Paul Krugman complains at the harmful focus on the long-term in US fiscal policy, fighting to solve problems that are too distant to matter, while the need for short-term stimulus is neglected.
Just a conjecture, but I wonder if the longer term issues had been transparently sorted out, and in a way that was likely to hold, politically, perhaps the amount of stimulus that could have been squeezed out of Congress would have been greater.
At least part of the reason for the fiscal hesitancy in the UK in the early phases of the crisis was the burden of a history that the authorities felt bequeathed them with low credibility. Even if you don’t subscribe to this, you might sign up to the idea that this was an argument that provided political cover for inadequate stimulus, while the state was surreptitiously shrunk. Cover that if removed would have forced better policy.
Likewise, harping about structural reform – Krugman’s second complaint about long-termism – is not a distraction. If the fiscal stimulus is being done by one polity in favour of another, it’s what persuades them to unzip the wallet, since they are thereby convinced that the money is going to a better cause, and not to pay for benefits that the electorate in the polity with the deeper pocket don’t get at home. These issues may not be something a benign social planner might prioritise, if such an entity were likely to face policy implementation bottlenecks. But so what?
Given the way the world is, perhaps we should see addressing long-term problems as a way to generate economic and political flexibility to more vigorously respond to short-term needs.