Latest links on Friedman/Sanders, etc.

More posts related to the kerfuffle over our columnist Gerald Friedman’s report WHAT WOULD SANDERS DO? ESTIMATING THE ECONOMIC IMPACT OF SANDERS PROGRAMS:

Alan Harvey, IDEAeconomics, Standard Fare or Fantasy Economics? An excellent and vigorous defense of the plausibility of Friedman’s growth projections and a useful summary of the debate, including Christina and David Romer’s intervention into it. Among the telling points he makes in support of the plausibility 5+% growth rates with the kinds of big, big programs Sanders is suggesting: the fact that “the average growth rate under Democratic presidents prior to Barack Obama was 4.2 percent.” Gee, Friedman estimates a few years of growth 1.1 percentage points higher than the average growth rate under pre-Great Recession Democratic presidents, and suddenly puppies are flying?

Here are some of Harvey’s useful points about the Romers’ critique:

“Romer criticized Friedman for confusing stocks and flows, suggesting – as I understand it – that the Friedman analysis projected multipliers too far into the future. The multiplier is the increment of new activity produced by an investment or government spending program. The stimulus money spent is income to workers and businesses, who each save some, but spend most,
which becomes income to other workers and businesses and results in further spending. …”

“Christina Romer is uniquely qualified to discuss overreach in projections, since she was chair of the CEA during the Obama stimulus period and famously forecast an immediate reduction in unemployment that did not materialize. [Ouch!] This failure was seized upon by Republicans to discredit government stimulus entirely. We can, of course, look back and see the economic effects, which were substantial. But because they did not match the projection, the theory of the projectors suffered. …”

“Romer appears to suggest in the Wolfers piece that multipliers act only during the period of stimulus spending, and she faults Friedman for misunderstanding stocks and flows. It should be obvious, however, that a measure which provokes additional private investment can claim credit for economic activity induced by that additional investment. If Ms. Romer is suggesting otherwise, she is wrong.”

In a nice turn of phrase, Harvey suggests that, contra Larry Summers’ mantra, in the midst of the debates about the appropriate level of stimulus, that stimulus should be “timely, targeted and temporary,” Sanders’ proposed stimulus is (as it should be) “substantial, strategic and sustained.”

James K. Galbraith, Boston Globe, The kerfuffle over Sanders’ economic planA summary similar to his other pieces, but in a forum that will have reached a much broader audience.

James K. Galbraith, interviewed on the Real News Network, Attacks on Sanders Economic Plan By Former CEA Chairs Are Irresponsible.  Some nice detail in this interview, conducted by TRNN’s Sharmini Peries, that hasn’t appeared in his earlier written statements. The summary: “So what we had here was a, what was essentially an academic exercise that produced a result that was highly favorable to the Sanders position, and showed that if you did an ambitious program you would get a strong growth response. It’s reasonable, certainly, for the first three or four years that that would transpire in practice. And what happened was that people who didn’t like that result politically jumped on it in a way which was, frankly speaking, professionally irresponsible, in my view. It was designed to convey the impression, which it succeeded in doing for a brief while through the broad media, that this was not a reputable exercise, and that there were responsible people on one side of the debate, and irresponsible people on the other.And that was, again, something that–an impression that could be conveyed through the mass media, but would not withstand scrutiny, and didn’t withstand scrutiny, once a few of us stood up and started saying, okay, where’s your evidence, on what are you basing this argument? And revealed the point, which the Romers implicitly conceded, and I give them credit for that, that in order to criticize a fellow economist you need to do some work.”

Michael S. Gordon, Boston Globe, Socialists, look to economists at UMass Amherst for support.  In light of the huge uptick in the number of people in the U.S. who call themselves “socialists” (see below), this headline isn’t as snide or marginalizing as it might have seemed a couple of years ago. Look for an uptick in applications to the UMass-Amherst econ department from all those millennial Berniegals and -bros.

Annie Lowrey, New York magazine, Who’s Winning the Great Bernie Magic-Math Battle?  Follow up to an earlier piece (something of a hit piece) by Lowrey, Bernie Sanders Has Started Thinking Like a Republican  (where Bernie is “thinking like a Republican” because “He has no interest in garnering respectability and credibility among Establishment Democrats,” with the suggestion that he is willing to make unrealistic promises). Despite her continued use of the derogatory and tendentious term “magic math,” the more recent piece is more favorable to Friedman:

“The truth is that it seems impossible for Sanders’s economic plans to do what Friedman thinks they would. But the whole debate has underscored that our current growth rates are as much a function of policy as they are of anything else, and that we need not resign ourselves to growing at 2 percent a year, year after year. Maybe the technocrat wonks are right. But maybe Hillary Clinton should be promising to try for 5 percent growth herself. Smarter policies —infrastructure investment, early childhood education, making work pay, rebuilding the safety net, declining to raise interest rates and choke off a recovery — would all help bolster the economy. Five percent growth over a decade might be fantastical, but 5 percent in a few years might not be.”

