A last Naill in the coffin of rightwing economics

The Tea Party has been quiet on Maui for a while. Now I know why. A letter to the editor of The Maui News today from local Tea Party hostess Rhonda Glass says she has shaken the red dust of Maui from her feet and moved to the "Republic of Texas," which she likes way better, because of no income tax. Good, she can use that money to rebuild her house when the fertilizer plant next door blows up, because no zoning and no regulation, either.

It's been a bad week for Teaconomics. Not only is oil acting funny (see previous post), Niall Ferguson made such a stupid remark about John M. Keynes that he had to apologize, but everybody is calling him a creep anyway.

Matthew Klein has an outstanding commentary on the hoof-in-mouth disease of rightwing superstar  Ferguson. Read the whole thing, including the comments, which are by no means all pro-Klein.

However, RtO wants to add a historic footnote to this. Klein quickly switches his fire over to Greg Mankiw, who was George Bush's Teaconomist and teaches at the same rightwing academy in Cambridge as Ferguson.

Klein, in defending, basically, the New Deal, cites some economists who, unlike Ferguson and Mankiw, do not get the vapors over a little deficit spending. For example: "Gary Gorton and Guillermo Ordonez have even argued that 'government bonds are net wealth' because they can always be used as collateral." Unless they are tsarist bonds.

However, the point RtO wants to make is, do you know who else used to make that argument? Ronald Reagan's economists, that's who. The Internet does not reach far back enough for me to dredge it out, but when Reagan was running up the national debt, the Wall Street Journal was describing the deficits as "savings."

Really.

I don't think many leftwingers can be found describing borrowing as "savings," but it was the coin of the Republican realm back in the dear dead days of Ron. We were also assured then that the Savings and Loan collapse was really a great opportunity, because the money had been used to build all these empty office buildings, and while the notes behind the construction had been magickally disappeared, the buildings were still there, ready to accommodate an expanding economy.

And you know what? For once, the rightwing economists were right. Houston at the time had empty Class A office space equal to ALL the office space in Des Moines, Iowa. (The reason I know this extremely obscure factoid is that I was writing business news in Des Moines but visiting my father-in-law in Houston at the time.)

Sure enough, in not too many years, the empty skyscrapers of downtown Houston were pretty full.

Of course, the original owners were no longer owners and were probably mowing the lawns of the current owners (just kiddin', of course they weren't. Immigrants do that in Texas.)

MORAL: The eternal verities of rightwing economics are neither eternal nor veracious, but they can be surprising.