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Posted at 09:21 AM ET, 11/01/2011

Neither party knows how to fix the economy

Ed argues that the Obama White House has no real economic plan; I’m tempted to say we’ll never really know because Republicans haven’t given it much of a chance to work. They limited the stimulus, dragged out the health-care debate, derailed the debt-ceiling talks, and won’t even vote for a jobs package that includes many items they’ve already supported.

But I won’t leave it there, because I think that while Democrats have a more sensible and more politically appealing approach to the economy, neither party really has a handle on how to resolve an economic crisis that has been brewing for several decades.

Economists these days-- both academic and those more politically inclined -- must feel a little like astronomers did before the age of Copernicus, Kepler or Newton. There is overwhelming evidence that their theories of how the universe works have failed, but no new explanation has arrived. Faced with a challenge to the old order of things, but unable to find the new, many of today’s economists, like astronomers of the past, cling to outdated theorems more on faith than verifiable fact.

Both party’s economists suffer from this confusion. Too many Democrats cling only to orthodox Keynesian stimulus and to monetary easing. They keep applying those shock paddles to the economic corpus, but it remains flatlined.

Many Republicans actually want to return to the very discredited economics that Keynes replaced: They believe slashing spending, taxes and regulation will bring us to prosperity. We’ve tried this approach in varying measures and repeatedly over the last 30 years, a period that has witnessed the greatest acceleration in income disparity in American history.

In a sense, many of today’s Republican economic theorists are like Pre-Newtonians who, when faced with the evidence of gravity, went back to heavenly spheres of Copernicus.

But not all. Republican economist Bruce Bartlett recently wrote in the New York Times: “People are increasingly concerned about unemployment, but Republicans have nothing to offer them.”

From what I’ve seen so far, Democrats have the better argument in a debate that doesn’t even begin to live up to the economic challenge facing our country.

By  |  09:21 AM ET, 11/01/2011

 
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