The only absolute here is that Wolfers has no clue what would happen under a President Sanders. Though we do know what the last thirty years of economic policy has created.
25
And so, a week after a damning opinion piece from the NYT of Friedman's study (really in effect a veiled attack of Sanders) claiming the need for evidence-based decision making. At the time of the opinion piece there was only a letter cited from four prominent (no mention of biased) economists and they had not yet analyzed the study, they only thought the results too favorable. So, the opinion piece was an ad hominem attack on Sanders via Friedman--no hard data (no evidence in an opinion attacking the lack of evidence). Now, a week later one of those prominent economists finds an assumption that might be inconsistent with one theory, though not inconsistent with another.
Meanwhile, for those who only read headlines Sanders has been slammed prior to the Nevada democratic caucuses. This article is buried and slanted as well.
For a fair overview of the study please see the following:The Sanders ‘Economic Plan’ Controversy
http://www.huffingtonpost.com/dave-johnson/the-sanders-economic-plan_b_9...
Meanwhile, for those who only read headlines Sanders has been slammed prior to the Nevada democratic caucuses. This article is buried and slanted as well.
For a fair overview of the study please see the following:The Sanders ‘Economic Plan’ Controversy
http://www.huffingtonpost.com/dave-johnson/the-sanders-economic-plan_b_9...
11
For all the effort by the NYT to pick apart Friedman's work for its faults, you'd think they could manage a little bit of counter-balance by writing a piece about some of its merits. You have a plethora of top economists out there who have backed Friedman and Sanders. Why not give them an equal platform to defend themselves?
17
The only source I can find linking Friedman's growth forecast to the Sanders campaign is a single piece in the Pittsburgh Post Gazette. Exactly six sentences can be attributed to the Sanders campaign. And rather than "embracing" or "lavishly praising" Friedman's math, Warren Gunnels (Sanders' policy advisor) "hailed the report’s finding that the proposals are feasible". What's wrong with that? Friedman's explosive growth projections don't have to be right for the Sanders plans to simply be feasible - a much lower bar. And how should a campaign react to an overly optimistic analysis of its platform? By saying that it's complete garbage? Imagine the commentary that would have followed...
But here's a question that's not being addressed: are Sanders' plans in fact feasible? Gunnels invites more people to look into them. Economists who write for the New York Times could do just that, and educate readers by giving us honest analyses of the candidates' platforms. Or they could use their columns for hackery. Election years are telling.
But here's a question that's not being addressed: are Sanders' plans in fact feasible? Gunnels invites more people to look into them. Economists who write for the New York Times could do just that, and educate readers by giving us honest analyses of the candidates' platforms. Or they could use their columns for hackery. Election years are telling.
9
Bernie keeps asking: "Who the heck knows this crazy Friedman guy?" But the Clintonites keep repeating: "Economic Analysis Embraced by Bernie Sanders." One must conclude: "Tabloid Methods Embraced by the NYT Propaganda."
22
Maybe it's interesting to discuss Bernie's plan. We could ask Paul Ryan what he thinks and how soon the House will pass it.
People who feel the Bern always ignore that little detail.
People who feel the Bern always ignore that little detail.
14
Hillary's supporters love her despite her flaws and baggage because we know she will fight for what this country needs by bringing all of our voices to the table. Bernie's supporters love him despite his improbable ideas because he is a wonderful human, the embodiment of empathy, a bellwether. Scholars and journalists are doing an exceptional job critiquing both. Let's all of us, both sides, stop pretending they're biased just for raising questions.
12
Am I missing something, or is it this article and the Romers' way of thinking? What Sanders is proposing sounds to me like not just a temporary stimulus to get dollars moving, but an investment in the actual wealth and wealth-producing capacity of our country. When people have access to health care and education, when infrastructure is built and maintained, when we preserve and heal our environment, and when we invest more in nurturing people than jailing or killing them, we create the conditions for the long-term health and prosperity of our nation. As the old saying in the health food business goes, if you think being healthy is expensive, try being sick. We've been a sick country. It doesn't work.
44
Theoretical models should be supplemented by real-life historical examples. In cases where no experiment is possible, science resorts to natural experiments: looking at how actual cases that approximate given conditions have turned out. Sanders' economic model, or its approximation, has been tried in other countries. The results are mixed. The Scandinavian countries are doing well, though not as well as many believe, never having set a foot there. Other European countries (Greece, Spain, Italy) are in recession. Germany has a record of declining growth. So does the UK. This may not be too bad if you are wiling to have high unemployment, high taxation and a strong welfare state, though this combination comes with a social cost. The problem, though, is that Sanders' rhetoric veers off into real socialism, the kind that has destroyed Venezuela and has been roundly rejected by all the peoples unlucky enough to live under its rule. Commenters here paint rosy utopian pictures instead of looking at what actually happens when quasi-socialist policies are implemented. Why does America always try to reinvent the wheel?
8
Um, GDP growth per hours worked has exceeded hours in Denmark since at least the 1970's. I am sure you will fully recant your worldview now...
http://www.demos.org/blog/10/20/15/united-states-vs-denmark-17-charts
http://www.demos.org/blog/10/20/15/united-states-vs-denmark-17-charts
10
So what I don't get about this article is that it seems to be primarily focused on pointing out that the effects of a temporary stimulus are temporary. That seems logical enough and I don't really know anyone who would disagree with that.
The problem is, Bernie Sanders isn't proposing a temporary stimulus. He clearly intends for his proposals to be permanent. So the article should really be addressing the question of whether a permanent increase in government spending would result in a permanent benefit to the economy or only a temporary benefit. I kept looking for the answer to that question in this article and I never found it.
The problem is, Bernie Sanders isn't proposing a temporary stimulus. He clearly intends for his proposals to be permanent. So the article should really be addressing the question of whether a permanent increase in government spending would result in a permanent benefit to the economy or only a temporary benefit. I kept looking for the answer to that question in this article and I never found it.
28
GDP is being measured in growth, which means an ever increasing amount, year over year. It is not a static number. The rationale is that once wages plateaued and the one-off infrastructure spending is finished, they would stop having a positive effect on GDP growth.
I would like to think that there would be secondary benefits that would go along with this economic improvement, gains in productivity efficiency, innovation and demand. Even with the New Deal, and the Internet boom, there were significant groups of people within our country that did not benefit from this. A plan that truly went toward helping all Americans could have far-reaching benefits we've never seen. Social and political will is what is lacking. Americans should not be afraid of trying bold, new ideas. What is done can always be undone, and vice-versa.
I would like to think that there would be secondary benefits that would go along with this economic improvement, gains in productivity efficiency, innovation and demand. Even with the New Deal, and the Internet boom, there were significant groups of people within our country that did not benefit from this. A plan that truly went toward helping all Americans could have far-reaching benefits we've never seen. Social and political will is what is lacking. Americans should not be afraid of trying bold, new ideas. What is done can always be undone, and vice-versa.
6
Romer and Romer are pretty clear on this. Here's an explanation. Say that government spending increases -- permanently -- by $100B per year. If we assume -- as Friedman does -- that the government spending multiplier is equal to 0.9, this will increase the level of GDP by $90B per year,
Friedman's error is, in effect, to regard this change not as a single permanent increase, but as a permanent increase the first year, followed by another permanent increase the second year, etc. So Friedman ends up implicitly applying a multiplier of 9.0 for his ten year period (10 * 0.9 = 9.0); alternatively, one could say that Friedman implicitly adds together the ten annual stimuli to get a total stimulus of $1,000B and then applies his multiplier of 0.9 to that total stimulus. Either way, his calculation results in an estimated increase of GDP of $900B rather than 90B. (1,000B * 0.9 = 900B = 100B * 9.0).
Friedman's error is, in effect, to regard this change not as a single permanent increase, but as a permanent increase the first year, followed by another permanent increase the second year, etc. So Friedman ends up implicitly applying a multiplier of 9.0 for his ten year period (10 * 0.9 = 9.0); alternatively, one could say that Friedman implicitly adds together the ten annual stimuli to get a total stimulus of $1,000B and then applies his multiplier of 0.9 to that total stimulus. Either way, his calculation results in an estimated increase of GDP of $900B rather than 90B. (1,000B * 0.9 = 900B = 100B * 9.0).
9
Go to the actual article and read it; it's pretty clear.
https://evaluationoffriedman.files.wordpress.com/2016/02/romer-and-romer...
The point is that an increase in government spending of 1% of GDP results in an increase in OUTPUT not GROWTH while it's going on. If you believe the "multiplier" is 1.5, then it will result in a 1.5% increase in GDP. That is, if you increase government spending by 1% for 10 years, at the end of the period the economy is 1.5% bigger, not 15%. Obviously that makes a huge difference in economic growth rates, and Friedman is obviously wrong.
But even the idea that government spending increases the economy is true only if there's slack in the economy - otherwise it generates inflation. There's nowhere near as much slack in the economy as Friedman assumes.
https://evaluationoffriedman.files.wordpress.com/2016/02/romer-and-romer...
The point is that an increase in government spending of 1% of GDP results in an increase in OUTPUT not GROWTH while it's going on. If you believe the "multiplier" is 1.5, then it will result in a 1.5% increase in GDP. That is, if you increase government spending by 1% for 10 years, at the end of the period the economy is 1.5% bigger, not 15%. Obviously that makes a huge difference in economic growth rates, and Friedman is obviously wrong.
But even the idea that government spending increases the economy is true only if there's slack in the economy - otherwise it generates inflation. There's nowhere near as much slack in the economy as Friedman assumes.
5
Two things:
1) Friedman's analysis didn't even factor in another leg of Bernie's platform, namely, balanced trade. A trade deficit is a direct, mathematical deduction to GDP and our cumulative trade deficit in goods has been a mind-boggling $7 trillion over the last 10 years.
2) Friedman was being overly conservative by using $750 billion over 10 years for his estimated tax revenue from a financial transaction tax. I presume he was using that number because that is the estimated cost of free tuition and lower student debt interest rates over 10 years. However, based on 2011 trading volume in stocks, bonds and derivatives the proposed taxes on those would raise $3.5 trillion over 10 years with a 50% drop in trading volume as a result of the tax. If this extra $2.75 trillion were added to the $1 trillion proposed jobs spending, that would make a tremendous difference.
1) Friedman's analysis didn't even factor in another leg of Bernie's platform, namely, balanced trade. A trade deficit is a direct, mathematical deduction to GDP and our cumulative trade deficit in goods has been a mind-boggling $7 trillion over the last 10 years.
2) Friedman was being overly conservative by using $750 billion over 10 years for his estimated tax revenue from a financial transaction tax. I presume he was using that number because that is the estimated cost of free tuition and lower student debt interest rates over 10 years. However, based on 2011 trading volume in stocks, bonds and derivatives the proposed taxes on those would raise $3.5 trillion over 10 years with a 50% drop in trading volume as a result of the tax. If this extra $2.75 trillion were added to the $1 trillion proposed jobs spending, that would make a tremendous difference.
15
The "study" is not an official anything nor has it been endorsed, supported, or submitted by anyone as a serious document that anyone should base anything on. Unfortunately bottom feeders like Wolfers think they can get some traction roiling around in the political season bilge. Wolfers should be ashamed to appear in this paper having formulated another cartoon he thinks he can sell as legitimate criticism. This has already been discussed to death. Those who care about their public reputation and perceived intellectual integrity conceded that the entire discussion is pointless, has no bearing on anything in the real world not least of which would be a Sanders economic plan not to be formulated anytime soon.
I'm know many other subscribers are seriously tired of these childishly specious screeds unworthy of this paper and its readers.
I'm know many other subscribers are seriously tired of these childishly specious screeds unworthy of this paper and its readers.
14
I think I found the problem in the N.Y. Time's analysis and Professor Friedman's. We honestly can't tell what the effect of policies yet on economic outcomes and outputs. But what can be known, even using neoclassical analyses, is that there could be a lot more demand produced by having a more equitable society and, through government spending, the development of new technology and infrastructure that enables new and existing markets to flourish (see Marianna Mazzucato for more on this). The relationship between spending, taxation, and growth/well-being needs to be understood better and is not as simple and predictable as neoclassical schools teach it to be. However, the economy itself might be better off if more people could afford more stuff, and new technologies were invented and implemented to reduce costs of production and increase sustainability. Investing in rail infrastructure, or cheap green energy infrastructure will undoubtedly have a big impact on our society, economy, and environment. It's time we take this more realistic and less theoretical picture of the economy to heart in academia and government to get the best results for all of us. Whatever is happening now, it's not really working for most people and, if Hillary wants to continue the "same", I think we could do better than her as well.
18
Why shouldn't The New York Times put it out there, that there's been some research into Bernie Sander's economic projections?
This is the run-up to the election for president of the United States. This is the time to vet candidates. Sarah Palin comes to mind and we know how that went.
We are vetting candidates and mention of anything that might reflect on a candidate shouldn't be overlooked. I'd like to see some mention of how Senator Bernie Sanders voted for the Commodity Futures Modernization Act in the year 2000, the bill that kept federal agencies from regulating Credit Default Swaps, those nasty little things that brought about the global economic meltdown we are still mired in.
Examining a candidate is what this is all about.
This is the run-up to the election for president of the United States. This is the time to vet candidates. Sarah Palin comes to mind and we know how that went.
We are vetting candidates and mention of anything that might reflect on a candidate shouldn't be overlooked. I'd like to see some mention of how Senator Bernie Sanders voted for the Commodity Futures Modernization Act in the year 2000, the bill that kept federal agencies from regulating Credit Default Swaps, those nasty little things that brought about the global economic meltdown we are still mired in.
Examining a candidate is what this is all about.
21
"But in December, Gramm -- after coordinating with top Clinton administration officials -- added much harder-edged deregulatory language to the bill, then attached the entire package to a must-pass 11,000-page bill funding the entire federal government. After Gramm's workshopping, the legislation included new language saying the federal government "shall not exercise regulatory authority with respect to, a covered swap agreement offered, entered into, or provided by a bank." That ended all government oversight of derivatives purchased or traded by banks. He also created the so-called "Enron Loophole," which barred federal oversight of energy trading on electronic platforms."
http://www.huffingtonpost.com/entry/bernie-sanders-wall-street_us_5617f6...
http://www.huffingtonpost.com/entry/bernie-sanders-wall-street_us_5617f6...
