We demand the right to contradict ourselves!
–Parisian University students, 1968
It is not clear why, but in 155 B. C., Rome levied a gobsmacker of a fine on Athens. The Athenians felt this was unfair. Seeking a redress of their grievance, they sent Carneades the dialectician to Rome to argue their case before the Forum.
Day one, Carneades delivered a brilliantly argued harangue in praise of justice and how citizens should make strict observance of the law their top priority. He completely won over the audience, but that was not his point.
Day two, Carneades delivered an equally powerful argument in favor of disregarding the law at all times. In the space of twenty four hours, Carneades got the audience fully in agreement with him on diametrically opposed positions. Thus, the Athenian established, in possibly the most convincing way, the Doctrine of Uncertainty of Knowledge. Too bad for Carneades. Cato the Elder, Chief Censor, sent him the hell away from Rome, fearing he would poison the minds of the youth.
I will now riff on this Doctrine of Uncertainty of Knowledge by meditating on the subject of the Federal budget deficit.
I declare that I hate the monster–its size keeps me up nights. Whenever I hear someone say we are condemning our children to a future of debt slavery, I sagely nod my head in agreement. I do this without the slightest shred of evidence for this likelihood. This nation has run high deficits many times and we have yet to fail to regain our surpluses. Nevertheless, in the company I keep, arguing against eliminating the deficit is heresy.
So, I Google “Subsequent generations’ complaints about the deficits their forefathers saddled them with,” and get zero entries (as opposed to 607 million entries for “jobs”). I now ask myself what is my beef with running deficits today? Is it that our previous deficits were for good and proper reasons, like, say, the Revolutionary War, or World War II?Arguably, today’s deficits have come about because we just didn’t want to pay right away for what we were letting Congress buy for us, whatever that might be. But still, a deficit is a deficit. Who is to say we can’t grow ourselves out of this one like we have so many times in the past? No one discusses that possibility. My cohort just universally hates the damn thing.
At least I know why I hate the deficit: I hate it because when I think about it I apply the affect heuristic, Daniel Kahneman’s (Thinking, Fast and Slow) term for the typical method of thinking in uncertainty, where judgments and decisions are guided directly by feelings of liking and disliking, with little deliberation or reasoning.
That being said, here’s what spooks me: as the bear market in social mood progresses, the fear mongers will gain purchase on our thinking. And, when the mid-term elections come along, we are likely to vote for a scorched earth Congress who will go all out to cut spending in order to “do the right thing” about the deficit. We will be much further along in the Grand Supercycle deflationary depression and whatever they manage to do will surely exacerbate the economic malaise. I wish to be told why it would not be better to leave our concerns about the deficit alone until we get through the bear market and let the eventual recovery take care of things in the natural way.
If you say “Because this time it’s different” you will really spook me.