Political Animal


July 31, 2012 4:25 PM Monetary Stimulus Is a Moral Obligation

By Ryan Cooper

Image via

Here Tyler Cowen makes a strangely bland and bloodless call for more monetary stimulus:

It’s not very glorious or motivational, but here goes: the costs of inflation, within reasonable ranges, are not very high.

He goes on to say he is skeptical of all the purported benefits of more monetary stimulus, but is willing to try it anyway because the downside risk is relatively low. True enough. The reasoning is airtight, but completely ignores the enormous, hulking fact that hundreds of millions of people are sufferingly horribly accross the world for lack of adequate demand, and better monetary policy could potentially ameliorate that.

Kudos to Cowen for coming to the correct conclusion. But he is so breezy, and so ignores the other side of the “social cost” ledger, he ends up sounding like a gargoyle:

Still, at the end of the day if we try further monetary expansion and it fails to stimulate employment, I don’t see a huge social cost to having a three or four percent rather than a two percent inflation rate.

Yeah, we could, you know, like, try and save millions of lives from ruin and penury, I guess. Or whatever. As Matt Yglesias says:

Whether or not that was a good idea, the impact of central bank independence is to put an awesome level of power and responsibilites onto the shoulder of the Federal Reserve Chairman. The moral stakes are high. Nobody forced Bernanke to take the job. Sharp business cycle downturns lead to, among other things, large spikes in suicide rates. Let’s explain to those families about the difficulties central banks face in making credible commitments.

Or, what Atrios said.

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Ryan Cooper is a National Correspondent at The Week, and a former web editor of the Washington Monthly. Find him on Twitter: @ryanlcooper


  • Andrew J. Lazarus on July 31, 2012 4:43 PM:

    But that famous picture is a deserving poor person. You can tell because she is Caucasian. Obama wants to take our money, that we earned by being born into wealthy families, and give it to shiftless N—, well, you knows.

  • Tim Connor on July 31, 2012 4:53 PM:

    Tyler Cowen doesn't "come off" as a monster. He is a monster of self-satisfied complacency and self-regard. Such men are always finalists for the juicy contract to pave the way to hell.

    May he receive his just desserts.

  • c u n d gulag on July 31, 2012 4:56 PM:

    Modest inflation would actually be a GOOD thing!

    Right now, investors are basically PAYING the US government to keep their money safe in US bonds.

    A modest increase, I'm not talking about the late 70's to early 80's insanity, but something in the 3-6% range, will increase interest payments, and also add value to people's homes - especially those who own them outright.

    It's been this hysteria of debt and austerity, that has either suckered the people in charge of economies, who are then stupid - OR, this is what they want, and they are then evil.
    Or, both.
    It seems like they want to break the backs of the middle class world wide, impoverish as many people as possible, to provide a cheap, serf-like work force. And have no obligations for health care, retirement, or anything else, besides defense of their nations, and to allow the rich to do what they want.

    The problem is, if that's the plan, it's the snake eating its own tail.

    Who's going to buy anything besides what they need to survive from one day, one week, one month, to another?

    Sure, Mitt and the other .01%ers got a lot of money.

    But they don't spend nearly as much as 98% of the people who have to live day by day, and, if there's something left over, buy some small luxury - like an HDTV, or something comparable. And a bit more - a new car, or maybe a house.

    So, what has overtaken the economists and politicians in Europe and America?
    Is it this?

    Or, are they stupid, vain, and out of touch enough to think that the masses of people will take this abuse sitting down, and won't revolt?

    My money's on the latter, btw.

    Pitchforks, may end up being the least of their problems, when/if the masses decide to revolt.

    That may be quicker than what's in store for them.

    Again, I'm NOT advocating violence - but there's a pretty solid body of historical evidence to show that that's where this vanity, greed, and madness, will end up.

  • DAY on July 31, 2012 5:04 PM:

    It was long ago, and the memory grows dim, but I remember hearing something about a government "of, by, and for the people."
    I think it mean ALL of the people, not just the rich ones, the white ones.

  • Jose Hipants on July 31, 2012 5:15 PM:

    In congressional hearings, speeches, and every other venue, Republicans have explicitly told Bernanke what they expect him to do to help the economy - nothing. Rick Perry even threatened to "treat him pretty bad" if he doesn't obey. Maybe Bernanke is afraid to move.

