Daniel Drezner at Foreign Policy summarizes my feelings about Krugman in almost as complete a way as Evan Thomas did:
The fundamental question is whether Krugman is a brilliant hedgehog, an insecure pain in the ass, or – as frequently is the case – both at the same time.
One suspects that Krugman is at least part right – and that Obama and his team realize this. Obama’s response to the financial crisis has been significant – and more than any government response in history – but it is dwarfed by the scale of the crisis, as Krugman is fond of pointing out. Nicholas Lemann in the New Yorker tries to explain why Obama seems to be ignoring Krugman’s advice so far:
[Obama] has to address the crisis, and he is trying to add enough new controls to the system to prevent a repeat of it, but it looks as if his heart is with the big new programs in his budget and with his foreign-policy initiatives. Bank nationalization would drive the stock market down and increase theagita of people with 401(k) plans. Moderate Democrats in Congress would further soften in their support for the Administration’s legislation. The price of bank nationalization might be Obama’s super-ambitious plans in other realms, which, if history is a guide, are likely to pass only in this first year of his Presidency. If they do pass, he will have generated tax revenues from affluent people for social purposes far beyond those of the House’s tax on A.I.G. bonuses, and he will have significantly eased the distress of people who can’t get good health care or education. That is a lot to put at risk.
At the same time, Obama’s team seems to think that, to quote my post of yesterday:
[I]n the short term, the Geithner plans will work to restart the “old” economy. In this moment before that happens though, pressure from Europe and internal critics as well as a desire to avoid a repeat of this fiasco will enable enough forward-looking, gradualist regulation and legislation to correct the long-term problems with high finance.
E. J. Dionne Jr. in the Washington Post explains where the administration’s focus is:
Obama’s top budget officials seem confident that they can deal with this immediate difficulty. His larger challenge is to take on the politics of evasion promoted by those who would indefinitely delay health-care reform, energy conservation and the expansion of educational opportunities. Already, his lieutenants are signaling how he will cast the choice: between “taking on the country’s long-term challenges” or just “lowering our sights and muddling through,” as one senior aide put it.
If Geithner is responsible for fixing the current crisis, Peter Orszag is responsible for the long-term outlook – of balancing Obama’s plans to expand government’s role and stabilizing our deficit spending. As Jodi Kantor in the New York Times explained:
Mr. Orszag embodies the administration’s awkward fiscal policy positioning: big spending now, with a promise to scrub the budget of waste and a bet that economic recovery and changes to health care will gradually reduce the deficit.
A lot of pieces need to fall together for this to work. I have confidence in each piece of this plan – but together, the venture seems a bit bolder than is wise.
Perhaps this is a perfect moment in history for Obama’s plan – and Obama has the insight to see this; perhaps Obama is a master of politics who is able to get all of these items through; but it’s hard for me not to be discomfited by the manner in which everything is coming together.
2 replies on “The Master Plan Always Has Flaws”
http://www.nytimes.com/2009/03/26/opinion/26Kristof.html – hedgehog? or http://www.nakedcapitalism.com/2009/03/links-32809.html – hedgehog? 😛 neither! i say sly fox to keep summers/geithner on their toes, and obama has shown he responds to (reasoned) pressure, which is, i think, why not only people elected him, but also why he was elected…
also see: http://www.chicagotribune.com/news/politics/obama/chi-emanuel-zekemar30,0,3359997.story
Zeke, as everyone calls him, is an accomplished academic with boundless energy and impressive medical and policy credentials who has written a well-received book on health-care reform. He has the ear of Rahm, the president’s chief of staff: The brothers talk every day.
Yet Zeke has never been part of a political team or toed a party line. The reforms he has championed—giving all Americans insurance vouchers and getting rid of employer-based health-care coverage—bear little resemblance to those embraced by the president.
That doesn’t bother the 51-year-old, who’s serving as special adviser to Peter Orszag, the director of the Office of Management and Budget. The job puts Zeke Emanuel at the table with a small circle of trusted insiders crafting health-care policy.
As the top physician in the group, he gets to explain how policy proposals can affect providers working at the front lines of medicine—a perspective that was lacking during the debate over health-care reform in the Clinton presidency. Publicly, his role is to make the case for reform while reassuring medical professionals that it won’t constitute an unwelcome upheaval.
and btw: http://blogs.wsj.com/economics/2009/03/31/guest-contribution-the-real-geithner-plan-a-nuclear-option/
If the difference is as Kristof describes it:
Then it seems to me clear where the ideological, outspokenly partisan, rarely self-doubting Krugman lies. Kristof seems to see a hedgehog as a bad thing – but if you look at Berlin’s original formulation, and Drezner’s invocation of it, there are both positives and negatives to each. From the saying, “The fox knows many things, but the hedgehog knows one big thing” Berlin extrapolated two personalities. Krugman doesn’t seem to have the limited vision of the hedgehog, but he is extremely focused and ideological. This isn’t to say he is wrong – it’s just to describe his type.