What’s Good for the Goose is Good for the Gander: Rahm’s Doctrine and Mercutio’s Complaint

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In a January 2009 article – “The Big Fix” – in the New York Times Magazine, David Leonhardt introduced a frequently-employed political strategy into popular political culture by identifying it with the new President’s Chief of Staff, Rahm Emanuel:

Two weeks after the election, Rahm Emanuel, Obama’s chief of staff, appeared before an audience of business executives and laid out an idea that Lawrence H. Summers, Obama’s top economic adviser, later described to me as Rahm’s Doctrine. “You never want a serious crisis to go to waste,” Emanuel said. “What I mean by that is that it’s an opportunity to do things you could not do before.” … That’s the crux of the doctrine.

Exploiting a Crisis

Stated less sympathetically, perhaps, the argument seems to be that sensible political strategy calls for exploiting the existence of a crisis by using it as an opportunity (excuse) to pursue policies you want, whether or not they are the best responses to the specific crisis.  The crisis in this case was the worst recession since the Great Depression, and the “opportunities” on the new President’s mind were ambitious policies for health care costs and coverage, energy and climate change, and taxes.

Killing Two Birds with One Stone:  Fixing the Economy and the Environment

At about the same time that Leonhardt’s article appeared in the New York Times Magazine, Elizabeth Kolbert’s profile of green jobs activist Van Jones, “Greening the Ghetto: Can a Remedy Serve for Both Global Warming and Poverty,” was published in The New Yorker.  Kolbert included the following passage:

When I presented Jones’s arguments to Robert Stavins, a professor of business and government at Harvard who studies the economics of environmental regulation, he offered the following analogy: “Let’s say I want to have a dinner party. It’s important that I cook dinner, and I’d also like to take a shower before the guests arrive. You might think, Well, it would be really efficient for me to cook dinner in the shower. But it turns out that if I try that I’m not going to get very clean and it’s not going to be a very good dinner. And that is an illustration of the fact that it is not always best to try to address two challenges with what in the policy world we call a single policy instrument.”

I elaborated on that analogy and explained my concerns about the “greening of the economic stimulus package” (one element of the White House attempt “not to let a serious crisis go to waste”) in my essay on “Green Jobs” at this blog in March, 2009.

Two activities — each with a sensible purpose — can be very effective if done separately, but sometimes combining them means that one does a poor job with one, the other, or even both.  In the policy world, such dual-purpose policy instruments are sometimes a good, even great idea, but other times, they are not. Whether trying to kill two birds with one stone makes sense depends upon the proximity of the birds, the weapon being used, and the accuracy of the stoner.  In the real world of important policy challenges — such as environmental degradation and economic recession — these are empirical questions and need to be examined case by case.

In this case, it was (and is) important to separate the two issues:  (1) environmental degradation (which in economic terms calls for pricing the externality, i.e. getting relative prices right); and (2) the economic downturn (which calls for increasing and maintaining aggregate demand in the economy).  Environmental regulations address the first issue, while broad-based fiscal and/or monetary policies address the second.  So, in economic terms, the imperative is to get relative prices right (internalize externalities), and avoid tilting an economic stimulus package toward any particular type of activity (such as “green jobs”).

I argued in my March, 2009 essay (and argue now) that addressing the worst economic recession in generations called for the most effective economic stimulus package that could be devised, not a stimulus package that was diminished in effectiveness through excessive bells and whistles meant to address a myriad of other (legitimate) social concerns.  (And, likewise, getting serious about global climate change would require the enactment and implementation of meaningful, dedicated climate policies.)

By the way, I do not wish to add any fuel to the current political fire raging over the bankruptcy of Solyndra, the solar power manufacturer supported by a $500 million Federal loan guarantee under the stimulus package.  The failure of Solyndra was largely due to the collapse of silicon prices and the consequent increased competitiveness of conventional solar cell technologies.  I will leave it to others to debate whether the government should have seen this coming.

My point rather is that there is a strong counterargument to Rahm’s Doctrine, and that counterargument is – in the words again of David Leonhardt – “hardly trivial — namely, that the financial crisis is so serious that the administration shouldn’t distract itself with other matters. That is a risk, as is the additional piling on of debt for investments that might not bear fruit for a long while.”

That’s the Goose – What About the Gander?