5
Sanders did what he did, and what he voted for put into play
The Commodity Futures Modernization Act, the bill that handcuffed Federal regulatory powers, thus green lighting the start of the Credit Default Swaps, the complex contracts that ultimately brought the global market to its knees:
"......Sanders voted in favor of legislation to exempt whole swaths of the banking sector from regulation."
"The legislative text Sanders supported was CLEARLY designed to curtail regulatory oversight."
The Commodity Futures Modernization Act, the bill that handcuffed Federal regulatory powers, thus green lighting the start of the Credit Default Swaps, the complex contracts that ultimately brought the global market to its knees:
"......Sanders voted in favor of legislation to exempt whole swaths of the banking sector from regulation."
"The legislative text Sanders supported was CLEARLY designed to curtail regulatory oversight."
Ah, did you miss the part about this not being associated with Sander's campaign? I realize that would be difficult to catch because they plastered his photos all over it, but he didn't order the analysis and didn't pay for it. Freidman was curious and took in on himself to analyze it. Now is it clearer?
4
To put it very plainly, you contradict yourself heavily in this article, and use technical jargon incorrectly. To someone with actual economics credentials, it's eyerollingly painful watching you try to explain something you don't fully understand.
Your primary contradiction lies in the fact you that you point out the loss of output increase when a stimulus program ends, immediately note that Sanders' plan is to PERMANENTLY increase spending, thus it wouldn't drop by your logic, so output would remain increased. But then you continue to argue that the flaw is the fact that it'll drop off when the spending decreases...you just have absolutely no cohesion to your logic. It's depressing.
Your primary contradiction lies in the fact you that you point out the loss of output increase when a stimulus program ends, immediately note that Sanders' plan is to PERMANENTLY increase spending, thus it wouldn't drop by your logic, so output would remain increased. But then you continue to argue that the flaw is the fact that it'll drop off when the spending decreases...you just have absolutely no cohesion to your logic. It's depressing.
23
That was my exact reaction when I read this.
3
To be clear, you're arguing Sanders will be passing new tax increases and spending increases from the first year his spending plans are enacted to forever? Every year? Seriously?
Because that's not how Sanders is selling himself.
Because that's not how Sanders is selling himself.
2
It says, below the article, Justin Wolfers is a professor of economics and public policy at the University of Michigan. So... perhaps not fair to say "To someone with actual economics credentials, ..." ??
3
Reading these NYT comments reminds me of reading comments on a right wing blog site responding to quantitative criticisms of right wing theories and philosophies. Neither group seems to read the articles very closely. Both seem to lack critical thinking skills. Both seem driven to respond by a preconceived ideology with nary a quantitative thought.
My criticism is NOT an criticism of Bernie Sanders, it is a criticism of the readers who have written comments here.
This article is part of the quantitative analysis and peer review of a proposed economic model, something that normally occurs over the long term in the published literature out of sight of most people. It occurs in all the sciences. Friedman's model has the limelight simply because one candidate (makes no difference who) used it as an example of what might be possible.
Professional economists now need to examine and test this theory/model/assumptions closely and decide whether to accept it as is (which would be wonderful), change and improve its ability to predict economic activity for better or worse (which would be equally wonderful), or throw it out and start over again (which would be yet another odd/flawed block proposed for the road of human progress to be tossed aside). A significant clue is provided by Dr. Friedman's admission that his model uses nonstandard assumptions to arrive at extraordinary claims. Bernie deserves better economic models. We deserve better economic models.
My criticism is NOT an criticism of Bernie Sanders, it is a criticism of the readers who have written comments here.
This article is part of the quantitative analysis and peer review of a proposed economic model, something that normally occurs over the long term in the published literature out of sight of most people. It occurs in all the sciences. Friedman's model has the limelight simply because one candidate (makes no difference who) used it as an example of what might be possible.
Professional economists now need to examine and test this theory/model/assumptions closely and decide whether to accept it as is (which would be wonderful), change and improve its ability to predict economic activity for better or worse (which would be equally wonderful), or throw it out and start over again (which would be yet another odd/flawed block proposed for the road of human progress to be tossed aside). A significant clue is provided by Dr. Friedman's admission that his model uses nonstandard assumptions to arrive at extraordinary claims. Bernie deserves better economic models. We deserve better economic models.
10
Imagine a country where we compete globally with well-educated, healthy people, decent infrastructure, good government and less war. We'd be unstoppable with all our natural resources, climate and size. Has anyone modeled that economically?
17
Gee, I thought you were saying that we were/are competing with countries that have those things. In fact, we are and it is depressing. Swedish students are very well informed; and the last thing I saw, American youth couldn't even identify the Pacific Ocean and thought New York was landlocked. On the plus side, they were not in last place. We beat Mexico!
6
Remember, the first person who pointed out that there could be permanent stimulus effects from a temporary stimulus was: Christina Romer. You know, the one who is now showing that's just a mathematical and logical fallacy.
"In addition to its near-term jobs effects, the Recovery Act may also be having more lasting benefits. It’s too early to measure the value of the roads, bridges and airports improved through stimulus funds. But a survey of influential studies looking at highway construction in the 1950s and ’60s suggests that such investments contribute substantially to long-term growth."
What does substantial mean? It is a tricky word. If the Romer's approve of the stimulus, its substantial. If it is proposed by Sanders, why it is a mirage.
But you know, we mortals just don't have the intellectual capacity to see that it is all levels and rates and such. No political bias whatsoever here.
http://www.nytimes.com/2012/10/21/business/how-the-fiscal-stimulus-helpe...
"In addition to its near-term jobs effects, the Recovery Act may also be having more lasting benefits. It’s too early to measure the value of the roads, bridges and airports improved through stimulus funds. But a survey of influential studies looking at highway construction in the 1950s and ’60s suggests that such investments contribute substantially to long-term growth."
What does substantial mean? It is a tricky word. If the Romer's approve of the stimulus, its substantial. If it is proposed by Sanders, why it is a mirage.
But you know, we mortals just don't have the intellectual capacity to see that it is all levels and rates and such. No political bias whatsoever here.
http://www.nytimes.com/2012/10/21/business/how-the-fiscal-stimulus-helpe...
23
In the General Theory Keynes operated with R.F.Kahn’s version of the multiplier to make the case for deficit spending on investment in a sustained way to thereby alter the scarcity value of capital sufficiently to restore full employment and sustained prosperity. The notion of the higher propensity to consume among the moderate and low income classes and the excess savings proclivities of the wealthy was also central to the analysis. Senator Sanders appears to have in mind a sustained program to alter the structure of the American political economy in a Keynesian way. Making universal public access medical and health care and reducing after tax income inequality are permanent structural changes and not one time pump priming.
Haroldchorneyeconomist.com
Haroldchorneyeconomist.com
13
I fail to see why budget talks neglect to include military expenses. We would have enough money for anything we want to do in this country, were it not for the excess waste of the military. Unless that is included I won't believe any of the "research." http://youtu.be/F4OXrmxDp44
6
In last night's debate, Rubio claimed that Social Security, Medicare and Medicaid would take up all but 17% of the federal budget - I forget his timeframe. However, no one has jumped on that to remind him that Social Security is not part of the federal budget, by design.
How about some analysis of his claims, NYT?
How about some analysis of his claims, NYT?
yeah - just think if we got rid of most or all of our very dangerous nuclear ICBMs - MAD thinking is still with us. http://www.pbs.org/newshour/bb/as-pentagon-overhauls-nuclear-triad-criti...
I can see the logic and importance article. We would not want our country to accrue debt! Our economic policies have always been spot on and sound.... Please write about the current state of affairs under the establishment (both Dems and Reps) prior to shooting down a new approach that focuses on helping all citizens rather than our current system that perpetuates poverty for most in order to provide wealth for few...
11
How were our economic policies "spot on" during 2000-2008?
5
The writer was being ironic.
2
it's called sarcasm
2
I'm reading a lot of excuses for poorly formed academic process, by apologists. Academics are supposed to have a process, and a code for documenting their assumptions and research. Professor Friedman, his distinguished name aside, stepped way outside that process and deserves the inspection he receives.
8
Lets discuss what would happen when the money adults would be spending paying banks interest for student loans as well as the money they'd have spent on tuition itself is poured into a new home, a new car, a small business, travel, lessons for children, food clothing, entertainment and also gets taxed. Lets talk about the quality of life for someone who launches into a new job without crushing student debt. The economic impact of that, alone, is worth voting Sanders in. The people hardest hit by student debt are trying to feed and cloth children. And his healthcare plan - tell how on earth a not-for-profit healthcare system is more expensive than a for-profit one. You won't get there. This piece is about philosophy, it has little to do with what is happening in real time on the ground to Americans. But philosophize away New York Times, jobs are scarce for philosophers, you are improving life for a few of those. Well done.
21
There's more at stake here than student loan debt.
And is that what this Bernie thing all boils done to? His getting rid of all student loan debt when he's elected?
Now I get it. A new version of "a chicken in every pot."
And is that what this Bernie thing all boils done to? His getting rid of all student loan debt when he's elected?
Now I get it. A new version of "a chicken in every pot."
6
Mr. Wolfers, the title and opening paragraph of your article are not supported by the information you present in the remainder of the article.
1. Senator Sanders never endorsed Professor Friedman's economic projections. Your title reads like an attack against Sanders and his platform. While no doubt some Sanders supporters may have reacted positively to Friedman's work or "embraced" it, you imply that Sanders' math or logic is wrong, or that his proposals rest on bad math or faulty logic. There is no evidence that Sanders ever collaborated in any way on Friedman's project or ever endorsed his projections.
2. You explain near the end that Professor Gerald Friedman has a Robinsonian view of Keynesian economics. This view may be a stronger form of Keynes' theory, and one with which you and the four economists you cite (and many other economists) disagree. But it's inaccurate to call it bad math or poor logic. Your title should have merely presented the Friedman or Robinson view as non-standard or non-orthodox Keynesianism.
A correction and an apology to Senator Sanders are in order.
1. Senator Sanders never endorsed Professor Friedman's economic projections. Your title reads like an attack against Sanders and his platform. While no doubt some Sanders supporters may have reacted positively to Friedman's work or "embraced" it, you imply that Sanders' math or logic is wrong, or that his proposals rest on bad math or faulty logic. There is no evidence that Sanders ever collaborated in any way on Friedman's project or ever endorsed his projections.
2. You explain near the end that Professor Gerald Friedman has a Robinsonian view of Keynesian economics. This view may be a stronger form of Keynes' theory, and one with which you and the four economists you cite (and many other economists) disagree. But it's inaccurate to call it bad math or poor logic. Your title should have merely presented the Friedman or Robinson view as non-standard or non-orthodox Keynesianism.
A correction and an apology to Senator Sanders are in order.
56
Agreed, but don't hold your breath waiting.
2
Obama declared he would reform Wall Street, just as Bernie is doing. But Obama has not done that. Now I don't believe Obama is a liar; I just believe that pushing through change in Washington D.C. is a lot harder than it looks. So why should I believe that Bernie will be able to accomplish the promises that Obama could not?
10
Or Hillary. What matters is that Hillary threw her arms around the materialistic rightward drift of the Dem party as if it were inevitable, while Bernie redraws the lines, pulling Hillary and the electorate's assumptions with it, back to a worker-oriented economics. It wasn't inevitable; it was a money-fueled power grab.
8
When will Bernie-ites stop mixing up campaign boasting with actual political experience of achievement of change, however incremental? They act as though Hillary has been doing nothing but counting her jewels for the past two decades. Somehow, winning a Senate seat in NY and appointed Secretary of State are dismissed as though they were just glorified social butterfly positions. They hardly ever speak about Bernie's actual record of accomplishments in his decades in Vermont, where he has not accomplished the health reforms that he so valiantly proclaims he will be able to push through in Washington. If not in Vermont, how in Washington? Hillary at least does not make such fairy-tale claims, and has a hard-nosed realism about the God-awful mess that U.S. politics is.
6
Obama is a very moderate, right-of-center Democrat. He had a wealthy "angel", sort of like Rubio's, who gave money and social capital to fund his rise. As you surely know, Bernie is not handicapped in what he can propose or prosecute by a list of donors expecting a return on their investment. Therein, as they say, lies all the difference.
Bernie may not be able to do all he would wish, but he would not settle for a few fines to be written off as a business expense by the bankers. He would appoint real cops on the beat.
Bernie may not be able to do all he would wish, but he would not settle for a few fines to be written off as a business expense by the bankers. He would appoint real cops on the beat.
2
"...simply gotten math wrong"?? after reading this I couldn't figure out what exactly was the "bad math" that Friedman might have done. Pointing out a math mistake should be pretty straightforward: Wolfers (or R&R for that matter) hasn't told us what the mistake is.
I think critics' main issue(s) are with Friedman's economic assumptions. And that's a good thing for discussion.
I think critics' main issue(s) are with Friedman's economic assumptions. And that's a good thing for discussion.
7
It's spelled out pretty clearly -- or so it seems to me. The problem is that Friedman's analysis assumes that if the government spends enough next year to increase GDP growth from 2% to 3%, that benefit will continue even after the government stops spending additional money.
Any rational analysis of economics concedes that government spending has some short-term stimulus effect (the arguments are about the multiplier -- which could be greater than or less than 1 -- and the long-term effects); and the vast majority of economists also agree that when you turn off this money spigot, most or all of the stimulus effect goes away. Apparently Friedman does not see it that way, which is not a standard macroeconomic model.
Any rational analysis of economics concedes that government spending has some short-term stimulus effect (the arguments are about the multiplier -- which could be greater than or less than 1 -- and the long-term effects); and the vast majority of economists also agree that when you turn off this money spigot, most or all of the stimulus effect goes away. Apparently Friedman does not see it that way, which is not a standard macroeconomic model.
