12 November 2012

Gary Johnson and the dangers of common-sense economic policy

Ezra Klein
Last month, I was giving a talk at a college campus and got buttonholed by a local congressional candidate. He was running, he said, as an independent. The incumbent Republican was the most right-wing guy in the entire world. He was going to beat him, he swore.
Then he handed me a small card that outlined his political platform. Bullet point #1: Cut federal spending to 15 percent of GDP.
President Obamas budget calls for spending $3.8 trillion in 2013. The House Republican budget wants to spend $3.5 trillion. Bringing spending under 15 percent of GDP would mean bringing spending down to about $2.3 trillion in 2013.
Weve not seen federal spending come in beneath 15 percent of GDP since 1951 prior to the introduction of Medicare and Medicaid. The kind of cuts wed need to get it back there would be disastrous, and in the current economic environment, theyd likely be depression-inducing (just ask Greece, which is trying something similar).
However right-wing the incumbent Republican in this district was, he wasnt that right-wing. The House Republican budget doesnt envision federal spending below 15 percent of GDP ever. And yet this guy saw himself as an independent. A moderate. A candidate who would save the public from the crazy ideologues currently running Washington. Promising to cut federal spending by $1.2 trillion in 2013 didnt sound radical. It sounded like good old common sense.
I was reminded of this conversation when I read Josh Barros analysis of Libertarian candidate Gary Johnsons economic plan.
Ive been on some panels with Johnson. He comes off a nice, sober, sensible guy. He talks a lot about being a businessman, and hes eloquent on the failures of the two major parties.His campaign sells him as a politician who simply brings a common-sense business approach to governing.
Heres what that means, though: Johnson supports a metallic currency standard and massive, rapid spending cuts. He wants to balance the budget not five or ten years down the road, but in 2013. He thinks, without obvious evidence, that were in the midst of a monetary collapse, and that TARP, the stimulus and the Federal Reserves emergency measures were all bad ideas.
As Josh Barro explains, this platform means that if Johnson had been president in 2008, he would have allowed the U.S. financial system to collapse and the country to fall into depression. And if he became president now, he would do his best to strangle the tepid recovery we are enjoying and turn it into another severe recession.
When politicians begin telling me that their policies are just common sense, I begin getting nervous.A common-sense approach to how the world works would rule out quantum physics. A common-sense approach to how medicine works would rule out chemotherapy. A common-sense approach to transportation would rule out getting on a heavy metal tube that some lady in a blue uniform assures you can fly.
No one ever promised that the way the world works would accord with our intuitions. And the same goes for economic policy. Almost all of the worst economic ideas out there are sold on the basis that theyre just common sense. Some of them, in fact, are just common sense. Thats what makes them so dangerous. Life would be a lot easier if bad ideas never appealed to anybody, but thats not how it works.