Here’s Harvard‘s Larry Summers in this morning’s Washington Post;

“This is a dangerous cycle whatever your economic beliefs. Doctors who prescribe antibiotics warn their patients that they must complete the full course even if they feel much better quickly. Otherwise, they risk a recurrence of illness and, worse, the development of more antibiotic resistance. So it is with economic policy. Advocates of orthodoxy prize consistency. Those like me whose economic thinking emphasizes promoting demand worry that expansionary policies carried out for too short a time prove insufficient to kick-start growth while discrediting their own efficacy and reducing confidence.”

I find Dr. Summers’ antibiotic analogy, in one respect, to be right on the money—in that policymakers view the economy like a patient in need of medicine—otherwise I think he’s entirely missing the mark. A medicine analogy does work well, however more-so for those whose “economic thinking” doesn’t emphasize the government “promoting demand”:

After injecting several hundred billion of fiscal stimulus, and two rounds of QE (in the $trillions)—the patient is barely out of bed. And since none of that has worked, policymakers, fearing another code red—and undyingly committed to their diagnosis—have installed onto the patient a pump that will infuse 40 billion units of their antibiotic, per month, for, how long? Oh that’s right, this prescription comes with unlimited refills.

I wonder at what point, if ever, Dr. Summers would entertain the possibility that perhaps we’re dealing with something more akin to a virus than a bacteria. That all the meds are serving only to compromise the patient’s immune system—that the slow recovery is the result of policymakers’ desperate measures to get the patient up and running without allowing the virus to run its course.

Links to articles relating to this message:

Bloody Keynesians by Don Boudreaux
Reducing Real Output by Increasing Federal Spending by Dwight Lee
The Thing About Coffee (my post from yesterday)
Between the Proverbial Rock and a Hard Place
No Magic Pill (speaks to the stock market, but it’s the same basic message)