I'm a little late on this issue but I see from reading TVHE that Steve Pierson over at the Labour Party blog, The Standard, is criticising National's stimulus package, and the quality of economic journalism. I was somewhat surprised that Pierson was criticising other people's economic understand, but be that as it may, I want to add a couple of short comments to what Matt Nolan has already said.
I’ll go through the two harshest criticisms below:My point here is that Pierson looks like he is all fired up over having a stimulus package without asking, Do we need one and if so, what form should it take? These are two questions over which there is much debate, many economists argue that a package is not needed or will do more harm than good and many of those who support a package, disagree over what should be in it. The issue is that the usefulness of a stimulus package is far from agreed upon by economists and it should not be taken for granted. So to say1) “In the greatest economic crisis in a lifetime, we remain the only country in the world whose government has done nothing to try to stimulate the economy”I’m not so sure about this. Just recently there was a post on Dani Rodrik’s blog that, when talking about the G20, stated:There have been a relatively small number of stimulus packages thus far and they don’t amount to muchWe hear alot about stimulus packages around the world - and I’m not sure that NZ’s tax cuts and infrastructure spending are that small in comparison …
“... we remain the only country in the world whose government has done nothing to try to stimulate the economy”even if true, could turnout to be a good thing.
Matt Nolan continues
I agree with Matt, but would say the government is a 'too large' a sector of the economy. But the household analogy is a good one, in particular because it focuses our attention on the budget constraint. The government does have a budget constraint, just like a household, a point overlooked at our pearl.2) “Many (economic journalists) are so economically illiterate that they think running an economy is like running a household budget”I’m not sure this is really economically illiterate - expect for the bit about “running the economy”. The government doesn’t so much run the economy - it is a sector in the economy, a sector that is focused on redistributing and setting up a broad framework to improve outcomes in the market economy.
It should be noted that the term economics comes from the Ancient Greek οἰκονομία (oikonomia, "management of a household, administration") from οἶκος (oikos, "house") + νόμος (nomos, "custom" or "law"), hence "rules of the house(hold)".
Update: Not PC comments here.
Update 2: Matt Nolan has some additional comments here.