Agree completely on this. So many (read ‘all’) corporates reacted as if there is no tomorrow…

The problem is the negative impact will be cloaked by a recovering economy – people will start saying “higher MW, higher employment”

I do hear every now and then that there’s ‘no proof’ that increasing the MW negatively impacts on employment e.g. ‘look, unemployment didn’t go up!’, in response one could presumably say that ‘MAYBE it would have been lower without a MW increase!’. The theory of MW being harmful has some credence to it in my very humble opinion, but what data would PROVE it?

The argument will be that the design of the stimulus was wrong methinks.

However, hopefully more of the critique will be on the basis of what caused the crisis (social and private returns from some activities not meeting) and what is the appropriate scope of the Fed (have they gone too far, or not done enough).

Something happened this time around (10% UR attests to that) and trying to understand that will be of value then trying to estimate multipliers around a fiscal stimulus that shouldn’t have been necessary in the first place.

“Oh – Miron’s no Republican. Libertarian, sure. Republican? No way.”

I see, very good.

Indeed. It is amazing how supply and demand goes out of the window when looking at the labour market

It sounds like the govt will increase the minimum wage, they have a no-change call on one hand and a $15 call on the other hand – and they want to sound centrist so they’ll go in the middle.

The problem is the negative impact will be cloaked by a recovering economy – people will start saying “higher MW, higher employment”

So what exactly?

I was arguing against an absolutist claim that the fiscal stimulus did nothing positive.

I am inherently very against discretionary fiscal policy, but given the ridiculous circumstances I can see how it could have had positive impacts (even with its imperfect decline). It IS NOT a first best solution, but none of the better solutions seemed to involve any political (or otherwise) will.

Again I repeat, “Making a statement of fact with no evidence (which is what saying the stimulus did nothing is, given that we have a vicious paucity of data) would be intellectually bankrupt from an economist.”. If David is just repeating a fact put forward by some dishonest/exaggerating economists then I do not blame him – but it does not make it appropriate.

Would I have preferred a more textbook monetary stimulus – yes.

Would I have preferred better public policy so that these social and private returns from risk didn’t diverge and the crisis didn’t happen – yes.

Would I have preferred a stimulus scheme that was set up like a textbook scheme, instead of filled with rubbish for interest groups – yes.

Would I have preferred the changing of policies to allow for greater price flexibility in order to avoid the need for any discretionary central action – yes.

Even with all this, do I believe that the stimulus could have had some positive impacts, especially given the obvious market failure in the labour market (which 10% UR indicates) – yes

“I’ll be surprised if a decent evaluation a decade hence finds that the stimulus package was on net desirable.”

I can definitely fathom that – especially for long-run consequences.

The argument will be that the design of the stimulus was wrong methinks.

However, hopefully more of the critique will be on the basis of what caused the crisis (social and private returns from some activities not meeting) and what is the appropriate scope of the Fed (have they gone too far, or not done enough).

Something happened this time around (10% UR attests to that) and trying to understand that will be of value then trying to estimate multipliers around a fiscal stimulus that shouldn’t have been necessary in the first place.

“Oh – Miron’s no Republican. Libertarian, sure. Republican? No way.”

I see, very good.

It certainly induced folks to wreck perfectly good cars by pouring sand into their engines and running them ’till they seized, bringing forward purchases of durable goods by a few quarters (I still get a bit weepy thinking about those poor engines).

Oh – Miron’s no Republican. Libertarian, sure. Republican? No way.