Don Boudreaux doesn’t like Keynesian economics:

It’s understandable that many people untutored in economics fall for this nonsense. Just as many untutored in geography naturally think the Earth is flat (looks that way, doesn’t it?), many untutored in economics, upon seeing businesses closing up and workers being laid off, conclude that the problem is inadequate spending (looks that way, doesn’t it?).

This is a mighty strange mode of argument given that Karl Smith and Greg Mankiw and Brad DeLong and Paul Krugman and Ben Bernanke and Doug Elmendorf and Scott Sumner and the late Milton Friedman and all the many, many, many economists working with frameworks in which spending shocks cause output fluctuations clearly aren’t “untutored” in economics. But I want to discuss the other horn of the analogy. People assert all the time that the Earth “looks” flat, but it’s hard to know how to understand this. The Earth looks exactly the way a large roughly spherical object would look precisely because it is a large spherical object. If you sit in a boat on the open ocean, the angle between your eye and the surface of the water changes only very slowly but eventually you hit a horizon line when you can’t see beyond the curvature of the earth. If you move forward, you’ll see that you don’t get any “closer” to the horizon. If the Earth were something other than a large roughly spherical object, it would look different. You’d be able to move close to the horizon, or there’d be an illusion of convexity as the angle between the surface of the water and your eye decreased with distance.

This whole subject is often filled with myth. They still seem to teach some people in school that Christopher Columbus’ voyage was controversial because some people didn’t believe that the world was round. In fact, most cultures that commenced seafaring independently uncovered the fact that the Earth is roughly spherical precisely because the Earth looks like a sphere once you go someplace where you can get the relevant perspective. By the time of Columbus, the spherical nature of the Earth had been well-understood in the West for a couple thousand years. He had trouble attracting support for his voyage because skeptics argued (correctly) that Columbus was vastly underestimating the distance between the western coast of Europe and the eastern coast of China.

Back to economics, it looks like spending shocks can reduce output because spending shocks reduce output. If something else were the case, things would look different. If the Earth were flat, it wouldn’t look like a sphere.

CBO Chief Doug Elmendorf testified today before the Supercommittee and said, sensibly, that “[t]he combination of fiscal policies that would be most effective would be policies that cut taxes or increase spending in the near-term, but over the medium and longer-term move in the opposite direction.” In other words, the sort of thing that President Obama proposed in his jobs bill. Higher deficits in the short term when interest rates are low and the output gap is large, followed by lower deficits down the road when (hopefully) the situation will be different.

Clearly that leaves plenty of room for disagreement around the margins about exactly which measures to adopt. But if members of Congress were willing to broadly accept Elmendorf’s ideas, we’d have an easy time working out a compromise. Instead, we live in a world where compromise is impossible because senior House aides are running around saying “Obama Is On The Ropes; Why Do We Appear Ready To Hand Him A Win?”

A legislative compromise on a bill that has a meaningful positive impact on the economy is, by definition, going to be a “win” for President Obama. It would also be a win for the American people. But if you think that beating Obama is the best thing for the long-term interests of the country, then you’ll quite sensibly work to deny him that win. Thus, no compromise and no recovery.