David Brooks has a column this morning, “The Lost Decade,” in which he describes our bad economy as an “emergent condition”—one where the condition (viewed as a whole) is worse than the sum of its parts. He then suggests that the big problem is ideologues of the left and right who focus on just one particular part. According to Brooks, they should instead take a more holistic view of the economy and adopt a holistic response.
There are a number of problems with this analysis–of which I will mention two. The first is that, while taking a holistic view of the matter is surely a good idea, it does not follow that a holistic response is necessarily the best. That’s just a non sequitur. Second, if one wants to take a holistic view of the matter, surely time frames should feature somewhere in this holism. For instance, one could reasonably take the view that while budget deficits are a problem long term (they should be reduced long term) the problem short term is the recession. One could also note that if the short term problem (i.e. the recession) is not addressed promptly (this is Krugman’s line) then the economy will not “grow” and the budget deficits will get worse.
Plying his view of the matter, Brooks notes that Obama’s stimulus has not worked and that therefore it makes no sense to continue along Keynesian lines. Brooks does not address the point (Krugman again) that the problem with the stimulus is that it was too small.
Enter now Belgium by way of an article in the recent issue of the London Review of Books by John Lanchester:
Quarterly GDP data don’t, on the whole, tend to make the person studying them laugh out loud. The most recent set, however, are an exception, despite the fact that the general picture is of unrelieved and spreading economic gloom. Instead of the surge of rebounding growth which historically accompanies successful exit from a recession, we have the UK’s disappointing 0.2 per cent growth, the US’s anemic 0.3 percent and… wait for it [here comes the outlyer] the agreeably frisky Belgian 0.7 percent.
Why is this funny? Because, as John Lanchester notes, Belgium hasn’t had a government in 15 months. And apparently, having no government (and therefore no real economic policy) turns out to be much (much) better than the actual available alternative—notably, having a government that pursues cuts and austerity policies (i.e. Germany, the U.S. etc.)