Noah Smith lets his freak/scientist flag fly. Says he can't conform to tribal thought because he has to follow scientific principals.
Sounds good, and I agree with a lot of what he's saying.
But then he lets fly with this:
"RBC models say that small government is good."
Where to start?
Real Business Cycle models do not "speak" with one voice.
Most people who advocate for small government wouldn't know an RBC model if it bit them it the butt.
Very few people actually use RBC models in this day and age. Virtually all models now have monetary sectors and some form of monetary non-neutrality and are thus referred to more generally as DSGE (dynamic, stochastic, general equilibrium) models. RBC theory is a useful teaching tool, but I don't know anyone using it as a guide to policy.
I have never seen in any RBC or DSGE paper I've read (which easily would be 100+ papers) a statement like "thus we see small government raises welfare". Perhaps Noah is inferring his statement from the fact that some early RBC models didn't have government in them? Or that some early RBC models argued that business cycle fluctuations were optimal? I'd be very curious to see the money quotes to support Noah's statement.
If I do think to think about some type of generic RBC model, the government could easily have a large and important role as a funder of basic research leading to improved technological progress.