Referring to the Council of Economic Advisers, John Cochrane writes,
One of its most important and least appreciated roles is just to stop silly stuff.
1. An interesting question is whether economists’ ability to do this is rising or falling.
2. One of the worst economic policies I can remember is Nixon’s wage and price controls. That was “silly stuff” that was dreamed up by economists.
3. Although he was not going to say so in public, Martin Feldstein at CEA probably would have classified President Reagan’s tax cuts as “silly stuff.” Was Feldstein right? Was he ineffective?
4. Alex Tabarrok points to a letter from former CEA chairs under Democrats questioning Bernie Sanders’ arithmetic. Steven Randy Waldman explains why he does not care.
I am for Bernie. I am not against Hillary. But just as it’s foolish to say that Democrats and Republicans are “all the same” because they are both corporatist parties, it is foolish to claim that Bernie and Hillary do not represent meaningfully different interests and values. I’ll enthusiastically support either Bernie or Hillary over a Jeb Bush, Marco Rubio, Ted Cruz, or Donald Trump. But it is Bernie Sanders who is for me, and I’m supporting him without apology. If your interests and values are my interests and values, I hope that you do too.
Read his comments on the role of wonks.
“An interesting question is whether economists’ ability to do this is rising or falling.”
Good question. Also — to what extent are economic advisers able to prevent silly stuff and to what extent are they forced to provide cover for silly stuff that they unsuccessfully opposed behind closed doors but must subsequently support (or at least not criticize) publicly because they work for the administration?
Gruber.
To be fair, we can’t tell whether he can tell when he was doing which.
I can imagine that the “interests and values” of Hugo Chavez were closer to Randy’s than Hillary’s are.
Too bad he wasn’t (and isn’t) eligible to run for President. He would have been a great choice. I guess Bernie is close enough and will just have to do.
They would have to make a pretty good case before I’d shift my assumption that economists in government are advancing organizational capital.
Let’s say we assume Jeb Bush is against us. Wouldn’t he have to do a lot of damage before we approached a purchasing power per capita of say…Europe?
I should give my context here. An apolitical friend asked about the election. They said “isn’t Sanders a socialist? What does that mean?” I had to assure them that American socialists don’t mean the USSR or China. They mean Sweden, France or Germany. But are we sure they could hit the mark? I wonder if Russians and Chinese thought what they were getting was Finland. Even if we get Germany, as I lilke to point out, they do 2/3rds the business we do, and they are Germans.
If Feldstein would have said that, he would have been wrong. Real Federal tax collections increased by one-third in the Eighties.
I’m glad that Waldman decries technocracy, but what kind of wonk does he think Sanders will promote? His post seems like a paean to good intentions regardless of practicality.
That Interfluidity post seems like a classic case of mood affiliation. I read that as voters should ignore specific policy proposals and just vote for what feels/sounds good and let the professionals sort the rest out? I think that’s the kind of argument that, if it came from anyone other than a Sanders supporter, would have SRW in hysterics, dropping f-bombs and lecturing people on the role that empiricism ought to play in political debates, and would if only we had a better, more informed and responsible citizenry.
Everybody knows this election is special. One of the ways it is special is that the dissatisfaction with donor-beholden establishment politicians is at a generational high on both sides. If one is supporting an outsider, the content, coherence, or realism of policy proposals and analyses thereof are almost completely besides the point and just ‘blank filler’. Everyone knows that the will be compromises with political and economic reality later. The point of the policy statements is to amplify the signal of genuine distance between these candidates and the donor-owned politicians.
Some of the candidates are more special than others.
I suspect liberals would acknowledge that Obama’s erudite demeanor was a mood-dis-affiliation reaction to George W Bush’s cowboy act. But I doubt they would acknowledge that it was just a different flavor of arrogance. An arrogance that is seeming less and less justified.
Voters also seem unaware that something had to have changed to initiate this anti-establishment fever (cue Martin Gurri reference- although libertarians have been discussing this for a while). From the NSA to Trayvon Martin, it seems like I knew well before Obama knew that he was about to say something obviously false and/or stupid. We are seeing the errors of the establishment’s ways faster, and it seems the establishment has even drunk their own kool-aid in some cases.
But, why do people think that necessitates a change of course? They were for the establishment before they were against it. They were dumb before and they are probably no smarter now, but this is when voters decide who gets to be the scapegoat.
The CEA said Cash for Clunkers was stimulative.
“One of its most important and least appreciated roles is just to stop silly stuff.”
Their 2nd most important job is to put the professional economist imprimatur on other silly stuff.
+1 to Kevin and +1 to ‘Andrew. My thoughts exactly.
What do Economists DO in government?
They remain human.
Some are co-opted into explaining or supporting social order objectives to be achieved via political processes rather than “economic” processes.
Some strive for and attain significance (sometime beyond their capacities).
Most probably try real hard to make sense of actual “policy” in terms of empirical evidence and learning.
Economists at the Treasury dreamed up the tax reform act of 1986. I remember that Bill Niskanen saying that he told Reagan that Walter Mondale would have loved the proposal. Reagan sided with Treasury though. So there can be conflict within an administration.
One could support Sanders with the knowledge he is far less likely to accomplish anything than anyone else.
Not anymore. Unless we think that if he pulled Obama’s shenanigans that he’d be tarred and feathered, or that he knows he’d have a shorter leash and thus wouldn’t try. But Sanders doesn’t give off an impression of much in the way of self-awarenes, at least from the 10 seconds I’ve heard him talk.
Or worse. They’d ride his wave of naivete and we’d get his bad ideas in exchange for the establishment’s bad ideas- which is kind of what we got with Obama (and Bush). We need a radical marginal incrementalist.
Usually, politicicans know the various economic theories and probably know which are true. After all, they evaluate their own plans and actions with a dispationate view.
But, they play to the prejudices and ignorance of people who they need on their side. Election and popularity follows from pandering to people rather than educating them.
http://www.pbs.org/wgbh/commandingheights/shared/minitext/int_miltonfriedman.html#6
Oct-00
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[edited] MILTON FRIEDMAN: Nixon, as you know, had been in the price control organization during World War II and understood that price controls were a very bad idea, and so he was strongly opposed to price controls. Yet in 08/17/1971, he adopted wage and price controls.
The reason he did it, in my opinion, was because of a problem with the exchange rate, Bretton Woods, and the agreement to peg the price of gold. The United States had agreed in 1944, at the Bretton Woods Conference, on an international financial system under which other countries would link their currencies to the U.S. dollar, and the United States would link its currency to gold and keep the price of gold at $35 an ounce.
Because of the policies that were followed by the Kennedy and Johnson administrations, it had become very difficult to do that. We had had inflationary policies which led to a tendency for the gold to flow out, and for the price of gold to go above $35 an ounce. The situation had become critical in 1971.
Nixon had to do something. If he had done nothing but close the gold window, if he had said the United States is going off the gold standard and done nothing else, every headline in every newspaper would have been, “That negative Nixon again! Just a negative act.” So instead, he dressed it up by making it part of a general economic recovery policy in which wage and price controls became a major element. The Democrats had been urging this.
By closing the gold window and at the same time having wage and price controls, he converted what would have been a political negative to a political positive. That was the reason for which he did it.
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