Tyler Cowen highlights a comment from Scott Sumner’s blog:
It’s incredibly frustrating. The political and policy world falls into two camps:
- Those who believe no stimulus is necessary, everything is supply-side.
- Those who believe stimulus is necessary but only fiscal stimulus can or should supply it.
….I feel like to both the centre left and the right, Milton Friedman is too heretical now — too right-wing for the left obviously and too left-wing for the right. Consequently, everything about monetarism has been stripped out of the public consciousness and we are left with vulgar Keynesianism and vulgar Austrianism.
We truly live in a Dark Age of economics.
Statement #1 is correct. Nearly all modern conservatives believe that no stimulus, either fiscal or monetary, is appropriate right now. It’s all about maximum pain and austerity. This truly is the equivalent of treating a patient with leeches.
But where does statement #2 come from? The liberal economists I read do indeed believe that we need fiscal stimulus, but unless I’m misreading them badly, they’d all welcome looser monetary policy as well in one form or another. That might be NGDP targeting (Sumner’s policy preference), it might be further rounds of QE, it might be a higher tolerance for inflation, or it might be something else. Whatever their particular policy preferences, though, I can’t think of a single liberal economist who hasn’t criticized Ben Bernanke for not combating the recession more actively.
This is the kind of weird false equivalence that drives everyone on the left crazy.