Two pieces I had missed on the keruffle:

Mark Thoma, The Fiscal Times (Feb. 23), Here’s Why Bernie Sanders’ 5% Growth Plan Isn’t Crazy After All. Another prominent left-leaning economist weighing in on Friedman’s side. Thoma quotes former Minneapolis Fed chair (whose blog posts I linked to in my last post):

“Narayana Kocherlakota argues ‘that there are good reasons to believe that, with appropriate stimulus, it would be possible to achieve growth outcomes of around 5-6 percent per year for the next four years.’ But we won’t know unless we try. The inflation risk is minimal, and we owe the households who have struggled so much during the recession and the long, drawn out recovery the best possible chance we can give them of finding a decent job.”

Greg Ip, Wall Street Journal (Feb. 19), To Match Lofty Growth Goals, Presidential Candidates Need Better Plans.  Discussion of what Ip views as overly optimistic growth promises from both Sanders and Republicans; an early criticism of Friedman’s report, but he appears to have actually read it: “Mr. Friedman claims a big deficit-financed stimulus, increased entitlements and redistribution would achieve this. That seems implausible; Barack Obama, after all, did all three (though by less than Mr. Sanders would), and labor-force participation and productivity growth have trended down. Indeed, in theory, increased social transfers and marginal tax rates tend to reduce labor-force participation, and increased regulation hurts productivity growth.” He concludes: “There’s nothing wrong with outside-the-box thinking. That’s what got the U.S. out of the Great Depression. But so far, what the candidates have offered doesn’t measure up. Either more realistic goals or far more unorthodox thinking is in order.” Sounds good–let’s go for much bigger stimulus and government intervention than Sanders is calling for!

Related Items on Candidates’ Health Care Proposals (or Lack Thereof):

Beverly Mann, Angry Bear, Clinton Announces When She Will Disclose Her Healthcare Insurance Improvement Plan: She’ll announce it just as soon as the Republican presidential candidates tell us theirs.  (Via Naked Capitalism.) See also Ben Mathis-Lilley, Slate, Hillary Clinton Doesn’t Have a Practical Plan, or Any Plan, for Universal Health Care Coverage.  So much for “pragmatism.” As David Sirota pointed out on Twitter, in its efforts to hitch Clinton to Obama’s parade, the Clinton campaign sometimes overstates Obama’s achievements, including on health care: “See this quote from Clinton campaign, then note that 30+ million don’t have health insurance:”

CbjN_3HUEAAhvg4

Find this statement on Hillary Clinton’s campaign site, here.  So maybe the reason Clinton doesn’t seem to have a plan to make health care universal is that she believes her own false claim that it is already universal (and affordable–which Obamacare isn’t either).

Is Clinton much better than Trump on this score? See Roy Poses, Health Care Renewal blog, It Has Come to This? – Donald Trump’s “Truly Absurd,” “Word Salad,” “Gibberish” Health Care Policy. (This also via Naked Capitalism.) This piece makes fun of the “word salad” and “gibberish” in Trumps debate answers about health care, mostly endless repeating that he will “get rid of the lines between states.” More recently, though, Trump has gone beyond revisionist cartography by posting more details about his health care reform ideas on his website. Besides repeal of Obamacare and “[m]odify[ing] existing law that inhibits the sale of health insurance across state lines,” the reform plans include allowing taxpayers to deduct premium payments, plus health savings account. Standard “free-market” fare, but trust him, “It’s gonna be great.”

Meanwhile, Sanders’ plan has gotten more scrutiny than Clinton’s and Trump’s non-plans. In an earlier post I mentioned the piece from WashPo Wonkblog,  Study: Bernie Sanders’s health plan is actually kind of a train wreck for the poor. This is the one that only cited Kenneth Thorpe’s study, and not the critiques of it by Friedman and by Woolhandler/Himmelstein. Where’s the scrutiny for Clinton’s failure to explain how she’s going make Obamacare truly universal?

Our current issue, which just went out to e-subscribers and is being mailed soon to print subscribers, includes a column by Gerald Friedman on Sanders’ health care proposals. I’ll post that to the website soon–probably next week.

