In today’s edition of the Washington Post, Amity Shlaes — author of, most recently, The Forgotten Man — distinguishes "Campaign Econ" from "Real Econ." It’s an important distinction to understand, for "Campaign Econ" (the "economics" typically babbled by politicians) is to real economics as astrology is to astronomy.
Here’s a choice selection from Amity’s op-ed:
Campaign Econ has costs. The first is that talk of a downturn — or
"mental recession," as Gramm put — can itself generate a downturn.
Keynesian economists say this is so because consumer spending slows
when people are afraid. But there’s also a non-Keynesian dynamic.
Grumbling leads to costly government rescues that scare markets and
slow growth.
