In reality, there’s remarkable consensus among mainstream economists, including those from the left and right, on most major macroeconomic issues. The debate in Washington about economic policy is phony. It’s manufactured.
And it’s entirely political.
Let’s start with Obama’s stimulus. The standard Republican talking point is that it failed, meaning it didn’t reduce unemployment. Yet in a survey of leading economists conducted by the University of Chicago’s Booth School of Business, 92 percent agreed that the stimulus succeeded in reducing the jobless rate. On the harder question of whether the benefit exceeded the cost, more than half thought
it did, one in three was uncertain, and fewer than one in six disagreed.
Or consider the widely despised bank bailouts. Populist politicians on both sides have taken to pounding the table against them (in many cases, only after voting for them). But while the public may not like them, there’s a striking consensus that they helped: The same survey found no economists willing to dispute the idea that the bailouts lowered unemployment.
How about the oft-cited Republican claim that tax cuts will boost the economy so much that they will pay for themselves? It’s an idea born as a sketch on a restaurant napkin by conservative economist Art Laffer. Perhaps when the top tax rate was 91 percent, the idea was plausible. Today, it’s a fantasy. The Booth poll couldn’t find a single economist who believed that cutting taxes today will lead to higher government revenue -- even if we lower only the top tax rate.
The consensus isn’t the result of a faux poll of left-wing ideologues. Rather, the findings come from the Economic Experts Panel run by Booth’s Initiative on Global Markets. It’s a recurring survey of about 40 economists from around the U.S. It includes Democrats, Republicans and independent academics from the top economics departments in the country. The only things that unite them are their first-rate credentials and their interest in public policy.
As I've grown older, I've really started to hate politicians on both sides of the aisle with equal relish. I left the Democratic party several years ago, largely because I'm too "pro business." There is a distinct dislike on the left side of the aisle for people who understand markets or have any degree of financial acuity. At the same time -- and over the same period -- the Republicans have become stark-raving mad. Anyone with an IQ above that of a dead person or who thinks in nuance is the enemy.
That being said, no party in Washington is making any economic sense. The Republicans are off on an Ayn Rand austerity kick, using the Paul Ryan budget as their blueprint. This document is, well, laughable at its best. The results would be catastrophic in terms of overall growth. The Democrats, on the other hand, have absolutely no idea what policies to propose, suggest or coalesce around. They timidly make mild suggestions via the press, only to then see what the Republican (or more specifically, the Republican media apparatus) says in response, usually resulting in them backing down, with the end result being nothing happens.
Ask any sane economist (not some hack on the payroll of any think tack or in the pocket of some ideological master) and you'll get a fairly clear answer on how to handle the current situation. Macro 101 says: boost demand. Borrow at low rates, build out infrastructure (which is in terrible shape) lower blue-collar unemployment (which is in terrible shape), boost overall economic demand to increase growth. It's really not that complicated. And no, these are not fake jobs, and no, it's not ephemeral growth. It's very real.
But neither party is listening to any amount of sane reasoning right now. They're both .., well, pretty useless.