Replying to Jim Kelley: I think I understand what you are saying, if I correctly decode your irony, but I am not sure you completely understand what I am saying. I am not presupposing or arguing that governments should fully smooth the business cycle. To the contrary, I am simply arguing that the government should do nothing to make the cycle worse. That is the sense of my first rule:

“ Rule 1: First, do no harm. The economic equivalent of this maxim is to aim for cyclical neutrality, that is, one that that manages taxes and spending in a way that avoids prolonging expansions or deepening recessions.”

If the government followed this rule the business cycle would continue alive and well. The market information contained in the cycle would be properly delivered to private sector decision makers. Better than that — they would get all of the information contained in the market-generated cycle (or real business cycle, if you adhere to that view) without the pollution caused by things like austerity in times of deep recession or massive tax cuts when the economy is already running hot.