  • SecularAnimist on July 31, 2012 5:15 PM:

    DAY wrote: "I remember hearing something about a government 'of, by, and for the people.' I think it mean ALL of the people, not just the rich ones, the white ones."

    Well, as a matter of fact, it originally did mean property-owning white males.

  • Walker on July 31, 2012 5:34 PM:

    Cowen recently wrote the social mobility is a bad thing. His career has reached the point-and-laugh stage and we should no longer talk of him in charitable terms.

  • Mitt's Magic Underpants on July 31, 2012 5:38 PM:

    Silly Ryan. The poor don't matter! The unemployed don't matter.
    We must give more tax cuts to the rich! That's all that matters.

  • AngryOldVet on July 31, 2012 6:41 PM:

    Fiscal stimulus of the American economy is also a 'moral obligation', but that ain't gonna happen either.

    Given that the 'Obama Stimulus' was about 1/3 of the size needed and then drained by non-stimulating tax cuts for co-Presidents Snowe and Collins, the repuknicans have been very successful in disrupting economic recover and having a spineless Senate Majority Leader and the White House being a 'gonad free zone' for three years has been a disaster for the working people of this country.

    Yes, Mittens being president will be worse (unless you are part of the 1/10th of 1%ers who Mitt will 'work for'). It is very unfortunate that The Obomination filled all of his economic 'team' with Wall Streeters who are like the Fed and believe that their first (and only) jobs are to protect the Financial Services Industry.

  • bcamarda on August 01, 2012 8:35 AM:

    You expect morality from someone who wrote: "We need to accept the principle that sometimes poor people will die just because they are poor. Some of you don’t like the sound of that, but we already let the wealthy enjoy all sorts of other goods — most importantly status — which lengthen their lives and which the poor enjoy to a much lesser degree. We shouldn’t screw up our health care institutions by being determined to fight inegalitarian principles for one very select set of factors which determine health care outcomes."?

    I used to find Cowen entertaining. Now I just find him profoundly indifferent to his fellow human beings. Libertarian at its most amoral. But I'll give him this: he is honest.

  • Navin Kumar on August 02, 2012 5:26 PM:

    Are you serious? You dislike a person, even if his conclusions are right, for not being emotional?

    I thought cool-headed analysis was a good thing. Or are policy debates insufficiently emotional?

    @Tim Connor I'm glad to know your more enlightened moral sensibilities will get you into heaven while Cowen burns in hell for not caring enough.

    @Walker No, His core point was a lot duller: that in the absence of growth, there's nothing welfare-increasing about social mobility and possibly welfare-decreasing. http://marginalrevolution.com/marginalrevolution/2012/07/growth-mobility-and-utility.html

  • AT on August 02, 2012 6:00 PM:

    I fail to agree. Stimuli of all sorts have brought us here, they will not get us but deeper down the hole.
    Clamoring for intervention is one thing. Attacking a man who agrees with you on point for not enough enthusiasm is another north Korean thing altogether.

  • Steve on August 02, 2012 7:17 PM:

    "he is skeptical of all the purported benefits of more monetary stimulus . . . The reasoning is airtight, but completely ignores [that] better monetary policy could potentially ameliorate [mass suffering]."

    Cowen is skeptical monetary policy would help. You say that is fair but he is ignoring that monetary policy might help? Are you saying it's worth a try because what do we have to lose? Wait, no that is what he said. So what are you saying?

  • Lupis42 on August 03, 2012 10:28 AM:

    I'm confused. Cowen says he doesn't think monetary stimulus will help, but we might as well try it because the risks are low. You don't attack his reasoning for thinking it won't help, you attack him for not recognizing the moral imperative to do something that he doesn't think will work?

    "Something must be done! This is something. Therefore, This must be done!"

  • Daniel Kim on August 09, 2012 4:14 PM:

    "Budgets are moral documents, and how we reduce future deficits are historic and defining moral choices."

    The Atlantic recently ran an article on 'what surprises first time visitors to America.

    "'Really hard to believe this one,' one Quora user said of the fact that the richest country in the world has hungry children."

    " An Iraqi refugee interviewed by This American Life was so surprised to see a homeless woman in New York's central park that he called 911, assuming that she must be sick, wounded, anything but homeless in America."

    Even now, people around the world expect America to take care of its people, and are shocked to see poor and homeless uncared for. Soon enough, they will know that we do not do this. The stain will follow us for generations after.

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