In his NYT column today, “The Structural Revolution,” David Brooks sets up a false choice between those whom he calls “cyclicalists” (he means you, Paul Krugman) and those whom he calls “structuralists” (hi, Paul Ryan, hi Mitt):
“The main argument you hear from these cyclicalists is that the economy is operating well below capacity. To get it moving at full speed, the government should borrow and spend more.
“The diverse people in this camp — and I’m one of them — believe the core problems are structural, not cyclical.
“There are several overlapping structural problems. First, there are those surrounding globalization and technological change. … Then there are the structural issues surrounding the decline in human capital. The United States, once the world’s educational leader, is falling back in the pack.
“Then there is political sclerosis. Over the decades, companies and other entities have implanted a growing number of special-interest deals into the tax and regulatory codes, making it harder for politically unconnected, new competitors, making the economy less dynamic.
“Unlike the cyclicalists, we structuralists do not believe that the level of government spending is the main factor in determining how fast an economy grows.”
Brooks’ false choice is highlighted in that last sentence. I consider myself both a cyclicalist and a structuralist. We need to focus on this cyclical downturn in the short term and on our undoubted structural problems in the short, medium, and long term. I don’t see government spending as a force to make our economy grow under normal circumstances. I see it as a temporary spur to counter the lack of demand in the private sector from the Great Recession. Once we get the private sector kick-started, government should pull back. This is classic Keynesian economics, which Republicans used to accept and believe in.
We can address some of our structural problems at the same time as we do our cyclical ones. They are not mutually exclusive. Brooks bemoans our decline in education. So let’s hire back or replace some of the hundreds of thousands of teachers who have been fired in the last few years. Some of those teachers weren’t very good? Fine, there are plenty of unemployed people to choose from. Same with his complaint about special deals in the tax code. Let’s close the loopholes. That raises more revenue that can be used to stimulate the economy and makes the playing field more even. Scrubbing regulatory codes of provisions that favor one company over another is irrelevant to government stimulus spending. You can do both simultaneously.
Brooks says the problem is that “different people are having entirely different debates.” The real problem, the sad and shameful problem, is that we’re having an election. Some people, whose initials are GOP, don’t want the economy to get better.