4
Macroeconomics is not easy. Even Alan Greenspan admitted his assumptions were wrong, long after it was too late and the US endured the devastating results of his theories.
9
Another of NYT's hourly hit piece on Bernie. What does your economist say would happen under Republican President Eisenhower's 90% tax rate on the rich ? The building of US Interstates, was just one of many public works projects that resulted. The late 50s and early 60s were a huge boom time when social projects were instituted by JFK and LBJ.
If the NYT's and Hillary's experts were just a little bit right that wouldn't have happened.
If the American people want a economic renaissance, that ignites the economy vote for Bernie.
If the NYT's and Hillary's experts were just a little bit right that wouldn't have happened.
If the American people want a economic renaissance, that ignites the economy vote for Bernie.
28
Of course in the late 50s the U S had little competition, it was an economic hegemon. Things have changed and not for the worse, from a global perspective. And how much do you think the U.S. Treasury collected in taxes from those in the 90% tax bracket? Rich people pay far more in taxes now as a proportion of all tax receipts than they did then.
1
As I have seen it, the assumption that we were the last economy left standing after WW II is not correct. And please don't confuse dollar amount with percent of income.
For example, we are always being told by the right how much we spend on international aid. In absolute dollars, that may be true, but as a percent of our economic output it is piddling.
Look at is this way, if I earn $100 and pay $20 in taxes and you earn $10000 and pay $100 in taxes who paid more? You did in absolute dollars, but I did in percent of income.
For example, we are always being told by the right how much we spend on international aid. In absolute dollars, that may be true, but as a percent of our economic output it is piddling.
Look at is this way, if I earn $100 and pay $20 in taxes and you earn $10000 and pay $100 in taxes who paid more? You did in absolute dollars, but I did in percent of income.
How about the economists stop commenting on economic analysis in the pages of the NY Times before conducting an actual analysis of data and methods. And, the NY Times stops publishing opinion pieces that are not clearly marked as opinions (at least online). W
19
This piece — which does very little to settle the matter — is but another salvo in the back-and-forth between two groups of liberal economists.
On the one hand you have the Friedman attackers (and by extension Sanders attackers), principally the Goolsbee group (which includes the Romers, so praised in this piece) backed by The New York Times which has given them full-throated support on the news pages, in Paul Krugman's blog and right here in this piece by Justin Wolfer. The connections to the Clinton and Obama administrations of the Goolsbee group and of Mr. Wolfer himself is hard to overlook.
On the other hand, you have the Friedman supporters (and by extension Sanders supporters), who include Gerald Friedman himself and such eminent economic voices as James K. Galbraith, William K. Black, and Yves Smith.
On the one hand you have the Friedman attackers (and by extension Sanders attackers), principally the Goolsbee group (which includes the Romers, so praised in this piece) backed by The New York Times which has given them full-throated support on the news pages, in Paul Krugman's blog and right here in this piece by Justin Wolfer. The connections to the Clinton and Obama administrations of the Goolsbee group and of Mr. Wolfer himself is hard to overlook.
On the other hand, you have the Friedman supporters (and by extension Sanders supporters), who include Gerald Friedman himself and such eminent economic voices as James K. Galbraith, William K. Black, and Yves Smith.
8
Sorry to have misspelled the author's name. It's Wolfers, with an S at the end.
As we know, Christina Romer has some experience in forecasting. From the New Republic: "Every year, the CEA puts out the Economic Report of the President (EROP), which includes projections for future economic growth. For example, the 2010 EROP, overseen by then-Chair Christina Romer, made real GDP projections of 4.3 percent in 2011 and 2012, and 4.2 percent in 2013. This was wildly optimistic. According to Federal Reserve Economic Data, the actual real GDP growth rate in 2011 was 1.6 percent; in 2012, 2.2 percent; and in 2013, 1.5 percent."
It is almost as if - if you don't have an adequate stimulus at the beginning, you will garner increasingly less growth. But of course we gotta trust the Romer model. Cause it has proved so good in the past.
It is almost as if - if you don't have an adequate stimulus at the beginning, you will garner increasingly less growth. But of course we gotta trust the Romer model. Cause it has proved so good in the past.
9
Stimulus was sadly too small, for us common folk anyway. Unemployment has improved, but vast majority of Americans have little in savings. Of course the banks received a much friendlier Fed bailout on the scope of 16 Trillion...
1
Everyone has seen that Clinton responds to crucial questions by a) giving very wordy answers that say nothing, b) giving diversionary answers like her comment on 9/11 or c) saying that Obama did it too. Looking closely you find:
1. Clinton has NEVER said she would support a modern version of Glass-Steagall, only that it is “not enough.” She has yet to admit that the big banks were the main source of funds for the shadow bankers who nearly wrecked our economy. She also never admits that in certain ways, Obama also supported the banks, including never trying to prosecute them.
2. Sanders said he would break up the biggest banks ONCE in office. HRC says she will break up a bank IF (!) it is or becomes a threat to the economy.
3. Hillary Clinton has a long history of being supported financially by the big banks and supporting their interests. (She set the amount of her speaking fees, not the banks.) Also why no transcripts? Will she edit them anyway?
4. After CHAMPIONING TPP for years as the “gold standard” of trade agreements she is opposing it “FOR NOW” Even if she didn’t tell the U.S. Chamber of Commerce that she really still supports TPP, HRC has supported ALL of the other job-killing trade deals.
5. Despite the mainstream media bias favoring Clinton, evidence is coming to light how the DNC, HRC and other thugs engaged in dirty tricks in both Iowa and Nevada.
6. HRC’s well-known endurance is usually in behalf of only herself not the American people.
1. Clinton has NEVER said she would support a modern version of Glass-Steagall, only that it is “not enough.” She has yet to admit that the big banks were the main source of funds for the shadow bankers who nearly wrecked our economy. She also never admits that in certain ways, Obama also supported the banks, including never trying to prosecute them.
2. Sanders said he would break up the biggest banks ONCE in office. HRC says she will break up a bank IF (!) it is or becomes a threat to the economy.
3. Hillary Clinton has a long history of being supported financially by the big banks and supporting their interests. (She set the amount of her speaking fees, not the banks.) Also why no transcripts? Will she edit them anyway?
4. After CHAMPIONING TPP for years as the “gold standard” of trade agreements she is opposing it “FOR NOW” Even if she didn’t tell the U.S. Chamber of Commerce that she really still supports TPP, HRC has supported ALL of the other job-killing trade deals.
5. Despite the mainstream media bias favoring Clinton, evidence is coming to light how the DNC, HRC and other thugs engaged in dirty tricks in both Iowa and Nevada.
6. HRC’s well-known endurance is usually in behalf of only herself not the American people.
16
Are you trying to trying to point out why people - Independents and Democrats, not just Republicans - don't trust her? The Times doesn't care that she parses her words or changes her positions as frequently as she changes her underwear. She doesn't threaten their very comfortable lives with the mere thought of change. After all, the peasants are revolting.
1
I wish the Bernie supporters would read this entire article. The last paragraph provides a good summing up and you need to read it.
From reading Bernie's supporters replies it's obvious they just can't wait to add their stinging, though naive and uninformed, two cents, as they bravely defend their candidate, who they hope by the way will cancel all student debt if elected.
Please get to the last paragraph before you comment here. You owe the writer, Mr. Wolfers, this much. He has put a sound argument out there and it needs to be judged fairly, and not with the bias your comments suggest.
From reading Bernie's supporters replies it's obvious they just can't wait to add their stinging, though naive and uninformed, two cents, as they bravely defend their candidate, who they hope by the way will cancel all student debt if elected.
Please get to the last paragraph before you comment here. You owe the writer, Mr. Wolfers, this much. He has put a sound argument out there and it needs to be judged fairly, and not with the bias your comments suggest.
13
Joan Robinson Keynesians? Did Post Keynesian suddenly become a dirty word or something?
OMG. Another budget scenario based on wild optimism about revenue growth.
Encountered this for the first time as a 22-year-old reporter in City Hall. One of the aldermen--normally a conservative guy--starting tossing out the revenue projections that had been carefully, conservatively predicted by the city's budget office. The alderman increased those figures by more than 50 percent. He offered little by way of explanation except that he thought the budget staff was being TOO conservative. He helped increase the spending side accordingly, of course.
I hadn't even started making a simple household budget for myself at that stage of life, but I remember thinking, "This cannot end well." And it didn't. The thought of doing the same thing to the federal budget is disturbing, to say the least.
Encountered this for the first time as a 22-year-old reporter in City Hall. One of the aldermen--normally a conservative guy--starting tossing out the revenue projections that had been carefully, conservatively predicted by the city's budget office. The alderman increased those figures by more than 50 percent. He offered little by way of explanation except that he thought the budget staff was being TOO conservative. He helped increase the spending side accordingly, of course.
I hadn't even started making a simple household budget for myself at that stage of life, but I remember thinking, "This cannot end well." And it didn't. The thought of doing the same thing to the federal budget is disturbing, to say the least.
3
If you don't agree with Friedman's numbers, please run your own and tell us how much taxes would go up, versus how much we would save per year for not paying insurance executives their $30M/year salaries to deny people healthcare.
Factor in the boost to the economy when companies aren't burdened with paying for employee's healthcare. And the boost when so much of the economy can return to more efficient work, rather than managing health care. Tell us what the multiplier effect will be when people are no longer indentured servants to their jobs when they will be able to move around, or start an independent business, without worrying about health care?
Tell us how much we can save when we negotiate prices with drug companies, hospitals, and medical supply companies.
Tell us how much we'll save when we treat people's medical conditions early, instead of waiting until the person can no longer ignore their condition? Tell us how many fewer people will needlessly die each year if everyone has universal access to health care?
Tell us why Canada, Great Britain, France, Greece, Ireland, Denmark, Sweden, Serbia, Russia, etc, etc, can have some public healthcare, but we can't?
Factor in the boost to the economy when companies aren't burdened with paying for employee's healthcare. And the boost when so much of the economy can return to more efficient work, rather than managing health care. Tell us what the multiplier effect will be when people are no longer indentured servants to their jobs when they will be able to move around, or start an independent business, without worrying about health care?
Tell us how much we can save when we negotiate prices with drug companies, hospitals, and medical supply companies.
Tell us how much we'll save when we treat people's medical conditions early, instead of waiting until the person can no longer ignore their condition? Tell us how many fewer people will needlessly die each year if everyone has universal access to health care?
Tell us why Canada, Great Britain, France, Greece, Ireland, Denmark, Sweden, Serbia, Russia, etc, etc, can have some public healthcare, but we can't?
79
Well said, and it is equally plausible that with a permanent increase in demand, we can find ways of doing things more efficiently to deal with the increases in demand. Spending less on healthcare, more entrepreneurs entering the marketplace (look at Scandinavian countries and you see that they are dominating us with young entrepreneurs). It all depends on how far down below our 'peak' one believes we're operating at. I am of the opinion that we are well below that peak.
Even in the heydays of the 90's there were plenty of communities that did not partake in these gains.
Even in the heydays of the 90's there were plenty of communities that did not partake in these gains.
1
More entrepreneurs entering the marketplace sounds painfully close to what the right wing says about what will happen if they lower taxes on the rich and is not supported by evidence. And Scandinavian countries have a lot of entrepreneurs because they foster business friendly environments.
4
Tell us how quickly these changes can be made. When can businesses expect to start realizing these savings? How soon will Congress pass legislation to create a single-payer system? How quickly will Big Pharm agree to the prices we want to pay? Do you plan to roll out free college tuition at the same time?
There is a reason why President Obama had to settle for a less-than-ideal Republican healthcare plan. It's called "reality." We don't have single-payer because not enough Americans want it. It's all tied up with idiotic notions about self reliance, socialism and exceptionalism, and it is fully as powerful as the clout the medical industry can wield against single-payer proposals.
There is a reason why President Obama had to settle for a less-than-ideal Republican healthcare plan. It's called "reality." We don't have single-payer because not enough Americans want it. It's all tied up with idiotic notions about self reliance, socialism and exceptionalism, and it is fully as powerful as the clout the medical industry can wield against single-payer proposals.
5
It would appear the Upshot article concedes Friedman would be correct in the case of permanent stimulus. Therefore, dismissal requires an exposition of either how that is not a feature of the evolving Sanders-world, or of the inevitability of effects that would cause other bodies to intervene, changing the parameters of Friedmans' model. We academic noneconomists look forward to a clear exposition.
11
The article does no such thing. You conflate two separate issues. The federal reserve would raise interest rates in the event of permanent stimulus in order to head off inflation. There are no circumstances under which Friedman is correct, certainly not the case of permanent stimulus. Which wasn't even part of his analysis.
3
There has been a huge hollowing of the workforce and destruction of small businesses in recent years. Ignored or downplayed by R&R, yourself and other VSP .
Since the previous high point in employment in 2007 employment has grown by 1.2% while the non-institutionalized population has grown by 8.8%. There has been a baby bust, massive underemployment of talents and U-6, by catching only those who have looked for work in the last year, dramatically under-counts involuntary unemployment. If we have had a step downward in employment, why not a step up to the old conditions? And maybe a model is needed that reflects or explains the step?
A five percent permanent increase in labor force participation would have huge impact on incomes, government revenue and expenses, etc. It is no more unlikely going forward than the step downward was unlikely looking ahead in 2006. Just not covered in your macro textbook.
Since the previous high point in employment in 2007 employment has grown by 1.2% while the non-institutionalized population has grown by 8.8%. There has been a baby bust, massive underemployment of talents and U-6, by catching only those who have looked for work in the last year, dramatically under-counts involuntary unemployment. If we have had a step downward in employment, why not a step up to the old conditions? And maybe a model is needed that reflects or explains the step?
A five percent permanent increase in labor force participation would have huge impact on incomes, government revenue and expenses, etc. It is no more unlikely going forward than the step downward was unlikely looking ahead in 2006. Just not covered in your macro textbook.
