The disappointing moment of this piece is when Delong blames it all on the Republicans. It's that phony narrative that keeps the corrupt Democratic Party establishment in power and in partnership with the Republicans. This is a two-party problem, very much including the Clintons. It's my good-ole Democratic Party Senator Chuck Schumer, for example, who is the strongest defender of the Carried Interest boondoggle, but the list of Democratic-Party supported abuses is a mile long (yes, less egregious than the Republicans, but without any excuses nonetheless).

My commentary raised a pertinent question: How does Paul Krugman reconcile his dire forecasts in 2013 (e.g., here) about the effects of deep US deficit reduction with rapid employment growth in 2013-4? From December 2012 to December 2014, the US economy added 4.2 million jobs, even as the deficit fell sharply (as did the cyclically adjusted deficit). Recent GDP growth also seems to be relatively robust. Krugman has so far declined to engage in this discussion. Instead, he has responded with a scatter plot about Europe (!) and a snide swipe at me that linked to a misquotation of my commentary. I believe a more serious discussion is required, because I think the stakes in this debate are real and consequential. The “stimulus” approach championed by Krugman has for a long time seemed to me to be a misallocation of political capital and public finances. More effective would be a long-term progressive fiscal agenda built not on tax cuts and temporary transfers but on long-term public investment in education, job skills, infrastructure, and low-carbon energy, combined with added tax revenues. Many readers respond that, sure, that would be fine, too – and it’s just what Krugman has advocated. Not quite so. Krugman has repeatedly emphasized short-run aggregate-demand management rather than long-term public-investment plans (though he’s not opposed to long-term investments). There is a big difference between the two approaches to budget policy, even if it is not well recognized in the US debate. Moreover, the political upheavals surrounding the 2009-10 stimulus (with roughly $800 billion of spending rammed through Congress in a few weeks, over vociferous Republican opposition) predictably sapped the Obama administration’s political capital, making any further longer-term public investment plans, beyond health-care reform, all but impossible. Sadly, of the $800 billion in stimulus spending, well under half was for public investments (most of which was short term). The US economy’s current upturn demonstrates that recovery did not, and does not, depend on short-term fiscal stimulus. Monetary policy has been more consequential than fiscal policy for the recovery. Yet the quality of the recovery is poor, because it has not been bolstered by long-term fiscal policies. GDP is growing fairly rapidly, and jobs are being created; but income inequality is exceedingly high, wages are stagnant, and, worst of all, the government is bereft of discretionary resources for new long-term investments. The stimulus came and went, while the main fiscal outcome has been tax cuts rendered permanent as part of various White House-Congressional budget deals. Let us discuss the lessons of the post-2008 cycle carefully. We can learn a lot, and improve long-term progressive policy design and implementation. As I wrote in my commentary, Krugman and I are on the same side of the ideological divide. We both favor a long-term progressive fiscal agenda. It is our assessments of short-run fiscal policy and fiscal politics that have differed.

Brad Delong insists on the reliability of low-cost, high-impact fiscal multipliers. That seems very far-fetched. The original US stimulus in 2009-10 underperformed the CBO growth forecasts at the time. SInce 2012 the sharp US fiscal contraction has been accompanied by accelerating and now high growth and falling unemployment, not the "depression" that Krugman constantly warned about. Other countries also abandoned the Keynesian approach in the past 3 years, either because they hit capital-market constraints or because they decided that the build-up of public debt was simply not worth the meager (if any) stimulus results. Yes, I've followed the events carefully, and most countries and certainly the US have backed away from the belief in low-cost and highly reliable large Keynesian multipliers. I should add that I have long favored higher, not lower, government investments, but have done so from a long-term growth and equity perspective, not short-term stimulus point of view. The (so-called) "Keynesian" emphasis on stimulus distracted the US political process badly from long-term investment planning and finance, and led to the easy and repeated resort (even by the so-called progressives!) to tax cuts rather than the long-term tax increases that we really need for long-term growth, social equity, and environmental sustainability. Finally, let me add that so-called Keynesianism has very little to do with the real Keynes, as I'm sure that Brad DeLong, an avid reader of economic history, knows very well. Keynes was far more clever than to believe in simplistic stable multipliers, and he advocated budget balance over the cycle (as is well known), and did not himself advocate fiscal expansion in the UK once the unemployment rate had declined to (around) 11 percent in 1936-7.

