The term "conventional wisdom" is often applied to describe a widely-held point of view with which the writer disagrees. But I can't bring myself to apply that term to the Manhattan orthodoxy, because "wisdom" implies that there was at least some grasp of the facts and some application of thought to arrive at the conventional position. A better term for the Manhattan orthodoxy is "conventional ignorance."
The funny thing about Manhattan conventional ignorance is that its purveyors are often very smart people. They make successful careers dealing with complex concepts and solving difficult problems. That leaves little time for studying history or thinking about public policy, but others in the elite crowd are already doing that, and they all agree on all essential points. So it's really easy just to conform.
Yesterday one of my partners, whose field is tax, invited me to the annual lunch of the Tax Section of the New York State Bar Association. This was a very large affair, perhaps 3,000 attendees, held in the large Grand Ballroom of the New York Hilton. It would be fair to say that all the top tax lawyers in New York were there.
The draw was a speech by a guy named Edward Kleinbard. Perhaps you haven't heard of him, but he's a bona fide big name in the field of tax law. After many years as a top partner at the Cleary Gottleib firm, he went off to become Chief of Staff of the Joint Committee on Taxation of the Congress (OK, my radar should have been alerted by that one), and then left there to become a professor at USC Gould School of Law. My colleague personally knew Kleinbard and described him as a "really smart guy." The advertised topic was "budget and tax policy."
Well, this guy may know more than anybody about reverse K squared tax shelters or the language of the new ObamaCare tax provisions, but this speech had nothing to do with his actual expertise. He had decided to branch out into being a public policy guru, with the compass of the New York Times editorial page and Obama campaign talking points to guide him. This speech was to be a high level summary of Manhattan conventional ignorance.
Title of the speech: Why Tax Revenues Must Rise. Already I knew I was in trouble. Well, why can't spending be cut instead? In summary the answer was that spending is just a law of nature and there's nothing that can be done about it. I made notes of a few of the key quotes:
Spending cuts just aren't going to happen.
You can't suck too many dollars out of the economy too quickly.
Spending just cannot be cut more.
The sharp austerity path is not a great idea. Most of us thought that was resolved in the Great Depression.
There you have the instinctive and ignorant acceptance of the official narrative that the Great Depression was cured by government spending. He is blissfully unaware that it was in fact spending cuts well in excess of 50% of the total that set off the postwar boom. Here is a link to one of my prior posts on this, with further links to the important David Henderson article about the postwar spending cuts and subsequent boom.
Cut discretionary spending? That's already been "cut to the bone." There was no specific mention of why the hundreds of billions of dollars of annual spending for things from agriculture subsidies, to education, to green energy boondoggles, to the Commerce Department, to the Labor Department, to the TSA, to disaster relief, to the drug war, etc., etc., cannot be cut or, in fact, eliminated.
Cut entitlements? That will take decades. We can't have "medical costs visited cruelly out of the direct pockets of Americans." Did he actually say that? Yes.
I won't go on. It's too painful. Three thousand people or so - the best and brightest in New York tax law - sat there nodding their heads. At the end of the speech, there was a little polite applause. I booed, but I was off in a corner in a room way too big for many people to hear me.
Of course, the speech actually demonstrated the fundamental argument for refusing to raise any taxes in any respect, because providing any additional revenue just gives added credence to the ridiculous argument that spending cannot be cut. Kleinbard cannot justify that, and neither can anyone else. As soon as someone actually challenges the "it's just a law of nature" argument, the whole structure crumbles.