4
How are Sanders' proposals not permanent stimulus?
Sanders proposes raising the minimum wage to $15 an hour.
Sanders proposes spending $1 trillion dollars on infrastructure over ten years.
Sanders proposal to subsidize public college tuition gives us an ever larger, more educated, workforce.
Sanders single payer health care eventually frees up to $1 trillion annually to spend or save on things other than health care. People and the government can also pay down debt, reducing unproductive debt service payments.
How is this not permanent stimulus?
Sanders proposes raising the minimum wage to $15 an hour.
Sanders proposes spending $1 trillion dollars on infrastructure over ten years.
Sanders proposal to subsidize public college tuition gives us an ever larger, more educated, workforce.
Sanders single payer health care eventually frees up to $1 trillion annually to spend or save on things other than health care. People and the government can also pay down debt, reducing unproductive debt service payments.
How is this not permanent stimulus?
33
"Sanders proposes raising the minimum wage to $15 an hour."
And how many workers will benefit from this and how many will loose their jobs to automation which is becoming increasingly less expensive?
"Sanders proposes spending $1 trillion dollars on infrastructure over ten years."
And will he demand that all infrastructure repairs be done only by union workers who will then kickback most of their union dues to the democrats?
And how many workers will benefit from this and how many will loose their jobs to automation which is becoming increasingly less expensive?
"Sanders proposes spending $1 trillion dollars on infrastructure over ten years."
And will he demand that all infrastructure repairs be done only by union workers who will then kickback most of their union dues to the democrats?
2
Keep in mind the measure considered is "growth". In order to achieve consistent growth would mean wages would be continually increasing, not just staying at the levels achieved, or in the case of stimulus, continually applied, not just a one-off stimulus amount.
I'm of the belief that there are a lot of positives that would be achieved that simply cannot be absolutely known or quantitatively measured. I believe there is considerable untapped innovation and losses in opportunity in our society. Given that I am no economist nor have I reviewed Friedman's work in detail, I cannot say with certainty the assumptions Friedman makes with the use of his permanent effects.
I'm of the belief that there are a lot of positives that would be achieved that simply cannot be absolutely known or quantitatively measured. I believe there is considerable untapped innovation and losses in opportunity in our society. Given that I am no economist nor have I reviewed Friedman's work in detail, I cannot say with certainty the assumptions Friedman makes with the use of his permanent effects.
1
Robert Eller,
No crying in baseball. A swing is a swing and a miss is a miss. Friedman admits he goofed. And he supports Hillary.
No crying in baseball. A swing is a swing and a miss is a miss. Friedman admits he goofed. And he supports Hillary.
While I understand fully that when a pressure (stimulation) occurs and then is released, the effect changes, however,I find it hard to imagine that such an effect rubber bands and defaults to point zero. Every action has an opposite, yet equal reaction. So when a stimulus is applied, the system changes to compensate. Even when the pressure ceases, the effect does not return to virgin status. This is akin to what occurs in systems biology: application of a stimulus or pressure such as vEGF in the tissue and cellular context causes neovascularization. Remkval of vEGF, however, does not cause the new vasculature to disappear; the tissue has been remodeled. Apply a stimulus to the economy, and you remodel the economy. This is probably why biologists and chemists show such disdain for economics. Take a lesson from physics and systems biology.
10
Dynamic systems theory. Absolutely ... Very simplistic to see stimulus as like blowing air into a tube. Even Kevin Rudd 's $1000 cash handout, Pink Batts and school halls and gymnasiums which was as near as blowing air into a balloon during the GFC was not followed by a collapse. Australia was only country to go through GFC without contraction. Many of Sanders measures as in Dynamic Systems theory will change the environment permanently e.g. From a high risk environment which discourages entrepreneurs terrified of losing health protection if they strike out on their own to one where that is not a huge disincentive because there is universal healthcare . And while you can't strictly call that a permanent stimulus .. That is only a semantic objection .. Because in effect it is .. It's a better environment which encourages growth.
4
Mr. Wolfers:
As a follower of Sanders and this recent spat between Clinton supporter and economist, Friedman and Galbraith vs. Krugman, Romer, Romer, et al, I find your argument and "facts" also deceiving. What you have failed to account for when criticizing Friedman is that the standard multiplier is 1.5 instead of the .8 multiplier that Friedman uses. Secondly, the studies you cite are conventional economics and not the very large investments and safety net spending that Sanders' plan envisions.
I am sure Romer, Romer, Krugman, et al, studies, historical precedents, etc confirm what you cite. Has anyone done a study on FDR's stimulative program from '33 to '37 or from '39 to '42? The FDR stimulative projects had real growth per the aforementioned timeframes and continued the exponential growth rates as well. Since Sanders' programs are not as expansive as FDR's, I would concede that his won't mirror FDR's growth rates, reduction in unemployent percentages, etc., but it will surely outperform Bill Clinton's eight year economic performance and most definitely Obama's.
As a follower of Sanders and this recent spat between Clinton supporter and economist, Friedman and Galbraith vs. Krugman, Romer, Romer, et al, I find your argument and "facts" also deceiving. What you have failed to account for when criticizing Friedman is that the standard multiplier is 1.5 instead of the .8 multiplier that Friedman uses. Secondly, the studies you cite are conventional economics and not the very large investments and safety net spending that Sanders' plan envisions.
I am sure Romer, Romer, Krugman, et al, studies, historical precedents, etc confirm what you cite. Has anyone done a study on FDR's stimulative program from '33 to '37 or from '39 to '42? The FDR stimulative projects had real growth per the aforementioned timeframes and continued the exponential growth rates as well. Since Sanders' programs are not as expansive as FDR's, I would concede that his won't mirror FDR's growth rates, reduction in unemployent percentages, etc., but it will surely outperform Bill Clinton's eight year economic performance and most definitely Obama's.
16
Except the part where he says he made a mistake, right?
3
Actually Romer wrote something on this here: http://www.nytimes.com/2011/08/14/business/economy/from-world-war-ii-eco...
It is silly to think that Bernie doesn't know that most if any of his policies would not get through Congress the way he initially proposes. He says time and time again that it would take a revolution for these proposals to get through as they are. After debating in congress the bills would be dramatic altered and changed right of his proposals but he will fight for the less fortunate. The reason I would vote Bernie is that our political system is bought and paid for by big money interests and he will fight to get our government for the people by the people back to us. There is a big difference in Democratic socialism as apposed to just socialism besides the Socialism
label is secondary because he just can't walk in and completely change everything but there are aspects of Democratic socialism that would be good to take from. Capitalism is great when it creates jobs and new wealth goes to the middle class but if jobs are sent out and tax breaks keep going to the top the middle class can not sustain the capitalistic economy.
label is secondary because he just can't walk in and completely change everything but there are aspects of Democratic socialism that would be good to take from. Capitalism is great when it creates jobs and new wealth goes to the middle class but if jobs are sent out and tax breaks keep going to the top the middle class can not sustain the capitalistic economy.
28
Now, what form exactly is this revolution going to take? An armed insurrection? E-mails? Demonstrators with signs chanting slogans? A combination of the above? Why do you think Bernie's ideas haven't been enacted? Most liberals are in favor of single payer. Even with Democratic control of both houses of Congress, this is the best President Obama and the Democratic party could do. Now do you think an aging Socialist who isn't even a Democrat is going to be able to do what the force of the whole Democratic party couldn't? The Republicans are mostly in safe gerrymandered districts. They don't care about noisy demonstrators or e-mail campaigns. Armed insurrection would end badly. What else do you have? You people need to stop drinking the Republican Kool-Aid. Don't you realize that they have been attacking Hillary for 25 years? They haven't started on Bernie yet. There's a reason for that. If you want to vote on principle and lose the country, you can do that. But I am not going along with you. The Republicans are split, and believe me, they're loving Bernie, because he's splitting us.
6
The litany of attacks on Prof. Friedman by those who served in the Clinton and Obama administrations is tiresome. Now we have Prof. Wolfers, whose spouse was on Obama's CEA, weighing in. These affiliations should be a tipoff that criticisms of Friedman have a political motivation, not one that only is a matter of "good" economics. In social science, pre-conscious biases have a way of affecting the subsequent analysis.
In the end, the macroeconomic dispute has less to do with predicted effects than with the magnitude of those effects. This is new? It's standard fare in politics. In 2009, Obama was criticized for an overly optimistic economic plan by distinguished economists on the right, such as Harvard's Greg Mankiw. Mind you, it's extremely difficult to predict the magnitudes of future effects in a world of uncertainty. This is as true for Friedman as it is for his critics.
Another problem is that there is no detailed economic stimulus plan on the Clinton side. What there is replicates much of what's been tried during the Obama years. What exists is vague. None of its assumptions have been laid bare.
When HC offers a detailed plan, voters (and economists) can compare the realism of its assumptions and predictions to Friedman's. For now we merely have the sound of one hand slapping.
In the end, the macroeconomic dispute has less to do with predicted effects than with the magnitude of those effects. This is new? It's standard fare in politics. In 2009, Obama was criticized for an overly optimistic economic plan by distinguished economists on the right, such as Harvard's Greg Mankiw. Mind you, it's extremely difficult to predict the magnitudes of future effects in a world of uncertainty. This is as true for Friedman as it is for his critics.
Another problem is that there is no detailed economic stimulus plan on the Clinton side. What there is replicates much of what's been tried during the Obama years. What exists is vague. None of its assumptions have been laid bare.
When HC offers a detailed plan, voters (and economists) can compare the realism of its assumptions and predictions to Friedman's. For now we merely have the sound of one hand slapping.
16
You hear about those said attacks because theyre public figures. But the criticisms of Sanders' policies goes far beyond the establishment crowd if you cared to look.
3
This is amusing. A Conservative economist says that the stimulus would be temporary... which pretty much admits to trickle UP economics. If there's more money in the system, it should mean people have more money to spend. Instead, admitting it slowly gets siphoned away... but he cleverly never says where. Not to the govt, because the govt is the one doing the stimulus spending. Oh, must be to the already rich. Leaving the middle class back where it started. Huh. What a way to dance around an inconvenient truth.
Look, in order to improve the middle and lower classes, you have to have upward pressure on wages (higher minimum wage for example) but the rich ownership class can simply raise prices and raise their own salaries accordingly... unless you also increase downward pressure on upper wages. You can do this with higher taxes on the higher end. If they keep robbing their wage workers to obscenely increase their own profits, the govt can increase their taxes and tack it back and redistribute... back to where the balance belongs. Fix infrustructure, fund the schools, keep the safety net intact.
Look, in order to improve the middle and lower classes, you have to have upward pressure on wages (higher minimum wage for example) but the rich ownership class can simply raise prices and raise their own salaries accordingly... unless you also increase downward pressure on upper wages. You can do this with higher taxes on the higher end. If they keep robbing their wage workers to obscenely increase their own profits, the govt can increase their taxes and tack it back and redistribute... back to where the balance belongs. Fix infrustructure, fund the schools, keep the safety net intact.
9
"in order to improve the middle and lower classes, you have to have upward pressure on wages (higher minimum wage for example)"
The more the minimum wage is raised, the more demand there will be for increased automation which is increasingly becoming less expensive.
The more the minimum wage is raised, the more demand there will be for increased automation which is increasingly becoming less expensive.
1
What makes you the arbiter of who is "conservative" or not? Left-leaning economists have had trouble with these numbers too, including Paul Krugman.
2
"Until now"
Therein lies the nub of the problem. The harshest critics of Friedman don't seem to get that doing your homework before expressing your conclusions in the strongest and most insulting way possible should be considered an absolute necessity..
Therein lies the nub of the problem. The harshest critics of Friedman don't seem to get that doing your homework before expressing your conclusions in the strongest and most insulting way possible should be considered an absolute necessity..
4
The man's math projected growth of 5.3% for ten years and his footnotes missed explaining why. But everyone knew Jeb's prediction of a growth rate of 4% was pie-in-the-sky and said so with his plan months before Sander's plan and Friedman's analysis. His work was sloppy and the mistake was found to explain the crazy growth predictions.
Do you think the fix was in, or that maybe the plan is too good to be true and the analysis was rushed and wrong?
Do you think the fix was in, or that maybe the plan is too good to be true and the analysis was rushed and wrong?
3
Really NYT??? Another negative article about Bernie Sanders. You give Trump a more positive tone than Sanders.
I guess even the Times is susceptible to establishment corruption. So much for the gold standard.
I guess even the Times is susceptible to establishment corruption. So much for the gold standard.
42
NYT's led the cheerleading section for the invasion of Iraq so this shouldn't come as a surprise.
4
GM, can I ask one question about the constant reminders about the Iraq vote? Why does it come up with Hillary every time the far left speaks, but never comes up when Biden's name is brought up: same vote but a profoundly different reaction! deep bias? Misogyny? Hypocrisy?
10
Yes, ... I cancelled my subscription to the NYTimes today for this reason. Although I have to say, I did appreciate the piece by the Editorial Board calling for HRC to release her Wall Street transcripts....
Economics is a challenging subject for most of us, but this analysis is written about as clearly as it could be and supported by further commentary from Friedman. It is disappointing that the most ardent supporters of Bernie Sanders simply choose not to accept it, since it appears in the New York Times, which is in their view biased. This blatant refusal to even consider contrary views, and invoke conspiratorial explanations, reflects poorly on them.
7
Sanders supporters likely wouldn't have such negative reactions if they didn't see only consistently negative assessments of Sanders from the NYTimes (among others). But even so, I think you mischaracterize the response here. In a good number of these comments, people are presenting arguments and asking questions... not simply rejecting the views presented.
Meta Analysis and studies are completely orthogonal in relation to validity when compared to properly controled studies. Meta analysis studies are prone to misinformation because they lack the controls and blinds that structure an actual study. The problem is that often times that in meta analysis the conclusion comes first then works backwards to statistical data that supports the conclusion. Conversely, in a study, the goal is to DISPROVE the hypothesis, and when you cannot it becomes theory that gets peer reviewed for confirmation. Big big difference.