In his review of Nina Munk’s error-filled and out-of-date book, Bill Gates oddly abandons the rigorous approach to measurement and evaluation that defines his foundation’s invaluable work. He simply accepts Munk’s assertion that the Millennium Villages Project – an ongoing development project across more than 20 African countries – has failed. In fact, it is flourishing. This credulousness is puzzling. Munk’s book covers only a sliver of the first half of a ten-year project, and only two of 12 villages. And she never “lived for extended periods in the Millennium Villages.” Munk spent an average of around six days per year – around 36 days over six years – actually visiting the villages, and usually at a stretch of 2-3 days. Moreover, she came to the story as a reporter for the magazine Vanity Fair, with no training or experience in public health, agronomy, economics, or African development. Worse, Munk’s observations frequently seem to have been, at the very least, greatly exaggerated for narrative effect. Does Bill Gates really believe that I advocated specific crops without worrying about whether there was a market for them, or that I failed to consider national taxation in my ongoing advice to government leaders? Moreover, the agricultural strategies and choices in the MVP have been led by African agronomists, some of the very best in Africa – often working hand in hand with Bill’s own agricultural staff in the Alliance for a Green Revolution in Africa (AGRA). Bill will be happy to know that the MVP will be properly and professionally evaluated next year – on time at its conclusion (and at the end of the Millennium Development Goals in 2015). The assessment will be based on the very considerable data that have been collected over the past decade, and on extensive new survey data that will be collected in 2015. Moreover, the evaluation will include comparisons with areas surrounding the Millennium Villages. In fact, I hope that the Bill & Melinda Gates Foundation will help to carry out the detailed, independently supervised survey work needed for a full evaluation of this complex project. Let me provide some more good news, based on the detailed data on community health delivery, morbidity (disease), and mortality that the MVP collects each month. Mortality rates are down sharply in the Millennium Villages. In fact, the current evidence, to be examined in greater detail next year, suggests that the bold goal of reducing under-five mortality rates to below 30 deaths per 1,000 births has been achieved or is within reach by 2015, and at a remarkably low cost to the health system. Recently, one of the Gates Foundation’s senior staff members visited the Millennium Village site in northern Nigeria. Afterwards, he confirmed to me personally that he and his team were deeply impressed by what they saw of the Millennium Village health system in operation. So let me take this opportunity to reiterate a challenge that I have posed to Bill. He can pick any district in rural Africa, and our team will work with the local communities using the Millennium Village health approach to reduce the under-five mortality rate to below 30/1,000 – a rate characteristic of many middle-income countries – at an annual health-sector cost of just $60 per person. And we will do it in five years or less. That success, I believe, would help Bill and others to recognize the remarkable value of investing in low-cost rural health systems that follow the design principles of the Millennium Village Project. Finally, given concerns, shared by Bill, about the MVP’s sustainability and scalability, it is no small matter that host governments are strong advocates of the approach. These governments’ leaders have seen the Millennium Villages day in and day out over almost a decade. They are putting their own money and policies behind expanded implementation of the MVP’s guiding concepts. For example, Nigeria has used the MVP concepts for national-scale delivery of health and education services in all 774 of the country’s Local Government Areas. Governments across the region have taken over $100 million in financing from the Islamic Development Bank to scale up the MVP concepts themselves. Around a dozen countries are now starting or have approached the Millennium Village Project to help them start their own Millennium Villages. And the Pan African Youth Leadership Network, Africa’s own young people, recently visited the Millennium Village in Senegal, and requested the support of the MVP to expand the Millennium Village Project’s techniques and strategies in their home countries and regions. This spread of the Millennium Village approach throughout Africa shows that African political and community leaders consider the MVP’s methods, strategies, and systems to be highly useful in combating poverty in rural Africa. Nina Munk’s book is out of date and misses the mark. I invite Bill Gates to visit one or more Millennium Village sites on an upcoming trip to Africa to see first hand why the approach is of such practical interest across the continent.