I have not been following the general discussion between Richard Posner and the macroeconomic community. I simply broke into the thing, finding a reference to the debate. I went back and studied the fight a little, concluding both Posner and DeLong were putting too much emphasis on general Statement, and insufficient impact upon trends. The first Rule on Government economic policy is that Numbers mean relatively nothing. It will take Accountants a probable Two years to get a realistic Number placed on the amount of Stimulus spent in the 2nd Quarter, with an approximate 15% of the total amount misspent according to the mandatory parameters of the enactment. No one has ever said Government is an exact science, and bureaucrats can spend your money with less Concern than ex-wives can exhaust your net equity. It devolves into a real discussion of Character, and both Sides seem determined to besmirch the Others’ reputation.
The reality of the discussion should be focused upon the relevance of the Stimulus. I will first establish my own position, which remains that Government should not have interfered in the financial crisis; allowing what financial institutions which could fail to collapse. What We have now is unsound financial entities, which possess a prejudice towards sound Lending because of a Scramble to recover lost assets, run by financial management already found to be inferior and dedicated to their own promotion over the health of their businesses. The Concept that they are a superior leadership because their previous failure has educated them to not fail again does not diminish my suspicions as to their ineptitude. The only real salvation I can find remains the inability of bureaucrats to dump Stimulus money onto the economy, without arousing a Public stink about violation of guidelines.
The only real Stimulus I can find in the Package passed, lies in the Corporate decision not to downsize their investment schedules; a debatable issue in itself; investment schedules having been cut by a probable 50% because of the lack of Consumption Demand. We cannot tell about this Number without following Corporate construction activity over the next Two years. The whole discussion with Posner and the economists is one sited without Provens, and damned few Givens in the argument. The injection of Numbers into the discussion only allows for some ability to defame Character, None able to present hard data. $100 billion becomes $89 billion, then only half that in the 2nd Quarter. The entire Argument has become blood upon the Water, and no one knows exactly who is bleeding. Scholars should not engage in such Conduct. lgl