1
Comments to the effect that the NYT is in bed with Hillary and therefore none of the analysis presented by Justin Wolfers can be trusted and that also do not present any substantive reasons why this analysis is wrong contribute nothing of value to this discussion other than to serve as a sad reminder of how many people cannot evaluate economic ideas on their own terms.
28
There was a very good article that explained the differences in views, why some establishment economists disagree with Bernie's plan. "Evaluating Bernie Sanders' Evaluators" I would suggest the author of this article read it. http://www.forbes.com/sites/johntharvey/2016/02/22/evaluating-the-evalua...
4
Great article thanks for the link.
Releasing the heavy debt burden of college graduates would be a huge economic stimulus. These young people want to buy homes, cars, appliances.... Even marriages and the birth rate would boom.
7
It does not matter no one wants their taxes to increase 70% plus to finance the Sanders fantasy. Maybe illegals, college kids, unambitious people are for it, but the majority or working and retired people are not and as soon as everyone understands this nonsense the better off we will all be.
4
Where are you getting your figure for "taxes to increase 70%+"? I have read that no where.
3
"When I pointed Mr. Friedman to this critique of his analysis, he simultaneously accepted and rejected it.
He accepted it, telling me that “I may have made a mistake.”
But he also rejected this critique, arguing that his figures are based on an alternative view of the world..."
I bet. It seems to be a popular view these days that reality is somehow a matter of choice. It's already completely dominant among Republicans, but it's sad to see it take over a huge part of the Democratic party as well. This is truly the Age of Truthiness.
He accepted it, telling me that “I may have made a mistake.”
But he also rejected this critique, arguing that his figures are based on an alternative view of the world..."
I bet. It seems to be a popular view these days that reality is somehow a matter of choice. It's already completely dominant among Republicans, but it's sad to see it take over a huge part of the Democratic party as well. This is truly the Age of Truthiness.
10
Reasonable economic models can be constructed that say anything you can imagine. They all begin with assumptions of human nature.
Bernie Sanders is proposing policies that for the most part we already had as law during the most of the 20th century, or that the rest of the developed world already is using.
You'd do well to consider that reality before pontificating about the realism of others. Your clinging to a recently minted belief that it is overly idealistic and not grown up to expect government to seriously challenge special interests. That is the strain of the democratic party that has lost its grip on reality.
Bernie Sanders is proposing policies that for the most part we already had as law during the most of the 20th century, or that the rest of the developed world already is using.
You'd do well to consider that reality before pontificating about the realism of others. Your clinging to a recently minted belief that it is overly idealistic and not grown up to expect government to seriously challenge special interests. That is the strain of the democratic party that has lost its grip on reality.
7
Oh, ye of little faith! Concentrating on the financing of Sanders' agenda is irrelevant to his primary objective which in essence is creating a society as per the theme of the Three Musketeers: One for all and all for one. Similar to FDR's multiple programs designed to lift the country out of a funk, some will work and some might not. In either event the continuation of an oligarchian society is unacceptable.
10
Of the many once great institutions in this country that have been destroyed by corporate greed, our public and private institutions of higher learning are among the victims. These institutions are no longer governed by academicians but by corporate CEOs who run them like they would a for-profit business. As a result, economists that are not 100% behind capitalism don't get hired. Professor Wolfers is just another shill for corporate America.
5
Yeah, he is associated with the usual suspects, Brookings, Peterson institute, etc.
2
It's pretty clear the economy is under-performing because of a shortfall in aggregate demand. Raising taxes on the wealthy and transferring that income to the poor and middle class should have a short-run positive impact on economic growth because the wealthy save so much of their income, i.e., they have a low marginal propensity to consume. Normally, I'm in favor of savings and investment because these lead to higher productivity and standards of living over time, but in the current circumstances, there is a glut of savings and a lack of investment in physical and human capital. But perhaps the most important impact to growth will come from the incentive effects the Sanders' plan will create. For much too long, the 99% have had their jobs sacrificed on the altar of free trade. For much too long, the 1% have rigged the game so that it's heads they win and tails the 99% loses. It's entirely reasonable to suggest a major reason the labor participation rate is so low is because large segments of the poor and middle class have rightly concluded that most of the economic gains will not reach them anyway, so why bust butt just so the oligarchs can get that much richer. Change the incentive structure, increase the participation rate, put the additional labor into building needed infrastructure and improving human capital, and the macroeconomy can grow much faster than the moribund "new normal" of the past sixteen years.
29
Gerald Friedman asserts that: "The growth rate of the real gross domestic product will rise from 2.1% per annum to 5.3% so that real GDP per capita will be over $20,000 higher in 2026 than is projected under the current
policy."
It seems that if it were possible to grow a modern economy at a rate of 5.3%, some Western democracy would have figured out how to do it by now. Yet, no one has. And that includes Bernie Sanders.
Bernie's economic agenda may well be worth pursuing, but pursuing it on the assumption that it will produce a 5.3% growth rate is blowing (or sucking) smoke.
policy."
It seems that if it were possible to grow a modern economy at a rate of 5.3%, some Western democracy would have figured out how to do it by now. Yet, no one has. And that includes Bernie Sanders.
Bernie's economic agenda may well be worth pursuing, but pursuing it on the assumption that it will produce a 5.3% growth rate is blowing (or sucking) smoke.
8
Thank you for this analysis. Initially, like many, I found Gerald Friedman's analysis quite implausible. James K. Gailbraith's, and a few others', defense of him got me thinking though, since they vouched that Friedman had used standard economic modeling in writing his paper. My sense was that there still had to be something off -- that you had to really drink the Keynesian kool-aid to buy Friedman's results as plausible. It seems the assumption that cutting stimulus would have no effect on the trajectory of the economy was the bad assumption that brings the house of cards that Friedman stacked down. Good job!
11
My guess would be the "Keynesian kool-aid" were staples in both the Reagan and GW households.
Moreover, obviously Cheney was drinking the Kool-Aid during his time as VP when he famously declared that "Reagan proved deficits don't matter; I guess he has sworn off the Kool-Aid, since he now believes deficits matter.
BTW, Keynes was not an advocate for continuous government fiscal intervention. His philosophy was the government should stimulate the economy in the absence of private investment, and after private investment returns government stimulus should end.
Moreover, obviously Cheney was drinking the Kool-Aid during his time as VP when he famously declared that "Reagan proved deficits don't matter; I guess he has sworn off the Kool-Aid, since he now believes deficits matter.
BTW, Keynes was not an advocate for continuous government fiscal intervention. His philosophy was the government should stimulate the economy in the absence of private investment, and after private investment returns government stimulus should end.
This unbiased analysis is sure to rock the Democratic primary.
7
This article is, basically, propaganda. The NYT, despite its close ties to Goldman Sachs, should present a more balanced assessment.
Other nations do the things Mr. Sanders proposes without the horrors suggested by Mr. Wolfer's incomplete study. If, for example, we add our taxes [State and Federal] plus our medical insurance and tuitions, Americans pay nearly as much [or more] as do the leading nations of Europe. But the Europeans get so much more out of their 'dollar' than we get from ours.
This is the shame of not binding together our 'sacred honour' as done in 1776.
Other nations do the things Mr. Sanders proposes without the horrors suggested by Mr. Wolfer's incomplete study. If, for example, we add our taxes [State and Federal] plus our medical insurance and tuitions, Americans pay nearly as much [or more] as do the leading nations of Europe. But the Europeans get so much more out of their 'dollar' than we get from ours.
This is the shame of not binding together our 'sacred honour' as done in 1776.
69
So what would be a more balanced assessment? What about this article makes it propaganda?
1
Economics is gender, racial, ethnic, sectarian, colored, political history plus arithmetic. Economics is neither science nor mathematics. There are way too many variables and unknowns to fashion and use controls to make any reasonably reliable repeatable prediction.
7
In the economic world before the 1970s, Professor G. Friedman's view was the mainstream Keynesian view (sometimes referred to as paleo-Keynesian) and Ms. Robinson was still an august person honored in our economic classes of 1974 and 75. A good argument also can be made that the natural experiments of WWII and Cold War of military Keynesian, the permanent raising of Government spending from about 10% of GDP to 30% of GDP (Federal, State, and Local), had raised the economy to a far higher GDP levels in the period from WWII through 1973. This level was far higher then what the economists using classical models expected in 1937-38 after almost 10 years of Depression. http://www.economicsconcepts.com/secular_stagnation_hansen's_thesis.htm A new natural experiment was conducted with the rise of neoliberal ideologies in both U.S. political parties in the 1970s. Since then the U.S. has engaged in austerity; restricting, capping, and reducing Government spending with Government investment spending on everything from NASA, Basic Research R&D, bridges, roads, and mass transportation all falling to half or lower levels of GDP then they had in 1969. Even military spending reductions, which went from near 9% of GDP during the Vietnam War to the current 3.5% of GDP (despite a global war on terror) has gone to reduce the deficit or provide tax cuts to the rich, while entitlement programs were funded by increasing payroll taxes on the working classes.
2
This is the usual incoherent opinion piece that I expect from the Upshot. The headline speaks of bad math or logic and Bernie Sanders. One might expect that
the story is about Bernie's algebra skills. In the end, the author essentially argues that some economist from Amherst had claimed to use standard macro theory when it turns out that he didn't. Thank God. We need a president who passed algebra.
the story is about Bernie's algebra skills. In the end, the author essentially argues that some economist from Amherst had claimed to use standard macro theory when it turns out that he didn't. Thank God. We need a president who passed algebra.
5
I am a little confused by the logic of some of the commenters which seems to be:
1. Sanders points out real problems
2. Sanders provides a solution to those problems
3. Others point out that the solution doesn't work
4. Those others (and potentially the entire field of economics) must be wrong since they themselves haven't solved the problems
1. Sanders points out real problems
2. Sanders provides a solution to those problems
3. Others point out that the solution doesn't work
4. Those others (and potentially the entire field of economics) must be wrong since they themselves haven't solved the problems
61
You have a problem at point 3. They have not pointed out that the solution doesn't work. At all.
2
What they did is point out that the underlying assumptions made by one of the analysts doesn't fit the standard economic model. This has led the same result listed in item number 4.
1
Where in this article do they point out that one of Bernie's solutions wouldn't work? It's hard to see how this article even applies to what Bernie is proposing. The article talks about the effects of a temporary stimulus being temporary, which is true, but when has Bernie ever proposed a temporary stimulus? What Bernie is proposing is a permanent increase in government spending. No where in the article does it explain why a permanent increase in spending wouldn't lead to a permanent benefit to the economy.
Here's the thing, NYTimes: I don't believe you. Your agenda is crystal clear. After endless, repeated, and flagrant pro-Clinton bias, you have lost all credibility regarding this election (if not credibility in general). And that's a shame because I used to trust what you had to say.
You might be right about the economics of Sanders' proposals, you might be wrong, I don't know, but more importantly, I DON'T CARE. Bernie Sanders so genuinely cares about people that at the end of the day, I implicitly trust him to do the right thing. I believe he will do whatever he can to help people, and that is why gets my vote. Hillary Clinton is so disingenuous and untrustworthy that she could literally have the best proposals in the world and I still wouldn't vote for her. And I don't think I am alone in this sentiment.
You seem to believe that Bernie Sanders appeal is that people believe he will give them free health care and access to affordable education, but it is so, so, so much deeper than that. He may not be able to accomplish any of those things but I know that he will die trying. THAT is the kind of leader I want.
You might be right about the economics of Sanders' proposals, you might be wrong, I don't know, but more importantly, I DON'T CARE. Bernie Sanders so genuinely cares about people that at the end of the day, I implicitly trust him to do the right thing. I believe he will do whatever he can to help people, and that is why gets my vote. Hillary Clinton is so disingenuous and untrustworthy that she could literally have the best proposals in the world and I still wouldn't vote for her. And I don't think I am alone in this sentiment.
You seem to believe that Bernie Sanders appeal is that people believe he will give them free health care and access to affordable education, but it is so, so, so much deeper than that. He may not be able to accomplish any of those things but I know that he will die trying. THAT is the kind of leader I want.
139
You epitomize everything I find distasteful about Bernie fans. You say you don't care if his plans work or not. That suggests immaturity and emotional reasoning. Do you care that he is a socialist and unelectable in a general election? Are you wealthy enough to withstand at least four years of a Republican administration? You throw slurs and tropes at Hillary, but how much of that is what you know? Are you just repeating talking points? Bernie isn't even a Democrat and he doesn't have the Democratic machine behind him. It is much more likely that a pragmatic and experienced Hillary would be able to make the incremental progress that can be made, not that we would wish could be made.
23
Here, here
1
Well, a lot of us do care whether Sanders' proposals will have the effects they say they have, or not. For myself, I would like to know that my Presidential candidate proposes a carefully thought-out economic plan, the effects of which can be generally predicted. There is only one candidate whose economic plans (also health care, financial reform, etc) pass muster with experts in these areas.
12
I am shocked -- shocked! -- that snake oil is being peddled here in Casablanca. Why would such a nice old democratic socialist do such a thing? Why would so many presumably intelligent people buy it? Maybe the presumption is wrong.
10
Shocked that Gerald Friedman is voting for Clinton? Nothing stated was implied that Bernie's plans are not the best options to strengthen our economy. It's a turf war over who has the bestest economic opinion.
While some of the specifics of Friedman's analysis may deserve some scrutiny, it is equally apparent that no one can predict all the positive outcomes of the redistributionist effects of Bernie's plans. It is all a game of estimates.
I feel reasonably confident that there would be considerable positive benefits that are achieved by having the vast majority of the population with more money to spend. This would result in a consistent boost in consumption. Can any of these experts tell us precisely what our production efficiency currently is or what it might be in the future?
While some of the specifics of Friedman's analysis may deserve some scrutiny, it is equally apparent that no one can predict all the positive outcomes of the redistributionist effects of Bernie's plans. It is all a game of estimates.
