Confessions of a Supply-Side Liberal

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Miles’s Best 7 “Save-the-World” Posts, as of July 7, 2012

Surface of Venus—an illustration to “Fiscal Armageddon”

There is a hint of gentle self-mockery in my title above, since I am not blind to my station in the world, which makes it hard for me to sway the policies of governments, central banks, or even economics departments. Indeed, one of my first papers, "Optimal Advice for Monetary Policy" (with Susanto Basu, Greg Mankiw and David Weil) was sparked by an early recognition that advice is not always heeded. But it seems more honest to admit to the hope of making the world a better place even beyond my immediate circle than to hide behind a tamer phrase such as “Posts relevant to important policy concerns.”

Moreover, the phrasal adjective “save-the world” gives better guidance for deciding what makes the list. I will use six criteria. The top ten list is decided by you, my loyal readers,  together with highly-appreciated newcomers, based on Google Analytics data. But I get to decide the list of best “save-the-world” posts giving policy proposals or advice, based on my judgment of 

  1. how certain I currently am of the value of the proposal,
  2. expected total benefit to world welfare, added up over time,
  3. urgency, 
  4. importance of having many people know about the idea,  
  5. avoiding duplication with other posts on the list in the policy proposal it addresses, and
  6. avoiding duplication with proposals that already have many other people pushing them hard, unless I have at least a slightly new angle on the argument for the proposal.  

For example, my post "Jobs" has an important policy proposal in it, but doesn’t make the list because the proposal there is too new to my thinking for me to be fully confident of it, and so it fails according to criterion 1. But it or a future post developing the idea further might make the list someday if I become more confident of that proposal. Also, the complexity and subtlety of monetary policy issues in the United States is great enough, and—relative to the sweep of history—the Bernanke Fed has been impressive enough, that a shred of remaining modesty has prevented me from having any suggestion about U.S. monetary policy of sufficient magnitude to belong on the list at this point. That is so even at a time when my undergraduate classmate Joe Gagnon has very strong words for the Fed in his post "The Fed Shirks Its Duty." I take Joe’s views (and similar views from others) very seriously, but I am not there yet.    

For now, if a post makes the list, I will just put it in chronological order of when I posted it. Here is the list:

  1. Getting the Biggest Bang for the Buck in Fiscal Policy.
  2. National Rainy Day Accounts
  3. "Henry George and the Carbon Tax": A Quick Response to Noah Smith
  4. Leading States in the Fiscal Two-Step
  5. Avoiding Fiscal Armageddon
  6. Health Economics
  7. Future Heroes of Humanity and Heroes of Japan

A few notes:

First, the Federal Lines of Credit (FLOC’s) proposal in “Getting the Biggest Bang for the Buck in Fiscal Policy” is a very simple, but powerful, idea that macroeconomists and policy makers seem to have missed—one that could be of enormous help to both the United States and to Europe in their current economic troubles. I should not have been the one to come up with this proposal: someone could easily have come up with it 40 years ago, but as far as I know, no one did. And it is unfortunate that no one did. “Leading States in the Fiscal Two-Step” is in a similar spirit.

Second, “Avoiding Fiscal Armageddon” really has three proposals, with the proposal referred to in the title the least important of the three.

Third, I mean what I say in the title of “Future Heroes of Humanity and Heroes of Japan.” No monetary policy move would mean more for the world, given the powerful demonstration value this move would have.      

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