I listen to what Simon Johnson’s has to say in his article Voodoo Economics Revisited, but I don’t necessarily swallow it hook, line, and sinker.

What we are seeing is agreement across the aisle on a very dangerous approach to public finance: a continuation and extension of what President George H.W. Bush memorably called “voodoo economics.” Its consequences are about to catch up with America, and the world.

The following paragraph hints at my qualms about Johnson:

The market is nervous — mostly about the prospect of large fiscal deficits as far as the eye can see. Some commentators dismiss this as irrational, but, again, that is wishful thinking. The path-breaking work over many years of Carmen Reinhart, my colleague at the Peterson Institute in Washington, makes this very clear — no country, including the US, escapes the deleterious consequences of persistent large fiscal deficits. (Indeed, her book with Ken Rogoff, This Time Is Different, should be required reading for US policymakers.)

I think Johnson is probably right about the long term consequences of “large fiscal deficits as far as the eye can see”.  I am less sure about his opinions of short term fiscal stimulus in the middle of a recession. Of course, given the fact that Reagan/Bush/Bush used deficits when they shouldn’t have, has left me wondering if their actions ruined the possibility of rescuing the economy with correctly timed stimulus now.  It’s a worry, but I don’t know what to do instead. I don’t know whether John Maynard Keynes talked about necessary fiscal stimulus applied after unnecessary stimulus has wrecked his weapon of choice just when it is truly needed. Perhaps Keynes should have pointed out that theoretically his policy prescriptions are the right ones, but politically and sociologically, they are impossible to carry out in a Democracy.

As a former chief economist of the IMF, I am unsure of how much credence to put in what Johnson says.  He certainly has plenty of experience with trying to rescue faltering economies.  However, much of the advice that the IMF has given over the years has had terrible consequences on the economies that have taken its advice.  I have always had doubts about Johnson’s association with The Peterson Institute in Washington, D.C. The benefactor of the institute has a somewhat one track mind in his thinking on economics and the research that he wants his institute to support.  That one track thinking is probably consistent with the advice issued by the IMF.

I had always hoped that Johnson was not a prisoner of these two institutions and that his presence at MIT had some significance.  Perhaps my hopes were like my hopes for Obama.  The good parts may be good, but I am relearning that the bad parts cannot be ignored.

In the article Arnold King reviews the book The Symbolic Uses of Politics.

King  says the following:

According to Edelman, here is how the insider-outsider interaction plays out (p. 23-28; as you read this, keep in mind something like Obamacare, Dodd-Frank, or the year-end tax bill):

as an introduction to the following quotes from the book:

Tangible resources and benefits are frequently not distributed to unorganized political group interests as promised in regulatory statutes and the propaganda attending their enactment…

and

The most intensive dissemination of symbols commonly attends the enactment of legislation which is most meaningless in its effects upon resource allocation. In the legislative history of particular regulatory statutes the provisions least significant for resource allocation are most widely publicized and the most significant provisions are least widely publicized…

Is it any wonder that some of us objected to the tax deal?  Is it any wonder why we are so frustrated by the acceptance of this outcome by so many people?

In the comments on the review, one person noted that the article Symbols and Political Quiescence by Murray Edelman published in 1960 in the American Political Science Review may be the basis for the part of the book reviewed by King.