I feel reasonably confident that there would be considerable positive benefits that are achieved by having the vast majority of the population with more money to spend. This would result in a consistent boost in consumption. Can any of these experts tell us precisely what our production efficiency currently is or what it might be in the future?
Could someone explain how conventional macroeconomic principles apply to different economic systems. Do these principles apply equally to communistic, socialistic and capitalistic economies? Milton Friedman seemed to say that attempts to restrain or regulate a free market economy led to undesirable outcomes. He criticized communism. His ideas always seemed akin to Alice in Wonderland, to me. Could one expect an economist to espouse or criticize based on their advocacy for one form of economy versus another? I have thought Krugman's criticisms of Bernie Sanders to be based upon a set of principles that might me called capitalistic as opposed to democratic-socialistic.
1
Let the feuding continue. None of these genius critics seemed to be able to warn us about the Wall Street meltdown, of which are we still paying for.
The assumption is that we will always be a dysfunctional country, with rising poverty and growing wealth to the 1%. We might as well be serfs and lords in the Middle Ages. Now, Democratic Socialism doesn't sound so bad?
The assumption is that we will always be a dysfunctional country, with rising poverty and growing wealth to the 1%. We might as well be serfs and lords in the Middle Ages. Now, Democratic Socialism doesn't sound so bad?
62
But there were many, many "genius critics"--economists from various universities, from the World Bank, from IMF, from within the SEC--who warned about the Wall Street meltdown. The Bush administration just ignored it. Bush was the one who guaranteed a bailout. Unfortunately, Obama did not punish Wall Street, which is a great blemish on his legacy. Watch "Inside Job" for more info. One of its main claims is to encourage non-experts to not be intimidated by or blindly follow economic arguments, but just be patient enough to look at the details. You should trust logically reasoned-out details when they are laid carefully before you, argument by argument. It's the vague political promises of utopia that will be paid for by magic that you should beware of.
4
"The study is not an official campaign document."
Mr. Wolfers can talk extensively about what he admits is "not an official campaign document". Does he have anything to say about grotesque economic equality? Student loan interest rates and debt? The fact that minimum-wage Walmart is our biggest employer? Our crumbling infrastructure, our lack of decent public transit options? The extortionist prices we pay for health care?
If he has solutions for anyone making under $100K/year, then we have a desperate need to hear them. If not, everything he says should be relegated to the dumpster bin along with trickle-down an all of the other "mainstream economic policies" that have been foisted upon us.
Mr. Wolfers can talk extensively about what he admits is "not an official campaign document". Does he have anything to say about grotesque economic equality? Student loan interest rates and debt? The fact that minimum-wage Walmart is our biggest employer? Our crumbling infrastructure, our lack of decent public transit options? The extortionist prices we pay for health care?
If he has solutions for anyone making under $100K/year, then we have a desperate need to hear them. If not, everything he says should be relegated to the dumpster bin along with trickle-down an all of the other "mainstream economic policies" that have been foisted upon us.
80
What is so alienating about Bernie-ites is that they act as though they are the only ones who have thought and care about things like economic equality, student debt, minimum wage, infrastructure, health care. Have you already forgotten Obama's platform of CHANGE? Do you think he's merely a traitor to his campaign promises? Or, more realistically, change is slow, but I believe in the actual change that Obama has accomplished in the past eight years than the nothing that Sanders has accomplished in his tiny state.
5
A temporary government stimulus can have a long-term economic benefit if it is invested in items that contribute to long-term productivity, such as better transportation.
However, the macroeconomic benefit of putting more money into the economy must necessarily decline once that extra spending is withdrawn. If that economic stimulus leads to a rise in business and consumer confidence, it is possible that an increase in private spending will make up for the withdrawal of the government stimulus. That appears to be what Mr. Friedman is arguing for. But a more sophisticated mechanism than simply projecting economic growth as if the government stimulus had not been withdrawn is needed to account for the "public spending stimulates private spending" effect.
However, the macroeconomic benefit of putting more money into the economy must necessarily decline once that extra spending is withdrawn. If that economic stimulus leads to a rise in business and consumer confidence, it is possible that an increase in private spending will make up for the withdrawal of the government stimulus. That appears to be what Mr. Friedman is arguing for. But a more sophisticated mechanism than simply projecting economic growth as if the government stimulus had not been withdrawn is needed to account for the "public spending stimulates private spending" effect.
4
Has there ever been a time when a large stimulus in the form of large spending has not raised the baseline? Typically, the stimulus tapers, The rate of growth slows, but it doesn't drop back to zero. Even if the growth rate drops back to exactly what it was before the stimulus, that rate of growth is now applied a higher base. It's the compounding effect. This should especially be the case when the large expenditure is on things we need that will improve economic efficiency. As I read Friedman, he was saying this. That particular argument of the Romers looks like a strawman to me. (Also questionable to me is the pessimistic assessment of potential output and the downplaying of "slack," one that probably would have been made in the early 1990s to pooh-pooh any possibility of happening what actually did happen later in the 1990s to the labor market. What that experience shows is that people thought long gone from the labor force come crawling out of the woodwork when jobs are plentiful and they see they can raise their incomes and have something constructive to do during the day. But that's another story.)
I can think of one time when the withdrawal of a government stimulus led to a recession/depression. In 1937, after several years of very solid growth, FDR pulled back on the New Deal expenditures and raised taxes in what proved to be a misguided effort to reduce the government deficit. The economy tanked almost immediately, and did not fully recover until WWII.
This may be a special case because at the time the economic stimulus was withdrawn, the economic recovery wasn't anywhere near complete yet. The growth over FDR's first few years had brought unemployment down from about 25% to 15% - a big improvement, but far from a full recovery.
Nothing I've said is meant to indicate that Sander's economic plans won't have a positive effect on the economy, just that the effect may not be as large as Friedman predicted.
This may be a special case because at the time the economic stimulus was withdrawn, the economic recovery wasn't anywhere near complete yet. The growth over FDR's first few years had brought unemployment down from about 25% to 15% - a big improvement, but far from a full recovery.
Nothing I've said is meant to indicate that Sander's economic plans won't have a positive effect on the economy, just that the effect may not be as large as Friedman predicted.
It is irresponsible for the popular media to use an esoteric, academic debate to critique Bernie Sanders' economic platform - especially given that Friedman's conclusions are not used by Bernie Sanders to justify his policies. The debate presented here is appropriate for professional journals where most of the readers can evaluate the claims. There should also be some reservation to treat the field of Economics like it's a reductionistic science, where the all numbers should be expected to add up. Furthermore, a "democratic" country with such abysmal voter participation and such an enormous military budget should give cynics some pause before they conclude that it's impossible for the US to achieve what much of the modern world already has.
40
OK, so twenty years ago I might have read this analysis and gave you the benefit of the doubt. But what analysis has been done here of Hillary Clinton's economic plans? Oh wait, beyound just saying she's going to maintain the status quo, she has no plan.
And that status quo is based on the time-tested "free market" that demands tax cuts for the rich and corporations, suspension of consumer protections and corporate regulations, outsources jobs to other countries, slashes government programs that provide a social safety net for the poor and middle class and slashes education of our young (yet preserves and expands the most expensive program: defense).
That system has lead not only to a big increase in income inequality under every president since Reagan--including Bill--but this gap has increased, hugely, since the economic melt-down, thanks to Obama's big, warm embrace of this free market delusion.
And wasn't Romer an advisor to Obama?
So forgive me if I dismiss this "analysis". I might have believed it twenty years ago. But when I read this blog, I can't help feeling the writers are nothing more than tools of the One-Percent who want to accrue America's wealth for themselves and everyone else be damned.
And that status quo is based on the time-tested "free market" that demands tax cuts for the rich and corporations, suspension of consumer protections and corporate regulations, outsources jobs to other countries, slashes government programs that provide a social safety net for the poor and middle class and slashes education of our young (yet preserves and expands the most expensive program: defense).
That system has lead not only to a big increase in income inequality under every president since Reagan--including Bill--but this gap has increased, hugely, since the economic melt-down, thanks to Obama's big, warm embrace of this free market delusion.
And wasn't Romer an advisor to Obama?
So forgive me if I dismiss this "analysis". I might have believed it twenty years ago. But when I read this blog, I can't help feeling the writers are nothing more than tools of the One-Percent who want to accrue America's wealth for themselves and everyone else be damned.
110
Oh, she has a plan. She takes money from big banks and does their bidding, while the economics profession (many of whom work for big banks and financial institutions) provide 'intellectual' cover.
13
Obama's tax rates on the rich have actually gone up, higher than previous presidencies. Hillary promises to continue Obama's slow-but-sure change. Bernie-ites, I get the feeling, are like the hares that scoff at the tortoise--but in the end, give me real, actual experience and change, rather than a Vermont Senator that has been stagnating for decades.
4
RR -- GW Bush's Economic Growth and Tax Relief and Reconciliation Act of 2001 dropped the highest income tax rate to 35 percent from 2003 to 2010. It helped to balloon the deficit that we have today.
The Tax Relief, Unemployment Insurance Re-authorization, and Job Creation Act of 2010 (the stimulus bill that saved the economy) maintained the 35 percent tax rate through 2012, when the tax rate went up to 39.6 percent.
Obamacare added an additional 3.8 percent. But most Americans won't pay that rate. Only the richest of rich do.
Under Reagan, the top rate was 50%. Obama is hardly gouging the rich.
I have seen my so-called "conservative" generation slash taxes over and over and cut everything except defense. Bush actually cut taxes during a war! Insane! Penny wise but pound foolish. You invest in the future: pensions, health care, and education promote a strong, healthy workforce and savings for the future. Wars are folly for immature men with small minds.
Seems to me Bernie Sanders is the tortoise and the "We can cut taxes to promote growth" are the hares-brains.
The Tax Relief, Unemployment Insurance Re-authorization, and Job Creation Act of 2010 (the stimulus bill that saved the economy) maintained the 35 percent tax rate through 2012, when the tax rate went up to 39.6 percent.
Obamacare added an additional 3.8 percent. But most Americans won't pay that rate. Only the richest of rich do.
Under Reagan, the top rate was 50%. Obama is hardly gouging the rich.
I have seen my so-called "conservative" generation slash taxes over and over and cut everything except defense. Bush actually cut taxes during a war! Insane! Penny wise but pound foolish. You invest in the future: pensions, health care, and education promote a strong, healthy workforce and savings for the future. Wars are folly for immature men with small minds.
Seems to me Bernie Sanders is the tortoise and the "We can cut taxes to promote growth" are the hares-brains.
2
Nice article and the points all make sense. But it seems the real issue comes with challenging a prediction that economic growth will increase. Friedman may (or may not, depending on your views on standard/mainstream economics) have got this wrong. However, is Bernie winning support by promising "high growth" or is he winning support by promising "education" and "healthcare" etc.?
Whether these measures do or do not lead to higher long run growth by the amont predicted in Friedman's analysis probably does matter much to those willing to vote Sanders. It's whether or not his proposals, for example on healthcare , infrastructure or education are viable, that might more seriously mislead voters.
Whether these measures do or do not lead to higher long run growth by the amont predicted in Friedman's analysis probably does matter much to those willing to vote Sanders. It's whether or not his proposals, for example on healthcare , infrastructure or education are viable, that might more seriously mislead voters.
As I have written before, Sanders message is not about historical GDP per capita, his message is about an equitable distribution of GDP per capita. His stated goal is to end the stagnation for median household income, which is basically unchanged since the predominantly single earner days in 1975.
During 1975 GDP per capita equaled 140% of the median household income for the average size household; today the GDP per capita ratio to median household income stands at 219%.
Had we maintained the 1975 ratio, today's median household income would be approximately 75K; current statistics show the median household income is approximately 53K.
Moreover, the main argument against the Friedman analysis is we have never had an extended period where GDP grew by 5.5% on an annual basis. This may be true, but a review of annual per capita GDP growth between 1949 and 1980 shows per capita GDP growth surpassed 5.5% on several occasions, and was over 4% 4X in every decade between 1950-1979. Whereas, in every year since 1981, per capita GDP surpassed an annual growth rate higher than 4% in only one year(1984).
What was the difference between the 50's-70's period, and the 80's through today? During the 50's-70's era, infrastructure spending; construction of the interstate highway system provided an impetus for increased private investment( demand for housing and automobiles). Post 1980, public investment disappeared; Sanders is calling for a return to infrastructure spending.
During 1975 GDP per capita equaled 140% of the median household income for the average size household; today the GDP per capita ratio to median household income stands at 219%.
Had we maintained the 1975 ratio, today's median household income would be approximately 75K; current statistics show the median household income is approximately 53K.
Moreover, the main argument against the Friedman analysis is we have never had an extended period where GDP grew by 5.5% on an annual basis. This may be true, but a review of annual per capita GDP growth between 1949 and 1980 shows per capita GDP growth surpassed 5.5% on several occasions, and was over 4% 4X in every decade between 1950-1979. Whereas, in every year since 1981, per capita GDP surpassed an annual growth rate higher than 4% in only one year(1984).
What was the difference between the 50's-70's period, and the 80's through today? During the 50's-70's era, infrastructure spending; construction of the interstate highway system provided an impetus for increased private investment( demand for housing and automobiles). Post 1980, public investment disappeared; Sanders is calling for a return to infrastructure spending.
55
" Sanders is calling for a return to infrastructure spending."
And will he also demand that all infrastructure repairs be done only by union members who will then kickback most of their union dues to the democrats? The GOP would be crazy to allow this plan to give kickback money to the democrats.
As a compromise, why not let states with right to work laws use non-union workers for infrastructure repairs and those states without such laws use only union workers, then at the end of the day compare the cost and quality of the work done by the two groups.
And will he also demand that all infrastructure repairs be done only by union members who will then kickback most of their union dues to the democrats? The GOP would be crazy to allow this plan to give kickback money to the democrats.
As a compromise, why not let states with right to work laws use non-union workers for infrastructure repairs and those states without such laws use only union workers, then at the end of the day compare the cost and quality of the work done by the two groups.
