Deficits Bad?
Johnathan Pearce cites Andrew Sullivan’s critical observations about increased federal spending under George W. Bush. Sullivan makes a good point. However, Pearce goes Sullivan one better and decries federal deficits, which are not quite the same issue.
Deficits are actually an important constraint on federal spending. In the ideal world we would have a small and balanced federal budget, but our more likely alternatives are a large federal budget with a deficit or a large federal budget with a surplus. A surplus functions much like a silent tax increase whose proceeds will be spent by Congress (as happened in the 1990s), whereas a deficit leads mainly to additional federal borrowing — which is less destructive to productivity and incentives than are tax increases and may itself create pressure for reduced spending. Surpluses allow legislators to increase spending without incurring the political costs associated with explicit tax increases, while deficits create political pressure to spend less. The question of whether to balance the budget is not trivial, but the main goal should be to reduce the overall level of government spending. Ironically, deficits, because of their negative political consequences, may advance this goal most effectively.
Politicians tend to like surpluses and dislike deficits. That should tell us something.
I Don’t Like Making Predictions
Last May I made a bet with the lovely Diane that the U.S. would attack Iraq before the end of 2002. While it looks like I will soon be right about the invasion, I was wrong about the timing, and timing was the issue. I blew it due to my usual excessive overconfidence.
Meanwhile Lex has been trying to talk me into publishing my predictions for 2003. He himself has already done so in a masterful post, and I predict that many of his predictions will prove accurate. He has a good track record, especially WRT politics. (He is typically less overconfident than I am, though our respective overconfidence levels may be converging as we age.) I have a lousy track record, especially on issues that affect me emotionally. And I find that by making a prediction on any topic I tend to increase my feeling of having a stake in a particular outcome, which makes my judgment even worse. The honest best that I can usually do, prediction wise, is along the lines of: “There is a greater than even chance that X will occur if Y occurs.” But nobody wants to read predictions that sound like that. So with these caveats in mind, I am willing to make a couple of straightforwardly vague prognostications:
– There will be surprises in the war against radical Islam. Most of these surprises will be bad.
– Unexpected stuff will happen around the world. As always.
– The U.S. monetary system will show an increasing bias towards inflation during the next year or two.
That’s about the best that I can do. If anyone wants to make some money, I am available to take the other side of bets.
More on the Tony Blair Interview
I read about 1/3 of the transcript from the Q&A. Blair handled himself well. The interviewer and the audience, if sincere, are twits. I can’t imagine the audience is representative of majority opinion over there. It’s probably representative of elite opinion, though. I hope that I am not naive to be so optimistic. Also:
– I was astonished by the high proportion of questioners from the audience who assumed that UN fiat takes precedence over decisions made by their own elected government.
– Paxman’s interviewing style is great. I wish we had journalists like him here in the States. So what if he’s rude. One of the press’s most important functions is to serve as a check on government. You can’t do that if you’re always deferential. Yet journalists who ask difficult questions of politicians are exceedingly rare. They are discouraged by the j-school mentality, with its emphasis on “access” — mustn’t risk losing it by antagonizing interviewees — and guild-like hostility to reporters who rock the boat. (O’Reilly isn’t a good counterexample, because there’s only one of him and he’s easily avoided by pols who don’t want to face his questions. Also, he is often unprepared.) How long would Clinton have lasted if he had been met at every press conference by Paxman-like reporters asking him, repeatedly, if he had raped Juanita Brodderick?