The Timidity Trap
By Paul Krugman

There don’t seem to be any major economic crises underway right this moment, and policy makers in many places are patting themselves on the back. In Europe, for example, they’re crowing about Spain’s recovery: the country seems set to grow at least twice as fast this year as previously forecast.

Unfortunately, that means growth of 1 percent, versus 0.5 percent, in a deeply depressed economy with 55 percent youth unemployment. The fact that this can be considered good news just goes to show how accustomed we’ve grown to terrible economic conditions. We’re doing worse than anyone could have imagined a few years ago, yet people seem increasingly to be accepting this miserable situation as the new normal.

How did this happen? There were multiple reasons, of course. But I’ve been thinking about this question a lot lately, in part because I’ve been asked to discuss a new assessment of Japan’s efforts to break out of its deflation trap. And I’d argue that an important source of failure was what I’ve taken to calling the timidity trap — the consistent tendency of policy makers who have the right ideas in principle to go for half-measures in practice, and the way this timidity ends up backfiring, politically and even economically.

In other words, Yeats had it right: the best lack all conviction, while the worst are full of passionate intensity.

About the worst: If you’ve been following economic debates these past few years, you know that both America and Europe have powerful pain caucuses — influential groups fiercely opposed to any policy that might put the unemployed back to work. There are some important differences between the U.S. and European pain caucuses, but both now have truly impressive track records of being always wrong, never in doubt.

Thus, in America, we have a faction both on Wall Street and in Congress that has spent five years and more issuing lurid warnings about runaway inflation and soaring interest rates. You might think that the failure of any of these dire predictions to come true would inspire some second thoughts, but, after all these years, the same people are still being invited to testify, and are still saying the same things.

Meanwhile, in Europe, four years have passed since the Continent turned to harsh austerity programs. The architects of these programs told us not to worry about adverse impacts on jobs and growth — the economic effects would be positive, because austerity would inspire confidence. Needless to say, the confidence fairy never appeared, and the economic and social price has been immense. But no matter: all the serious people say that the beatings must continue until morale improves.

So what has been the response of the good guys?

For there are good guys out there, people who haven’t bought into the notion that nothing can or should be done about mass unemployment. The Obama administration’s heart — or, at any rate, its economic model — is in the right place. The Federal Reserve has pushed back against the springtime-for-Weimar, inflation-is-coming crowd. The International Monetary Fund has put out research debunking claims that austerity is painless. But these good guys never seem willing to go all-in on their beliefs.

The classic example is the Obama stimulus, which was obviously underpowered given the economy’s dire straits. That’s not 20/20 hindsight. Some of us warned right from the beginning that the plan would be inadequate — and that because it was being oversold, the persistence of high unemployment would end up discrediting the whole idea of stimulus in the public mind. And so it proved.

What’s not as well known is that the Fed has, in its own way, done the same thing. From the start, monetary officials ruled out the kinds of monetary policies most likely to work — in particular, anything that might signal a willingness to tolerate somewhat higher inflation, at least temporarily. As a result, the policies they have followed have fallen short of hopes, and ended up leaving the impression that nothing much can be done.

And the same may be true even in Japan — the case that motivated this article. Japan has made a radical break with past policies, finally adopting the kind of aggressive monetary stimulus Western economists have been urging for 15 years and more. Yet there’s still a diffidence about the whole business, a tendency to set things like inflation targets lower than the situation really demands. And this increases the risk that Japan will fail to achieve “liftoff” — that the boost it gets from the new policies won’t be enough to really break free from deflation.

You might ask why the good guys have been so timid, the bad guys so self-confident. I suspect that the answer has a lot to do with class interests. But that will have to be a subject for another column.

美日央行決策 落入「膽怯陷阱」

目前似乎沒有嚴重經濟危機在蔓延中，各國決策者對此自我感覺良好。舉個例，歐洲正為了西班牙經濟復甦洋洋得意，宣稱今年該國經濟成長率至少會是原估的兩倍。

可惜這只代表成長率預測從0.5%增至1%，伴隨高達55%的國內青年失業率。這也能被當成好消息，顯示我們對糟糕的經濟情勢已高度習以為常。目前的市況比幾年前人們想像的更惡劣，但大家似乎開始把這種悲慘處境當成新常態。

怎麼會這樣？原因有很多，照我看這一切源自膽怯陷阱－－原則上理念正確的決策官員，實務上卻總是傾向採取權宜之計，這種畏首畏尾的態度最後在政治、甚至經濟上造成反效果。

詩人葉慈說得對：好人全無信念，而壞人滿是激情。

先來談談壞人。觀察過去幾年的經濟論辯，就會發現歐美都有強大的「痛苦集團」（Pain Caucus），這些充滿影響力的團體無所不用其極反對有助改善失業的各種政策。

美國華爾街和國會也有一個小團體，五年多來不斷對通膨失控和利率攀升發出駭人警告。你以為這些預測失準能讓他們重新斟酌發言，但過了這些年，同一群人仍受邀到國會作證，繼續老調重彈。

與此同時，歐洲採取嚴厲撙節措施已過了四年。這些方案的擘劃者要我們不必擔憂就業與經濟成長受衝擊，反而會帶來正面經濟效益，因為撙節能提振信心。不消說，市場幾乎從未浮現信心，社會和經濟都付出龐大代價。即便如此，權威人士仍堅稱必須持續推動撙節，直到市場信心好轉為止。

那麼好人有何反應？這群好人仍堅信必須對大規模失業有所作為。歐巴馬政府的經濟模型切中需求；聯準會（Fed）擊退通膨復熾的聲浪；國際貨幣基金（IMF）也發布研究報告，破除撙節無害的說法。但這些好人似乎從未全力以赴，捍衛理念。

最經典的例子是歐巴馬的刺激政策，從經濟窘迫就看得出政策明顯不夠力。我們很早就警告這個計畫將會捉襟見肘，但由於被過度吹捧，失業率居高不下終將導致刺激政策的評價大打折扣。果然一語成讖。

Fed也步上相同後塵。決策官員從一開始就排除可能最有效的貨幣政策，特別是任何暗示願意容忍較高通膨的作法。因此，他們後續推動的政策多半令市場失望，最後留給外界幾乎無計可施的印象。

就連日本的情況也差不多。日本大刀闊斧革新政策，終於效法西方採取大膽的貨幣刺激措施，但是對這整件事仍然缺乏自信，傾向把通膨目標這類標準設定得比實際需求低。這會使日本經濟無法起飛的風險攀升。

或許你會問，好人為何這麼膽小，而壞人卻自信滿滿？我猜答案多半和階級利益有關。但這需要另闢專欄詳述。

原文參照：
http://www.nytimes.com/2014/03/21/opinion/krugman-the-timidity-trap.html

紐約時報中文版翻譯：
http://cn.nytimes.com/opinion/20140325/c25krugman/zh-hant/

2014-03-22．經濟日報．A7．國際焦點．編譯莊雅婷