1
The idea that we even treat economic analysis as some sort of science is ridiculous. You can't do a double blind study with economics, so hypotheses can never be tested using the scientific method. Sure, you can make mistakes in math, but not in assumptions. Given all the economic forecasting over the years that has proven to be highly unreliable (Alan Greenspan, anyone? Milton Friedman?) there is nothing in Friedman's plan that suggests his assumptions are any different than those made by Christina Romer and her husband David?
6
Basically he is selling a perpetual motion machine. It just boggles my mind that Mr. Friedman can believe this when we have empirical evidence before our very eyes that the socialist countries do not have greater economic outputs and it's just a matter of time before the bill comes due. Just look at China with their fake propped up economy.
6
Actually, Denmark has better GDP growth per hours worked since at least the 1970's...
http://www.demos.org/blog/10/20/15/united-states-vs-denmark-17-charts
http://www.demos.org/blog/10/20/15/united-states-vs-denmark-17-charts
How embarrassing for Mr. Friedman. At least he admits that his modeling is mistaken and quite literally unfounded. What a bummer though, that economic nirvana Bernie is proposing really sounded great.
11
Let's not forget to mention that Gerald Friedman supports Hillary Clinton and is a contributor to her campaign.
NYTimes loves to push the idea that Professor Friedman is shilling for the candidate they fear worse than Trump, but in fact that is not the case.
NYTimes loves to push the idea that Professor Friedman is shilling for the candidate they fear worse than Trump, but in fact that is not the case.
49
If this is all pie-in-the-sky, then what are those G-20 economists, finance ministers, and other global officials going to achieve in China this week? (Read today's article here in the NYT). The western officials are advising the Chinese government to stimulate consumer spending in it's economy when the consumers who can't offshore their wealth into speculative western investments have lost most of their life savings invested into the Chinese stock market during booming economic times. Going into less productive times, since the western markets no longer have the disposable income to invest into the Chinese economy and are now indebted to the inflated finance, insurance, real estate, and medical industries here now, do the western elites really expect the eastern elites to " do as I say and not as I do and spread the wealth"? It seems that the entire global economy needs less concentration of wealth, however, the establishment here in the US is not going to rock the boat in this election season because I would guesstimate 20% of the US population earns $75,000+ annually in the FIRE and medical industries and won't have it. The losers can just eat cake, like those in the developing economies always have had to do.
Releasing slaves didn't look so good for the bottom line, either. Will it take a Civil War to change this country's direction this time?
66
Donald Trump is whistlin' Dixie.
So, Mr. Wolfers, what precisely is the upshot? To me, with ~40 years of working in and around federal, state, and local government, your analysis of Friedman's analysis means that Senator Sanders's first budget proposal as president would be DOA. Not only because a deer-in-the-headlights Congress wouldn't know what to do with it other than say No, no, hell no. But also because its basic assumptions about fiscal and economic effects would be, simply, wrong. Please tell us what your spreadsheet of the costs and effects of Sanders's policy proposals would look like. My take is that, as rhetorically attractive as his ideas are, they are not doable and that, scraped down to the bare metal, Sanders is just another tax and spend Democrat.
4
What, is that reality rearing its ugly head? Bernard Sanders has many supporters of differing ages and backgrounds. But if you take away his young, white college students, he wouldn't have much. Those people are new to the game of politics, easily hoodwinked by somebody in a position of authority (a U.S. Senator) telling them things that they really, really like hearing. Bernard isn't a charlatan so much as a believer in his own magic. He has been preaching the same message all his adult life, and at the sunset of his life, he is reaching a worldwide audience. Why wouldn't he be pleased and unwilling to admit any real-life problems with his plans? It's up to us, the discerning, experienced progressive voters, to save our country from the horrors, yes horrors, of a Republican control of all three branches of the government.
15
Dr. Wolfers,
Historically, government stimulus, a.k.a. investment in greater efficiency results in long-term economic benefits. My favorite is Eisenhower's Interstate Highways but there are others that have increased US economic growth through greater productivity, such as B. Franklin's postal roads, DeWitt Clinton's Erie canal, or Lincoln's Transcontinental RR and the standard RR gauge, telegraph, TR's Panama Canal, airport & air control system, the Manhattan Project, Apollo project. God! don't the former CEA chiefs understand what made America Great? Government plays a very important role in providing broad benefits to society.
Our problem now is we have forgotten how public investment has made this country.
We now have a problem that threatens civilization, that is energy from fossil fuels, which now must be evolved to new energy sources. I suggest that it would be prudent if the new government or the Obama government would take the lead in establishing an international Maglev space launch facility to place solar generators in geosynchronous orbit to beam very low cost electric power worldwide. Use stimulus to build a prototype synthetic gasoline, diesel & jetfuel facility to make fuels from air and water.
Then if we have a lick of sense we will use the rights-of-way of our Interstates to build a 300 mph 2nd gen superconducting Maglev logistics network to carry trucks in roll-on, roll-off carriers. This will increase productivity for all & ease congestion.
Historically, government stimulus, a.k.a. investment in greater efficiency results in long-term economic benefits. My favorite is Eisenhower's Interstate Highways but there are others that have increased US economic growth through greater productivity, such as B. Franklin's postal roads, DeWitt Clinton's Erie canal, or Lincoln's Transcontinental RR and the standard RR gauge, telegraph, TR's Panama Canal, airport & air control system, the Manhattan Project, Apollo project. God! don't the former CEA chiefs understand what made America Great? Government plays a very important role in providing broad benefits to society.
Our problem now is we have forgotten how public investment has made this country.
We now have a problem that threatens civilization, that is energy from fossil fuels, which now must be evolved to new energy sources. I suggest that it would be prudent if the new government or the Obama government would take the lead in establishing an international Maglev space launch facility to place solar generators in geosynchronous orbit to beam very low cost electric power worldwide. Use stimulus to build a prototype synthetic gasoline, diesel & jetfuel facility to make fuels from air and water.
Then if we have a lick of sense we will use the rights-of-way of our Interstates to build a 300 mph 2nd gen superconducting Maglev logistics network to carry trucks in roll-on, roll-off carriers. This will increase productivity for all & ease congestion.
4
I wish the author did a better job of digging into the details. It all depends where the money is invested.
For example, infrastructure projects would yield as a temporary boost to the economy but what about education?
Investing in Education has a very positive long term effect on the economy. In fact, according to the Buckminster Fuller Institute, in order for education to pay for itself only 1 Student out of 100,000 needs to create something special!
You can think of education as a 'Trickle Up Economics'. If more of the US population was college education, had access to great education etc... more economic prosperity, innovation, jobs etc would be created. America has to invest in its human capital.
For example, infrastructure projects would yield as a temporary boost to the economy but what about education?
Investing in Education has a very positive long term effect on the economy. In fact, according to the Buckminster Fuller Institute, in order for education to pay for itself only 1 Student out of 100,000 needs to create something special!
You can think of education as a 'Trickle Up Economics'. If more of the US population was college education, had access to great education etc... more economic prosperity, innovation, jobs etc would be created. America has to invest in its human capital.
6
At a time of zero and negative interest rates why are we not borrowing and spending as much as possible to fix our infrastructure. Repairs that will likely take years.... and repairs that will stimulate the economy. By the time we have repaired our infrastructure more and more jobs will have vanished as new technologies replace humans... and then we will need a new way distribute wealth if we wish the consumption wheels to keep spinning.
14
The US government does not have to borrow to spend. The idea that it must is a holdover from the days of the gold standard that lives on because politicians of all stripes find it useful as cover for policies that the voting public wouldn't otherwise accept.
2
The answer, it appears, is to always spend and borrow more as it is writ large that interest rates will always under all circumstances go down?
Hmmm. We have a job for you with the Obama/Clinton/administration!
Hmmm. We have a job for you with the Obama/Clinton/administration!
2
I know we do not need to borrow, but it simplifies the argument for those that think the economy works like the family budget. We do not need to worry about a deficit either, especially in this economy, but that goes back to the balanced budget kitchen table Republican analysis of the economy that almost everyone dwells on these days.
1
So, we should keep doing what were doing because it is working so well?
88
Bravo, simple and to the point.
1
No. We look for solutions that look like they'll work and pass in Congress.
4
You got the message!
Oh, the nitpickers! Why doesn't everyone just realize that Bernie will make America great again?
6
"Make America Great Again" is Trump's slogan, not Bernie's.
3
Wes, I think Paul was being tongue in cheek.
3
Thanks Joanne; at least someone out there is not brain-dead (which would appear to encompass an unfortunately large percentage of Senator Sanders' followers). While the emotional involvement of this cohort is commendable, they seem to have far more of that than cognitive rationality-- which is precisely like so many of the Trump train travelers.
3
Nevertheless, all the quibbling over what kind of economics it is..doesn't deny the truth that the whole country is falling apart in so many ways, physically, metaphorically....take that to the economists..
3
Lidia, it is not relevant to your thinking that Friedman is wrong? Spend, spend and spend?
1
Dear NYTimes, The New Yorker called. I think you two are familiar with each other...maybe you should pass on the below link and analysis to Justin Wolfers. Let them go head to head because John Cassidy writes one hell of a convincing argument.
Sanders’s economic plan doesn’t stop there. Friedman points out that the candidate’s “Medicare for all” proposal, whose cost he estimates to be about $1.1 trillion a year, would also raise demand throughout the economy. Although the plan would largely be paid for by higher income taxes and a 6.2-per-cent payroll tax on employers, Friedman argues that the savings in private insurance premiums would outweigh these costs, and that most of the savings would be passed on to workers in the form of higher wages, which would then be spent. Indeed, it is this extra boost to the economy that drives much of the rise in G.D.P., productivity, and wages that Friedman projects.
http://www.newyorker.com/news/john-cassidy/bernie-sanders-and-the-case-f...
Sanders’s economic plan doesn’t stop there. Friedman points out that the candidate’s “Medicare for all” proposal, whose cost he estimates to be about $1.1 trillion a year, would also raise demand throughout the economy. Although the plan would largely be paid for by higher income taxes and a 6.2-per-cent payroll tax on employers, Friedman argues that the savings in private insurance premiums would outweigh these costs, and that most of the savings would be passed on to workers in the form of higher wages, which would then be spent. Indeed, it is this extra boost to the economy that drives much of the rise in G.D.P., productivity, and wages that Friedman projects.
http://www.newyorker.com/news/john-cassidy/bernie-sanders-and-the-case-f...
24
Lydia,
I know this is dumb but you seem to count cost of medicare as not including demand.
I know this is dumb but you seem to count cost of medicare as not including demand.
" most of the savings would be passed on to workers in the form of higher wages, which would then be spent."
But it does not mention that higher wares would also result in higher taxes while higher wages would also lead to increased automation which is becoming increasingly less expensive.
But it does not mention that higher wares would also result in higher taxes while higher wages would also lead to increased automation which is becoming increasingly less expensive.
1
The Romer and Romer paper Wolfers links to already analyzed Friedman's Sanders health proposal analysis. It suffers from the same problem (counting the additional spending freed from the health proposal as contributing to each year's growth rates, rather than as a one-time increase in levels).
2
Key phrase, "the study is not an official campaign document. "
6
Laughable..
Bernie Sanders continues to tell his base what it needs to hear in order for him to get the monies he needs to keep his presidential run on track.
His "Pie in the Sky" economics forecast and his one-trick-pony mantra of Financial Reform play well to a large part of his following that has sizable student loan debt and a future that will not even come close to what their parents experienced-a middle class experience, attractive job benefits, vacations, pensions, et al.
And with that said, it's easy to see how his followers don't mind the notion of how corruptible he really is, evidenced by his climbing into bed with the Gun Lobby because so many of his constituents are gun owners, forcing him to vote many, many times against The Brady Billy, and all to secure votes and get reelected over and over again.
His "Pie in the Sky" economics forecast and his one-trick-pony mantra of Financial Reform play well to a large part of his following that has sizable student loan debt and a future that will not even come close to what their parents experienced-a middle class experience, attractive job benefits, vacations, pensions, et al.
And with that said, it's easy to see how his followers don't mind the notion of how corruptible he really is, evidenced by his climbing into bed with the Gun Lobby because so many of his constituents are gun owners, forcing him to vote many, many times against The Brady Billy, and all to secure votes and get reelected over and over again.
5
Reid climbed into bed with the NRA in order to fund his re-election. By any means necessary?
1
"HIs "Pie in the Sky" economics forecast..."
No need to be dishonest. Sanders did not forecast these numbers. These numbers came from an independent study conducted by a Hillary supporter. Sanders had nothing to do with this.
If you bothered to read R's&R's critique, you would have realized that they actually support many of Sanders policies. Their main contention is not with the actual policies, but with the overly optimistic numbers of Friedman's analysis.
No need to be dishonest. Sanders did not forecast these numbers. These numbers came from an independent study conducted by a Hillary supporter. Sanders had nothing to do with this.
If you bothered to read R's&R's critique, you would have realized that they actually support many of Sanders policies. Their main contention is not with the actual policies, but with the overly optimistic numbers of Friedman's analysis.
9
Climbed in bed with gun owners? Hardly! One vote for one bill does not make him an NRA darling.
The NRA gives Sanders a D-.
http://www.politifact.com/truth-o-meter/statements/2016/jan/20/bernie-s/...
The NRA gives Sanders a D-.
http://www.politifact.com/truth-o-meter/statements/2016/jan/20/bernie-s/...
4
Bernie is a bigger fraud and mislead ear than TRUMP. He cannot deliver jobs, healthcare or education without bankrupting the country. No revolution, here.
2
Granted, none of this would pass in congress, but it wouldn't bankrupt the country as long as it's paid for with higher taxes. Countries like Denmark, Norway and Sweden have shown that all of this stuff can work as long as you have a population that sees those higher taxes as being worthwhile.
There is ALWAYS danger when academic disputes (Friedman assuming novel and not widely held impact views) are brought into the political.
