April 26, 2016
By Tim Worstall
I think it’s fair to say that Paul Krugman has declared his colours here and can now be said to support Hillary Clinton for President. He does so on the basis that she’s well informed about economics and would thus be a good person to have in a crisis if another economic crisis were to arrive. And Krugman goes on to say that he thinks there’s a reasonable chance that sch a crisis might arrive in the next few years. That’s all reasonable enough and while I would argue about whether Clinton really is so qualified my real argument would be that it doesn’t matter very much. Because an American President doesn’t really have all that much economic power in a crisis. Thus it doesn’t matter very much whether we have one who knows what to do at such a time.
It does matter what economic policies in general a President follows: as with Krugman I think Trump’s ideas on trade are simply nonsense and Ted Cruz’s fascination with the gold standard is actually worse. Similarly Bernie’s ideas on getting the rich or Wall Street to pay for everything won’t work and no, I really don’t like Hillary’s general stance on the economy at all. My impression is that she takes said economy to be something that should be regulated into producing the desired outcome and my own take on the US economy is that it’s currently waaaay too regulated to produce that desired outcome of consistent and regular economic growth. But that’s all as general background: Krugman is specifically referring to a crisis. And there’s that truth I mentioned: an American President doesn’t actually have all that much economic power in a crisis. They’ve got the bully pulpit and not a great deal else:
And military emergencies aren’t the only kind of crisis to worry about. That 3 a.m. call is one thing; but what about the 8 a.m. call – the one warning that financial markets will melt down as soon as they open?
For make no mistake about it: The world economy is still a dangerous place. Financial reform has, I’d argue, made our system somewhat more robust than it was in 2008, but fumbling the response to a shock could still have disastrous consequences. So what do we know about the shocks we might face, and how the people who might be president would respond?
Well, what two sets of policy tools are there to deal with an economic crisis? We can’t talk about institutions, supply side reforms, structural issues, licensure reform, secular stagnation of any of those things. Simply because, as all agree, they take time, years perhaps, to work their way through the economy. They’re just not “crisis relevant”. There’s only two sets of policy tools that are relevant: fiscal policy and monetary policy. And the thing is, the President doesn’t control either of these.
Read the full article at Forbes.com: Paul Krugman Says Hillary Is Economically Qualified To Be President: But It Doesn't Really Matter