April 19, 2011

It is the Left that lives in a parallel world

Over at the Illiberal Conspiracy Duncan Weldon is wibbling that right wingers live in a parallel world to the left, and in his long, evidence free, screed that would the only part that might hold any truth. The world that right wingers live in be the parallel world were it is perfectly possible to cut government spending during a recession, like the USA did in the 1919-1920 recession, without generating a depression. A world where Hoover’s massive spending could not get him out of the Great Depression, nor could FDR by spending even more. Just like the massive government spending by the Japanese government could not get them out of their Lost Decade, or the high government spending by British governments could not get the country moving during the 1970s.

This would be the parallel world where higher debt means lower growth, but trying to deal with this debt through tax increases are more likely to cause recessions that spending cuts because tax increases are highly contractionary.

In the lefty world the solution to absolutely everything if for the government to spend more and more money that it does not have. Running a 10% deficit is fine to them, and in their world spending more than you earn forever has no consequences, such as having your debt rating downgraded making this debt more and more expensive.

The right might be a parallel world to the one the lefties imagine themselves to be in, but it is the real world. The world were debts have to be paid back and money does not rain from the skies. The world were actions have consequences.