Dear Deirdre, Humberto, and others,
	I like Deirdre's broad-gauged approach, but I wonder if there isn't
something in between the spirit-killing templates of modern grad training
and the whole daunting span of liberal arts, which few but a prodigy and
polymath like McCloskey could master. It might be called "Political
Economy", and show the interplay of academic thinking with applied public
policy. Herewith is a small sample, an excerpt plucked from the middle of an
article ...

" You might think that government borrowing would drain capital from private
industry, but people awoke to that later, when they labeled it
?Crowding-Out?. In the ?Soaring Sixties? the U.S. Treasury could borrow
indefinitely without even nicking its perfect credit rating. ?Crowding-Out?
was no problem because the Fed, by creating new money, could buy U.S. bonds
without depriving private business. The Council of Economic Advisers (CEA)
under Walter Heller and then Gardner Ackley, bursting with confidence,
declared they controlled demand so well they could ?fine-tune? it, the
ultimate step in demand management. Perpetual ?Economic Growth? through
perpetual Stimulus became the reigning fashion and mindset. Chirps of
protest from fledgling environmentalists and conservationists they put down
with condescension and apparent ease (deceptive ease, as it turned out).
Heller tried to coopt environmentalists by promising them scraps from the
table of ?economic growth?.

Samuelson passed the mitre to Heller, who put in practice a spectacularly
good idea that was standard macro-economic code in those days, and later
tragically discarded and forgotten. He distinguished clearly between NET new
investing and GROSS investing ? the former creates capital and makes jobs,
while the latter includes buying existing assets like lands, merely
shuffling them from one owner to another without directly animating any work
of society or creating any income. The national accounts, taught to every
student of macro-economics, drummed this important difference in. Keynes,
with all his faults, had defined ?investment? to mean only NET investing, so
it wasn?t even necessary to specify the ?net? part. 

Heller devised new creative means like the Investment Tax Credit (ITC) and
accelerated depreciation to lower the effective income-tax rate on new
investing and rev it up. These were the income-tax equivalents of exempting
new capital from the property tax, and may be traced to the works of
Heller?s Georgist mentor, Professor John R. Commons of Wisconsin. They were
a form, if only a mite, of True Stimulus, using Federal tools."

Mason Gaffney