Thursday, August 30, 2012

Stupid Debt Ceiling Histrionics


Aaron Sorkin likes to think he understands economics. His president in the show West Wing has a Nobel Prize in Economics (nevermind that a Notre Dame economics professor who wins the Nobel Prize might and someday become president is so absurdly implausible). Still I'm a sucker for Sorkin-esque dialogue and post-partisan idealism, so I've become a watcher of his new show Newsroom.

Excited to see Olivia Munn (whom I've known since she was the co-host on a little game show channel variety show) playing an economist (PhD from Duke, lecturing at Columiba), but just got annoyed and very disappointed whenever her character spoke.

Because she (like Sorkin) speaks not the language of real economists (like the NPR planet money or Freakonomics guys do) but instead the economics of know-it-all pundits like Thomas Friedman, who talk with authority but get most things wrong.

Among them, her (Sorkin's) hyper reaction to the Debt ceiling debate where Republicans asked for a debate on whether the US should be allowed to  borrow more money (which is being talked about again because of Paul Ryan, election season and a few books and tell-alls on the topic), which was full of hyperbolic superlatives that really didn't play out. First, the claim that the debt ceiling is not meant to be debated in Congress is stupid. If Congress really thought so, they could just eliminate it, but they *choose* to tempoarily renew it each time *to allow for debate*.  Second, the idea that playing with the debt ceiling will lead to distrust of US treasury bonds is a theoretically possibility, but empirically, the debt ceiling debates and the S&P downgrades only led to record low interest rates as people fled to American treasury notes because they are still deemed safer than anything else in the world (monetary policy also played a role here of course, but the idea still is that all the political turmoil had at best a 2nd order effect). Finally, as a practical matter, not raising the debt ceiling wouldn't necessitate default. There are lots of short term measures (like withholding social security checks) that would have allowed the US to continue to make its interest payments.

Having wrong-headed ideas is one thing. Having wrong-headed ideas wrapped up in trademarked Sorkin-style supercillious righteous indignation is just annoying.
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