Miles Kimball, the Supply-Side Liberal

Miles Kimball attempting, with some success, not to look at the camera...

Those of you who think I know anything about macroeconomics should realize that about 75% of what I think and say on the topic comes from a guy named Miles Kimball, who is my committee chair here at Michigan (the rest mostly comes from Bob Barsky, Rudi Bachmann, and Mike Elsby, with a dash of Brad DeLong's blog; also, there are a few amateurish musings like this that come from no one in particular). Now, you can get your macro directly from the man himself. Miles Kimball has a blog!

This is good news. Not only is Miles one of the smartest economists I know, but he is also one of the least politicized. This may sound odd, since he makes his political views public knowledge, and very explicitly lets them inform his policy positions. What I mean when I say Miles is "not politicized" is that he does not allow his politics to interfere with his assessment of the facts. Rather than seeing the evidence through a politically colored lens, like so many economists, he follows a two-step process: first he gauges the evidence and draws conclusions in a dispassionate manner, and then he uses his moral compass to decide what ought to be done given those facts. Never does he allow himself to see the policy world as a battle between competing teams of "good guys" and "bad guys". Of course, that's the way a scientist is supposed to think. What makes Miles uncommon is that he believes, reflexively and implictly, that a macroeconomist is a scientist.

Miles also refuses to oversimplify his arguments for rhetorical purposes. Some economists believe that when there is a consensus among economists on some policy, it's legitimate to use too-simple-to-be-quite-right arguments when justifying that policy to the lay public - for example, that it's OK to tell a Ricardian comparative-advantage story when pushing for free trade in the popular press, even if the model that actually convinced economists to support free trade was something much more advanced like a Heckscher-Ohlin or Krugman model. Not so Miles Kimball. I have never heard him simplify an argument past the point where he believes it himself. This can make his writings a little harder to read, but you can be sure that nothing has been dumbed down for the benefit of the plebes.

Here are three posts to get you started in your travels through Miles-land:

1. Print Money and Buy Assets! This was Miles' most famous line when he taught my second-year macro field course. The normal term for this is "quantitative easing", which is what many people (including Milton Friedman) think the Fed should do when its normal monetary policy bumps up against the Zero Lower Nominal Interest Rate Bound (e.g. right now). In this epic post, Miles explains the rationale behind QE. If you are intrigued by the ideas of Scott Sumner and David Beckworth, you should read this post, which provides pretty much the best simple primer on QE that I've seen in the blogosphere.

2. How to make sure people spend their stimulus checks. Miles has an interesting idea about how to do fiscal stimulus. Instead of handing out cash or spending on infrastructure projects, he thinks we should have the government offer to lend money to people in the form of "Federal Lines of Credit". This, he says, will get us the biggest possible bang for our stimulus buck, since it guarantees that any money handed out by the government will actually be spent; if people don't take the loans the government offers them (which for them is equivalent as sticking a stimulus check in the bank), the government's deficit doesn't go up. I think this is a very interesting idea. I am not sure I completely buy it, since I think there's something to the idea of the "balance-sheet recession" (i.e. that it's a good idea to transfer household debts to the government, even if the money is not spent). But this probably just means that there's something I haven't thought of, and that Miles has thought of.

3. Taxes bad, redistribution good. Many people are familiar with the fact that people work about the same  amount whether taxes are low (as in the 2000s) or high (as in the 1960s). Miles agrees with this, but points out that high taxes hurt people in a different way, by making them feel so poor that they have to work more, and thus depriving them of leisure. For this reason, he thinks income taxes are bad, all other things being equal; he's a "supply-sider" in the sense of thinking that taxes matter. But he weighs this against his "liberalism", meaning that he supports some amount of income redistribution. Miles believes that policy should strike a balance between the economic distortions of taxes and the moral imperative of redistribution. Hence, he's a "supply-side liberal".

Anyway, if you have an interest in macro, bookmark Miles' blog. As for me, I had better get back to finishing up my dissertation, or the author of said blog will (quite justifiably) feed me to the sharks...