Do not think for a moment that only Democrats are quick to subscribe to and employ Rahm’s Doctrine.  On the contrary, Republicans – particularly the ultra-conservative ones that are coming to dominate the Party – have recently embraced it with breathtaking enthusiasm by exploiting national concerns about the sluggish economy and stubbornly high levels of unemployment in order to pursue their anti-regulatory agenda and focused attack on the U.S. Environmental Protection Agency.

As I have also written at this blog (“Good News from the Regulatory Front,” April 25, 2011), the blanket characterization of environmental regulations as “job killers” is simply inconsistent with decades of economic research.  In the short term, new environmental regulations can have either positive or negative effects on employment in particular sectors, but in the long term, their employment impacts are trivial when compared with those of the overall set of factors that affect national employment levels.  Attacking EPA “to save jobs” is a shameful attempt to exploit economic fears in pursuit of an ideological agenda (whether or not that agenda has social merit).

Enter Mercutio

So, as is so often the case, this economist (like many – maybe most – others) disagrees with the economic arguments put forward by both sides in the political world.  Talking about “job-killing environmental regulations” is dishonest, and no more than another cynical application of Rahm’s Doctrine.  But the same must be said about the “greening of the stimulus,” and the ongoing, bloated claims about “clean energy jobs.”  As usual, those of us in the moderate middle are left to echo Mercutio’s censure:  “A plague o’ both your houses!”

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2 Responses to What’s Good for the Goose is Good for the Gander: Rahm’s Doctrine and Mercutio’s Complaint

  1. Sylvia Cornet says:

    Dear Professor Robert Stavins

    ‘Thanks for this brilliant article and wish you the best.

    Allow me two comments – very humbly – please.
    I) ” Who will guard the guardians ” ?
    How can politicians, business men, and all kind of responsible be of so few ethics when our society has so much resource to show an educated and civilised society ? How can responsible of world business and organisation be of such ignorance to the fields of knowledges as for instance the Nobel Prize of Economics ?
    How can the demeanor of the elite – who should feel responsible for other people less gifted or less lucky or less skilled or poor health – proof so mean ?
    How can a human organisation result in so few with so much technology and ways to perform fairly ?
    What are the aims of a society : isn’t it life and preserving the Nature as this
    is ” God ” s gift and a responsibility offered to our specy ?
    As my favourite author allow me very humbly recall
    the words of Professor Leonid HURWICZ –
    who got the Nobel prize only 6 months before his death after a life pursuing the same aim to ” open ” society and markets – Who will guard the guardians ?

    II) ” People who bring dignity to humankind ”
    Complex problems of the world and of the nations can be solved more simply when they are considered local and with the mathematical method of numbering *(* as we already talked this method together Professor Robert Stavins) .

    In a city : How many
    a) real estate in leprosy are seen in a city ?
    b) head hunters and profilers are there in a city ?
    c) unemployed people up to be profiled as
    i) ” entrepreneur ” ?
    ii) ” organisers ” ?
    iii) ” builders ” ?
    iv) etc for any type of profession needed…
    Would it be then that difficult to set up companies to employ those people
    transform cities into fine and well painted and comfortable places and within building homes for everyone ; and provide a work normally paid with everyone…

    What about the fierce and graceful dignity of our ” Ancients ” who pride to have a beautiful country ; with beautiful homes and beautiful gardens and beautiful kids well combed with fine clothes laughing and playing after their education day …

    Are’nt we facing the horrible pictures of part of cities resembling ” extermination
    camps “… Am not the only one who thinks of this.
    I just try the courage to tell it frankly hoping ETHIC will come to people in our time and as Balance has to get equilibrated for a better life for all people ; each along his(her) rank and all in respect and respectful.

    (II) This expression comes from anoter famous thinker and Nobel prize of peace : Professor Martin Luther King.
    Thanks for your attention.

  2. GA says:

    You state that less sympathetically, the Emanuel doctrine is “… that sensible political strategy calls for exploiting the existence of a crisis by using it as an opportunity (excuse) to pursue policies you want.”

    The more sympathetic interpretation/expression of this would be “…there are policies that all concerned know would be beneficial, but can’t agree on in non-crisis times.”

    I don’t disagree with your comments about green energy (although I think it would be possible to design a package that hit both targets much more effectively), but I think the thrust of the comment at the time was more to the effect that the Great Fear of the crisis could conceivably motivate all concerned to adopt better policies – precisely because the usual paralysis of politics is disrupted and compromise required.

    This would be particularly apt – if true – for policies where both sides (at least their respective mainstreams) – have policies that they each tend to favour when they are in office, but not out of office. That moment, however, seems to have passed, if it ever had existed.

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