In the long run, of course, when we’re all dead.

I’m scrambling on last-minute course prep, so not much blogging today. But yesterday’s Steve Rattner article, misuse of labor cost data aside, had me thinking about an issue that has had me annoyed ever since this crisis began: the constant efforts on the part of Very Serious People to turn discussions away from monetary and fiscal policy, recessions and sluggish recoveries, to the supposedly more fundamental issues of structural reform and long-term growth. Rattner dismisses the austerity/stimulus debate as “simplistic”; Jeff Sachs calls Keynesian concerns “crude”; many, many people (I’d guess an especially large fraction of those at Davos) are eager to get away from all this deflation stuff and talk about how what they imagine to be, or wish were, the really important issues like Big Data and a world that’s even flatter.

There were people like that during the Great Depression too — dismissing as naive any notion that you could put the unemployed back to work just by spending more, and surely technological unemployment was the real story, and anyway we should be looking at the broad sweep of history and institutions, right?

So, a few points.

First, we’re now in year eight of a massive setback to economic growth, to living standards; US per capita GDP has barely surpassed 2007 levels, while median income is still far below, and Europe is doing much worse. Technology hasn’t retrogressed; institutions haven’t suddenly gotten far worse. This is about the business cycle, and about business cycle policy. If you want to ignore all that, because in the long run it’s the fundamentals that matter, you’re exactly the kind of person Keynes was mocking:

But this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.

Second, more or less Keynesian macroeconomics — the macroeconomics of short-run fluctuations driven by aggregate demand — has worked very well in this long slump. While people were very seriously intoning that it was simplistic and crude to think that those little models could be of any use in a changing world yada yada, macroeconomists were making remarkable, counterintuitive predictions — about inflation (or the lack thereof), about interest rates, about the effects of austerity — that came true and were, if you think about it, an intellectual triumph. Yes, good macro tends to be simple, at least conceptually; but simple and simplistic aren’t the same thing, and by and large people who solemnly declared that things are more complicated than that ended up with lots of egg on their faces.

Third, what’s really striking about all the talk about how long-run structural issues are the real thing is how fuzzy the thinking is. In a world that is short of demand, how, exactly, is structural reform that enhances the supply side (if it does) supposed to solve the problem? If Europe’s problem is lack of competitiveness, why doesn’t a weaker euro solve it — and for that matter, why is Europe as a whole, and Germany in particular in trade surplus? For people who are supposedly so serious, the Very Serious seem remarkably casual about thinking things through.

Finally, I know that people who airily dismiss the austerity debate and all that and demand that we focus on the long run think they’re taking a brave stand; but you know, they aren’t. In fact, they’re ducking the truly hard issues — because let’s face it, stimulus and austerity, QE or not, are politically charged issues where taking any kind of stand will get you attacked. And since they are also important issues, pretending that they aren’t is a form of moral cowardice.