I fear this is going to be shifted into the same pedantic "playing fast and loose with economic propaganda" red herring that all current policy spats are.
For me the (undetermined) question of the Sanders' plan, even sans growth, would the economy be one in which I would want to live and raise my son? I'm not sure, but it's a hell of a more pressing question than whether Gerald Friedman is on the margins of his field.
I fear this is going to be shifted into the same pedantic "playing fast and loose with economic propaganda" red herring that all current policy spats are.
For me the (undetermined) question of the Sanders' plan, even sans growth, would the economy be one in which I would want to live and raise my son? I'm not sure, but it's a hell of a more pressing question than whether Gerald Friedman is on the margins of his field.
1
No. Friedman is not on the margins of his field. He is just wrong!
7
Do you want him living in this one? Because that's what you're going to get if you vote for Hillary. Worse, if you vote for a Republican.
3
Beyond the macro-economic impacts there are some very practical problems with some of Sanders' proposals. Take his one for free college education at public colleges and universities. While sounding nice, wouldn't this destroy all private colleges? Would they shut down due to lack of students, or would they be forced to become public universities? Regarding the public universities, wouldn't they have to raise their admission standards in order to keep from being overwhelmed with students they couldn't handle? And what about students with no 'skin in the game'? Would they study as hard when they are not putting their or their parents money ion the line? Would it just be a free four year hiatus? The devil is in the details.
5
Dont we all benefit from having a well-educated citizenry? And do you realize the impact it has on our economy when people are paying off crushing student debts for 20 or 30 years--payments so large that they have little disposable income and difficulty living independently?
5
A college education is a complete waste of time and money if the students have not successfully completed High School and Grade School. By "successfully" I meant they learned to critically think etc.
But since B. Obama never paid a dime in tuition he is unaware of this. Bernie, well Bernie is just Bernie.
But since B. Obama never paid a dime in tuition he is unaware of this. Bernie, well Bernie is just Bernie.
2
John,
Your Fears are unfounded :)
1. Would this destroy all Private Colleges?
Clearly not. Private High Schools exist even though HS education is Free. In fact some of the more expensive HS cost more than most colleges! There will always be a demand for a great private education on every level.
2. Would Colleges have to raise admission rates?
They could. Again this is not a real issue. Right now many state colleges are spending Billions of dollars creating a 'FUN' environment to entice students to enroll. These Billions of dollars could now go towards education.
3. Would the students study hard?
If you grew up in a poor slum and this was your get out of the ghetto card would you take it or are you too lazy?
Your Fears are unfounded :)
1. Would this destroy all Private Colleges?
Clearly not. Private High Schools exist even though HS education is Free. In fact some of the more expensive HS cost more than most colleges! There will always be a demand for a great private education on every level.
2. Would Colleges have to raise admission rates?
They could. Again this is not a real issue. Right now many state colleges are spending Billions of dollars creating a 'FUN' environment to entice students to enroll. These Billions of dollars could now go towards education.
3. Would the students study hard?
If you grew up in a poor slum and this was your get out of the ghetto card would you take it or are you too lazy?
3
No, the real problem is that Sweden has done what Sanders supports and more when they had to rectify their economic crisis of the early 90s.
I wish the Senator would be concrete in pointing to that example or the policies of their Scandinavian counterparts. Sweden reformed its health care system, which includes resolving the "abuse of too much care" issue critics of Senator Sanders always want to point to. They balance their budgets, methodically broke up "too big to fail" banks, and have a built a modern infrastructure.
These ideas actually exist in the real world. Sanders just needs to be blunt in explaining who uses them and how.
I wish the Senator would be concrete in pointing to that example or the policies of their Scandinavian counterparts. Sweden reformed its health care system, which includes resolving the "abuse of too much care" issue critics of Senator Sanders always want to point to. They balance their budgets, methodically broke up "too big to fail" banks, and have a built a modern infrastructure.
These ideas actually exist in the real world. Sanders just needs to be blunt in explaining who uses them and how.
72
Dragons also exist in the real world. And dragons are cool. But that doesn't mean we can just plop them on each state and expect them to thrive. Sweden does not have the unfortunate history of racist politics that underlies the massive inequalities in the U.S. In Sweden, they share the same values, the same language, the same history, because, frankly, they're pretty much all the same. They are homogeneous population. The U.S. has a massive disadvantage in that its diversity also means that the powerful will exploit all possible conditions in order to keep way ahead of the less fortunate, because they are racially, culturally, religiously, and linguistically different from them. There have been American leaders who have been trying for over a century to make U.S. more "equal" and more "socialist." It is an ongoing war for equality, and though Bernie is vocal about the surface issues, it does not seem that he or Bernie-ites are aware of the massive complications in pushing for even an increment of Change--though Obama has been able to accomplish a great deal, though obviously too slowly for those who have no idea how hard it is.
4
The day after Barack Obama got elected, the first time, Senator Mitch McConnell gathered the members of the Republican Congress together and informed them they were now expected to vote against everything President Obama put on the table, everything, and they have done just that for seven and a half years.
This Obstructionist Policy is what President Obama has had to work against for his entire two terms.
So, no matter what construct you put out there for our leaders to follow, it's just rhetoric when you are up against such a conspiratorial, opposition party like we have with the Republicans and you should mention this first before you devise a strategy.
Because with a roadblock like what President Obama had to deal with for all his time in office any chance of getting Progressive Initiatives through will fail in its tracks.
This Obstructionist Policy is what President Obama has had to work against for his entire two terms.
So, no matter what construct you put out there for our leaders to follow, it's just rhetoric when you are up against such a conspiratorial, opposition party like we have with the Republicans and you should mention this first before you devise a strategy.
Because with a roadblock like what President Obama had to deal with for all his time in office any chance of getting Progressive Initiatives through will fail in its tracks.
3
A real-world experiment supporting Professor Wolfers argument is ongoing in Denmark, a country Sen. Sanders apparently wishes the United States would emulate. The government of Denmark spends about 43% of GDP. This is almost twice what the US government spends (an apples to apple comparison using World Bank data found here: http://bit.ly/1XPMhbA). Keep in mind that the Danes spend it year in and year out, which means it's the kind of level stimulus that underlies Professor Friedman's economic conclusions. Yet growth in Danish GDP will be about 1.5% for 2015, only expecting to rise to 2.1% by 2018. It's true that an initial increase in US federal government spending from 24% to 43%, thereby matching what the Danish government spends, would definitely stimulate our economy (the very definition of economic stimulus). We might even surpass the 5.3% growth rate Mr. Friedman claims in his analysis. However, the increase wouldn't be sustainable, as Mr. Wolfers points out. And the United States is not Denmark in ways too numerous to delve into here. Suffice to say, the changes necessary for the federal government to be able to spend 43% of our current GDP of $17,942 billion (hot off the press today), or about $7.7 trillion, would be absolutely wrenching and totally improbable. In short, Professors Romer are correct and Professor Friedman is wrong. Sen Sanders needs to get a new model, hopefully one rooted in reality.
38
Right. If you chart Danish GDP growth going back 60 years, its averaged a little higher than the U.S. for the earlier part of that period, a little less in the later part. Overall on a per-capita basis basically same-ish. But NOT 5.3% or 4.5%. More like a long term rate of just over 1-3% growth of per capita GDP growth over each of the decades.
6
I would love to delve into why we are not Denmark? Our minimum wages are lower and people have less purchasing power. We have the child poverty rate that almost rivals Romania and ex-Soviet countries. Our power concentration and wealth concentration is insanely skewed.
Sure, the Bernie proposal might not make us Denmark. However, even you have said it will boost our economy in the short term, it will increase jobs, improve infrastructure, and re-balance power dynamics somewhat. That is enough for me to support a plan. It may not be feasible for 20 years out, but pretty much everyone agrees that the plan fundamentally will stimulate the economy if implemented. The debate is solely about whether the stimulus will be as large as predicted, and whether it is sustainable at that level of growth. Frankly, having 5-10 years of strong growth and then some leveling off sounds a hell of a lot better than Clinton's plan of.....oh, yes, that's right, status quo growth rates which still leave us up the creek without a paddle paying for the massive private health care system.
Sure, the Bernie proposal might not make us Denmark. However, even you have said it will boost our economy in the short term, it will increase jobs, improve infrastructure, and re-balance power dynamics somewhat. That is enough for me to support a plan. It may not be feasible for 20 years out, but pretty much everyone agrees that the plan fundamentally will stimulate the economy if implemented. The debate is solely about whether the stimulus will be as large as predicted, and whether it is sustainable at that level of growth. Frankly, having 5-10 years of strong growth and then some leveling off sounds a hell of a lot better than Clinton's plan of.....oh, yes, that's right, status quo growth rates which still leave us up the creek without a paddle paying for the massive private health care system.
1
a one off 5.3% growth(admitted to be possible as in friedman ) followed by the same moderate growth rates - say 2.5%- as envisaged by the clinton economists is better than 2.5% from the first year, is it not?
besides the stimulus can be tapered gradually.
as economists can't predict anything correctly for the life of them,friedman 's chances of being right are as good or bad as the opposite camp's.
the key probing the limits of monetary and fiscal expansion. we might discover there's huge systemic tolerance for deficits and debt as we are finding out about monetary policy.
besides the stimulus can be tapered gradually.
as economists can't predict anything correctly for the life of them,friedman 's chances of being right are as good or bad as the opposite camp's.
the key probing the limits of monetary and fiscal expansion. we might discover there's huge systemic tolerance for deficits and debt as we are finding out about monetary policy.
1
Thanks are due to Prof. Walters and other sober-minded scholars for engaging in the thorny details of this issue and so persuasively resolving it. In the windstorm of talking heads, rational analysis seems like an incredible gift.
7
Voodoo is voodo whether it's the Laffer curve or the Friedman ramp. But what is real is the fact our infrastructure is crumbling as evidenced by Flint lead poisoning - just the tip of the iceberg - water mains exploding, bridges collapsing, etc. Whether it's stimulative or not doesn't matter, we've deferred maintenance so long that we're facing real harm just as our workforce is being hit by the impact of a globalized workforce and unprecedented technological innovation. So quit bickering over minutiae, which multiplier to use, or how long to use it, and face the fact our "entitled" economically powerful class will have to give up their low cap gains rate and the government must begin to rebuild our middle class - infrastructure!
128
These are two separate issues. Routine and regular infrastructure upgrades are a budgetary expense with some temporary employment gains. And there is some hyperbole associated with the characterization of our "crumbling" infrastructure if you ask me. It's not do or die, it does though need targeted improvements.
1
Bernie and Friedman are the ones who brought up the "minutiae," but quit acting as though they invented "revolution" and "equality." What do you think Obama has been trying to do all this time? He mentioned getting infrastructure rebuilt years ago, the middle class has been an election campaign theme for decades--but actualizing Change is a lot harder than just shouting about it from Vermont.
6
I would hope the new spending plan is different from "Mainstream economics"
Those don't seem to be working too well right now, and literally anything, even temporary, would help right now.
And the fact that Bernie wants to try to fix our not-so-great economy to help the middle class is better than any GOP candidate, and a few Democratic ones.
Quit polishing the jewels on Hillary's crown NYTimes. Feel the Bern.
Those don't seem to be working too well right now, and literally anything, even temporary, would help right now.
And the fact that Bernie wants to try to fix our not-so-great economy to help the middle class is better than any GOP candidate, and a few Democratic ones.
Quit polishing the jewels on Hillary's crown NYTimes. Feel the Bern.
123
Every president has campaigned to try to fix our not-so-great economy to help the middle class. Why should I believe Bernie will be able to follow through on those promises?
3
Gerald Friedman and Robert Reich are both intellectually dishonest.
I had elsewhere pointed out that Reich's mention of the 1983-85 recovery in support of Friedman's voodoo pseudo-theory was obviously flawed in two important ways:
- It fails to state that the 83-85 recovery was unsustainable and the aftermath of an economic period unlike anything in history: the stagflation of the Carter period and the bad recession of Reagan's 81-82 years characterized by super high real interest rates. Reich knows better but chose to effectively lie by taking this bit out of context.
- It ignores the other equally ridiculous assumptions Friedman makes like an over 3% productivity increase sustained over a ten year period.
Anyone inclined to read something into this could easily think that Friedman and Reich have job offers in a Sanders administration that, thankfully is as illusory as the promised jobs.
I had elsewhere pointed out that Reich's mention of the 1983-85 recovery in support of Friedman's voodoo pseudo-theory was obviously flawed in two important ways:
- It fails to state that the 83-85 recovery was unsustainable and the aftermath of an economic period unlike anything in history: the stagflation of the Carter period and the bad recession of Reagan's 81-82 years characterized by super high real interest rates. Reich knows better but chose to effectively lie by taking this bit out of context.
- It ignores the other equally ridiculous assumptions Friedman makes like an over 3% productivity increase sustained over a ten year period.
Anyone inclined to read something into this could easily think that Friedman and Reich have job offers in a Sanders administration that, thankfully is as illusory as the promised jobs.
8
Reich may or may not be angling for a position in a Sanders administration, but I doubt that Friedman is: he has already stated in interviews that he is supporting Hillary Clinton.
1
reich i think quit the clinton admn himself.
not a power and wall st job seeker like the many economists in the clinton and obama govts i don't want to name.
i would buy him any day,thank you compared to the others.
what makes the clinton crowd angry is not sanders' manifesto but his maddening honesty.
not a power and wall st job seeker like the many economists in the clinton and obama govts i don't want to name.
i would buy him any day,thank you compared to the others.
what makes the clinton crowd angry is not sanders' manifesto but his maddening honesty.
3
Bernie sanders voted for the Commodity Futures Modernization Act in 2000. That act kept the Fed from regulating Credit Default Swaps. And you want to talk to me about Sander's "maddening honesty?"
You do realize those Credit Default Swaps are those complicated contracts the banks whipped up and are what kick-started the global meltdown we're still experiencing.
You do realize those Credit Default Swaps are those complicated contracts the banks whipped up and are what kick-started the global meltdown we're still experiencing.
1