Somehow, Brad DeLong remains an optimist about the economic outlook. In a talk in Washington, he enumerates the numerous policy failings of the Bush administration, but reckons: “As my grandfather used to say, the Lord protects dogs, children, fools, and the United States of America. We all mourn at the opportunities that have been wasted by the George W. Bush administration, but — so far at least–they are opportunities wasted, nothing much worse.”
Still, Brad has valuable advice for what a government should be doing:
- We’re in the up-phase of the business cycle, so we should be running a budget surplus in any event, considerations only reinforced by the unsustainable current-account deficit.
- We should be making it very clear that as a deficit country we value foreigners who want to invest in us–that we are grateful rather than xenophobic when we think about foreign capital.
- The Federal Reserve should be making it clear that it is more interested in stabilizing measures of domestic prices than of measures that have a high weight on import prices.
- International consensus on what to do should market prices move, and should demand for the products of 40 million Asian workers in export industries and 10 million American workers in construction and consumer service industries disappear.
Are any of these things happening?
Still, we’re probably going to be OK. Opportunities, not crises.