Thursday, December 18, 2008

government...

Mankiw on government expansion during crisis.

He notes that the biggest expansion was from 29-45 saying that with the Great Depression and War this was understandable.
But what is noteworthy is that while these crises were transitory, the increase in the scope of government was permanent.

Then goes on to worry about Rahm Emanuel who apparently said, "You don't ever want to let a crisis go to waste: It's an opportunity to do important things that you would otherwise avoid." Mankiw worries...
It is not entirely clear what he meant by this. But one interpretation is that he wants to use a temporary crisis as an pretense to engineer a permanent increase in the size of government.
But the way Mankiw frames this is, well, weird. Do you now anyone who sits around trying to make government big? Like, they just like big governments? I read him as saying its an opportunity for the government to begin to be politically responsive to the people who don't feel government is doing its job right now.

Could it be that modern economy's require larger governments than say pre-capitalist agrarian economies? Or that we're now more democratic, and the more more people have desires for what government should be doing--and feel vested enough to demand it? I dunno...

I was more intrigued by his classic framing of the question. No one I know sits around talking about creating big government(aside from conservatives), they talk about good health care, poverty, education, national security.

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