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Jeremy R. Hammond is an independent political analyst and a recipient of the Project Censored Award for Outstanding Investigative Journalism. He is the founding editor of Foreign Policy Journal (www.foreignpolicyjournal.com) and can also be found on the web at JeremyRHammond.com. His is the author of "Ron Paul vs. Paul Krugman: Austrian vs. Keynesian economics in the financial crisis" and "The Rejection of Palestinian Self-Determination: The Struggle for Palestine and the Roots of the Israeli-Arab Conflict".
Daniel Maywhort
May 1, 2012 at 9:17 am
Kevin Drum cannot simultaneously hold the position that government spending can stimulate the economy while also holding the position that there is absolutely no positive correlation between economic growth and tax cuts. According to Keynesianism, government is only one way to increase aggregate demand; cutting taxes, i.e. putting more money in people’s pockets, is another way of “stimulating” aggregate demand. That is why the typical fiscal response to recessions is a policy of relatively high government spending and relatively low taxes.
Daniel Maywhort
May 1, 2012 at 9:27 am
Also, Drum persists in making the most fundamental error which defines modern macro: the fallacy of studying only that which is seen. This is apparent when he talks about regulations. Shifting the paradigm for a moment to the discussion only of current regulations—he cites that they are not killing small businesses. For one, I question his ability to know that. But ignoring that for a second, the question that completely escapes him is, “How many businesses might have existed had the regulations never existed?” He doesn’t bother to think that maybe regulations kill the ability of new firms to be begot in the first place—a firm being denied existence isn’t something that can be scientifically measured, because it will not appear in any statistical data. It is convenient for people like Drum, whose thought process’ are not guided by any principles and thus never think beyond the immediate data.
Jeremy R. Hammond
May 1, 2012 at 9:50 am
Ah, yes, Bastiat’s broken window fallacy. Thanks for your comments.