Something else entirely

Simon Wren-Lewis describes events since 2008:

Go into detail within the advanced economies group, and the pattern is clear: the greater the contraction in government spending relative to previous recoveries, the slower the recovery has been.

Their analysis also shows us one of the reasons why this happened. The advanced economies started the recovery with debt to GDP almost twice its average level in previous recoveries.

So the lesson here is that having lots of government debt is bad because if the economy turns to shit, the government is handicapped by its debt. The government is prevented from enlarging its deficit spending to fight recession because of the size of the debt it already has.

Yes, okay, if you insist: The government is prevented by wrong-headed fools from enlarging its deficit spending to fight the recession. Feel better now?

Don't you see it doesn't do any good to look at things that way? They don't think they're wrong. (Actually, they think you are wrong.) And they obviously have the upper hand, for we are in fact prevented by them from the enlargement of deficit spending enough to create a recovery.

So maybe it's not them that are the fools, after all.


What did I say?

The government is prevented from enlarging its deficit spending to fight the recession, because of the size of the debt it has already.

I think that's an accurate description of what happens.

And I think there's some merit to it. You know better, I know you do. The government debt's not the problem. You know it. I know it too, but that doesn't get us anywhere.

See, here it is: You say the government debt is not the problem. But the other guys say the government debt is not the solution.

You say the government debt is not the problem, but you mean you want to use government debt as the solution.

The other guys know government debt is not the solution, because we already have very very much of it, growing since Reagan (though they may not actually say "since Reagan"), this massive government debt, and despite all that debt the economy is garbage, no better than garbage.

So, with some justification, they think that expanding the government debt is not even worth considering. Even though you know that government debt is not the problem.

And even though you are right.

But it is one thing to say government debt is not the problem. And it is something else entirely to say government debt is the solution.


Excessive private debt stands in the way of economic growth. Our goal must be to reduce private debt.