Just a few years ago, Vox was a big cheerleader for standard economic theory — but that appears to be no more. It’s almost as if they didn’t believe in it because it was – and is – standard economic theory, but because it was convenient at the time, and now they’re not quite sure whether it is.
The question they ask is this: President Joe Biden has suggested that bringing the deficit down might reduce inflation. Vox then goes on to ponder whether this might be so. The gap, the missing part, even the deficit in their pondering, is that the correct answer is “yes, of course”.
“The president says reducing the deficit will lower inflation. Will it?”
Think back a year: Vox and everyone else on the left was shouting that we just must have Build Back Better. The economy needed stimulus, so we had to blow out the deficit and just spend! So too a year earlier. And back a decade and a bit – before Vox but using the example of the folk who founded it – then the correct response to the Great Financial Crash was we have a recession, we need stimulus, blow out that deficit.
In standard economics – and this really is, the arguments are about how much for how long, when do we wind it all in again, not whether this is the correct emergency response – this is correct too. But that standard economics does say that this is a two-way argument. When there’s inflation – the opposite of a recession in one way – then the correct answer is to reduce the deficit, to curb back government spending and generosity.
Yet here we’ve got Vox wanting to use only one side of that argument. When it’s an excuse for the government to spend more, then great. But when the very same theory, the very same standard economics, says that government should spend less, then we get a great deal of chin-stroking about whether it might not work.
What’s more, Vox doesn’t even mention that this is the same argument. They’ve entirely memory-holed their own support for an expanded deficit – or, heavens to Betsy, they don’t even understand the connection.
Vox markets itself as “explaining the news” which is a noble goal. They rank just inside the top 100 news sites as they do so and gain some 20 million visits a month. We do tend to think that explaining works better if it is actually explained. That the flip side of arguing for stimulus when there’s a recession is to do so for a reduced deficit in a time of inflation.
There is, of course, the awful possibility that Vox never has actually believed the economics here. Rather, something that expands government is good, something that curbs it is bad. But we think we’d prefer to be polite and just suggest that they’ve just not realized the connection. A falling deficit will reduce inflation in exactly the same way as a stimulus will reduce a recession – they’re the same argument.