A new communique from the man who saw it all coming, warning us to prepare for Weimar II. If ever you wanted an illustration of just how inexact a “science” economics is, watch this clip back to back with The One’s assurances last night (at roughly 4:20 here) that the stimulus is the only way to avoid Armageddon. How much good has 75 years of data done us? From the NYT’s front-pager this morning on Japan’s experiment, this much:
Economists tend to divide into two camps on the question of Japan’s infrastructure spending: those, many of them Americans like Mr. Geithner, who think it did not go far enough; and those, many of them Japanese, who think it was a colossal waste.
Among ordinary Japanese, the spending is widely disparaged for having turned the nation into a public-works-based welfare state and making regional economies dependent on Tokyo for jobs. Much of the blame has fallen on the Liberal Democratic Party, which has long used government spending to grease rural vote-buying machines that help keep the party in power.
But some Western economists who have studied Japan’s experience say the stimulus accomplished more than it is now given credit for. At a minimum, they argue, it saved the economy from an outright, 1930s-style collapse.
Jim Manzi is demanding that economists put up or shut up on their predictions by publicizing their models now so that they can be scrutinized in a year or two, knowing full well that no one will take him up on the challenge. In sum: We’re at a fork in the road, with plenty of scholarly opinion urging us down both paths, and either one could lead to total destruction. Anyone got a coin to flip? Click the image to watch.