner is listening to him!!

Posted by: Calvin_Jones_and_the_13th_Apostle | May 18, 2009 1:02 PM | Report abuse

If Bartlett survives the crucifixion attempt, it will be nice to have a sensible conservative who is perhaps temperamentally suspicious of others' big plans for the government, but is still somewhat grounded in reality.

Posted by: Aatos | May 18, 2009 1:26 PM | Report abuse

I would also dispute that Reagan's tax cuts were the right idea at the time but at least Bartlett is trying harder now, maybe.

Posted by: Aatos | May 18, 2009 1:32 PM | Report abuse

such a fallacy. clinton gutted the military so that we wouldn't be ready when we needed it, and also he benefited from the baby boomers moving up to middle management - so much was paid into social security. In addition, the economy was changing. So technology was creating a 'new' paradigm...

Posted by: atlmom1234 | May 18, 2009 5:53 PM | Report abuse

Bruce Bartlett is a nice guy (I run in to him around the econoblogs) and a hell of a writer. But he is a political partisan to the core something that can be seen by visiting his now shuttered blog on TownHall (a clue right there) http://bartlettblog.blogtownhall.com/default.aspx Bartlett's Notations. For example his second to last post there was called 'The True Party of Racism' which makes the truly tired argument that since Thomas Jefferson and Jefferson Davis owned slaves and Lincoln freed them that you can actually draw conclusions about racial politics in the 21st century. And the whole blog is like that, a partisan Republican writing for Republicans.

Bartlett once said something sensible about Supply Side economics on an econoblog, that is he admitted it was Voodoo. When I asked why he wrote a book called "Reaganomics: Supply Side Economics in Action" he explained that most of the book was written before the election meaning I guess that you can translate "in action" into "in my imagined version of the future". The book was in effect campaign propaganda.

I admire Bruce Bartlett in much the way you might admire a really talented defense lawyer, he is a splendid advocate, someone you want on your side if you are guilty as hell.

I have said previously that Bartlett is so good and so smooth that you may not understand that he is actively working for the other side. Don't get fooled by his normal cover of "Honest Conservative", I am not sure that in reality there is any such thing.

"Be sure to count your fingers after shaking his hand" is maybe the best summary here.

Posted by: BruceWebb | May 19, 2009 10:16 AM | Report abuse

At heart, Bartlett is a savvy survivalist. Not in the sense of guns in a cabin, but in the sense of remaking himself to fit the current trend. He was an architect to Reaganomics, which was always recognized as based in political pragmatism more than economic theory. Shorter: Supply-side economics were never valid. He supported Bush, until it was popular to criticize him. Now he's trying to justify his past while swimming with the current.

Posted by: AMrE | May 20, 2009 1:25 PM | Report abuse

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