If you had to classify everyone with a position on the subject, you'd end up with a Pyramid of Macroeconomic Insight and Virtue that looks something like this:
Tier 1...Partisans...who loudly support..."their side"...See all the Democrats who supported Clinton's austerity, and all the Republicans who supported Bush II's profligacy.
Tier 2...Ideologues who are sure that "active government policy" will work well/poorly, even though they can't even explain ...
Tier 3...People who can parrot some basic textbook macroeconomics to support "their side," but who can't answer basic objections - or even accurately parrot the parts of the textbook that conflict with their views.
Tier 4...People who understand a few Undeniable Macroeconomic Truths. For Keynesians, these include: "Nominal wages are sticky," "A lot of unemployment is involuntary," and "Aggregate Demand matters." For anti-Keynesians, these include: "The safety net discourages job search and sustains unrealistic worker expectations," "99 weeks of unemployment insurance makes nominal wages stickier," and "Regular government spending is wasteful, and stimulus spending is worse."...
Tier 5...People who freely acknowledge the whole list of Undeniable Macroeconomic Truths[.]I really like the first three tiers of the pyramid. It's an accurate description of how most people in the world think about macroeconomic issues. We're used to thinking in terms of "sides", of morals and tribes instead of technocratic efficiency. Even Caplan doesn't really question that the divide is all about redistribution, government intervention, social safety nets, rather than about technocratic questions of how to smooth out the business cycle.
But I'm a little uneasy about these "Undeniable Macroeconomic Truths". I'm very leery whenever the word "undeniable" comes up. Let's check em out.
"Nominal wages are sticky": Well, every piece of research I've seen on this subject (for example, this or this) agrees that nominal wages are sticky, at least in the downward direction. But the kind of exogenous stickiness in most "New Keynesian" models doesn't make a lot of sense. So this "undeniable truth" gets only a provisional pass, since the real "stickiness" might not affect the economy in the way "Keynesians" think.
"A lot of unemployment is involuntary": The more you think about models of labor and unemployment, the more you realize that "voluntary" is not a well-defined term. But since many unemployed people definitely seem to think (correctly or incorrectly!) that they can't find any sort of job, I'll give this one a provisional pass as well, with the caveat that "involuntary" is defined in the mind of the unemployed person.
"Aggregate Demand matters": Well, in most recessions, inflation falls. If the economy is described by an AD-AS graph, then yep, that means that AD matters. But if the economy is some more complicated thing, then the whole concept of "aggregate demand" and "aggregate supply" becomes inapplicable. So this "undeniable truth" doesn't hold up; we need to scale this down to "most big recessions are disinflationary", or something like that.
Verdict: Not well-defined.
"The safety net discourages job search and sustains unrealistic worker expectations": What is "the safety net"? Isn't it a bunch of different things? Do all parts of "the safety net" discourage job search and sustain unrealistic expectations, or only some? There may be some "safety net" programs that encourage job search (for example, if the govt. takes care of your invalid mother, you might have more time to look for work). So this "undeniable truth" also gets only a provisional pass, since there are too many elements of the "safety net". If you're just talking about unemployment benefits, then you might want to look at North Carolina, where revocation of the benefits mostly just pushed so-called "unemployed" people to stop pretending to be part of the "labor force". But there really do seem to be some people who start looking for work more seriously as their benefits near expiration (see here and here for evidence). The effect is real but small.
"99 weeks of unemployment insurance makes nominal wages stickier": I have no idea if this is true or not, and I can't find any evidence for or against it. If this is an "undeniable truth", I'd like to know how Caplan discovered it.
"Regular government spending is wasteful, and stimulus spending is worse": What does "wasteful" mean? Not 100% efficient? Well that's probably true of any spending, including spending by a private household (I know I've wasted plenty of money in my life!). How wasteful is "wasteful"? This is not well-defined. As for stimulus spending being more wasteful, this clearly seems not to be an undeniable truth. First of all, if stimulus spending is effective at fighting recessions, shouldn't that effect be counted in the "efficiency" of the spending? And also, it seems plausible that stimulus spending is sometimes more efficient than normal-time spending, even not counting the demand boost! We don't understand how government decision-making works, so it seems possible that in normal times government waste a lot of money on pork, but in recessions, they come under increasing scrutiny, and are forced (or galvanized) into spending money on things that will actually boost the economy. In fact, that would fit with the finding of Rudi Bachmann and Eric Sims (2011), who find that government spending in recessions - and only in recessions - boosts people's confidence. So this "undeniable fact" seems to me to be quite deniable.
So of Caplan's six "undeniable facts", I can only bring myself to endorse three of them, and then only provisionally. At which level of the Pyramid of Macroeconomic Insight and Virtue does this place me, I wonder?
In fact, I kind of want to be off of the pyramid entirely. I hope there's a place for people who just don't see business-cycle debates in ideological terms at all, and who try to separate moral issues, distributional issues, and efficiency issues. I hope there's a technocratic Moses out there, who can lead us away from the land of the pyramids. Let my people go!