Several pieces about the leftward shift in U.S. politics (without a corresponding leftward shift among establishment elites):

Gertrude Schaffner Goldberg and Sheila D. Collins, HuffPo, Diminishing Expectations: For Whom?  Great piece by two friends of D&S (see Trudy Goldberg’s Jan/Feb 2015 cover story, Where Are Today’s Left Movements?: What we can learn from the millions who demonstrated for jobs, government relief, and collective bargaining rights in the 1930s). The first paragraph gives the lie to Clinton’s claim to be the best candidate for people of color: “In a debate with former Secretary of State Hillary Clinton Senator Sanders referred to the achievements of the Nordic countries in providing such things as universal health care and free higher education as models for the United States. Secretary Clinton responded by saying, ‘I love Denmark, but the United States is not Denmark.’ What does that mean? The allusion is not to insufficient economic resources but to unrealistic political expectations. Sometimes the excuse or barrier is our ‘diversity.’ In the final analysis, one might infer from that explanation that we would extend these benefits if it didn’t mean that they would be provided to persons of color, immigrants or other groups somehow regarded as alien and undeserving.” (Clinton’s remark about Denmark is another example of how easily she picks up right-wing talking points against social-democratic goals; this is on par with her criticisms of Sanders for promising “free stuff” and her promise not to raise taxes on the middle class (which would make it hard to replace premium-supported Obamacare with a tax-funded single-payer system).)
This piece reads well alongside Doug Henwood’s Post-Hope Democrats, which I linked to in an earlier post.

Harold Myerson, The Guardian, Why are there suddenly millions of socialists in America?  “It used to be a dirty word. Bernie Sanders helped remove the stigma – but it’s the spectacular failure of capitalism that has really changed people’s minds.” An excerpt:

“Bernie Sanders’s presidential campaign has made clear that many Democrats are inclined to vote for a candidate who proclaims himself a democratic socialist, but even more dramatic and consequential are the many Democrats who say they’re socialists themselves. In a poll on the eve of the Iowa caucuses, more than 40% of likely Democratic caucus attendees said they were socialists. In a Boston Globe poll on the eve of the New Hampshire primary, 31% of New Hampshire Democratic voters called themselves socialists; among voters under 35, just over half did. And in late February, a Bloomberg poll of likely voters in the Democratic primary in South Carolina – South Carolina! – showed that 39% described themselves as socialists.

“Favorable views of socialism aren’t limited to Sanders supporters. The 39% of South Carolina Democrats who call themselves socialists exceeded by 13 percentage points the number who actually voted for Sanders. In a New York Times poll last November 56% of Democrats – including 52% of Hillary Clinton supporters – said they held a favorable view of socialism. Nor was this sway toward socialism triggered by Sanders’s candidacy: as far back as 2011, a Pew poll revealed, fully 49% of Americans (not just Democrats) under 30 had a positive view of socialism, while just 47% had a favorable opinion of capitalism.”

See also: Peter Beinart, The Atlantic, Why America Is Moving Left. An interesting piece, but hard to follow because of the author’s use of the term “liberalism” to mean “left,” and the author’s suggestion that Obama is liberal/left, as in this thesis statement: “There is a backlash against the liberalism of the Obama era. But it is louder than it is strong. Instead of turning right, the country as a whole is still moving to the left.” Shouldn’t he instead say that there is simultaneously a left-wing backlash against neoliberal Obama, and a right-wing reaction against that backlash (and against whatever socially liberal elements or imagined “left” or “socialist” elements there are in the Obama administration)?

Ethan Young, Rosa Luxemburg Stiftung, A Political Revolution for the U.S. Left. Much better piece. “The U.S. Left is in the process of emerging from decades of decline. It entered the Obama years in terrible shape: politically incoherent, cut off from its historical continuity, and organizationally and socially fragmented. Yet in the last years there have been signs of awakening, and in the past few months a new progressive insurgency has appeared, piercing public consciousness in a way not seen in generations.

“The most distinctive form this insurgency takes is the Bernie Sanders campaign for the Democratic Party nomination for president in 2016. Sanders is the first self-proclaimed socialist to win a national audience since Eugene V. Debs ran as the Socialist Party’s presidential candidate in the early 20th century, and the size of his base is arguably greater than that of any socialist leader in U.S. history.”

Two pieces on the Democratic primaries:

Jim Naureckas, FAIR/Extra! blog, NYT Works Hard to Present Primary Race as More Boring Than It Is.  This is a searing critique of the NYT’s post-Super Tuesday piece that originally bore the headline “Wins for Sanders in Liberal Strongholds,” but eventually read Minority Voters Push Hillary Clinton to Victories. As Naureckas rightly points out, it’s ridiculous to call Oklahoma and Colorado “liberal strongholds.”

Corey Robin, from his blog, Super Tuesday: March Theses. Republished at the Jacobin website as The Primary Isn’t Over  (whose title I would have edited to “The Primaries Are Not Over”). Excellent points about how the Super Tuesday results are not as good for Clinton as many have suggested. After Super Tuesday, Clinton has ten states and Sanders has five, but: “[t]he elections in Nevada, Iowa, and Massachusetts were either close or extraordinarily close. A little bit more time here, a little bit more organizing there, and they could easily have tipped his way. In other words, Sanders could very easily have seven states now to Clinton’s eight. He doesn’t, and coulda shoulda woulda is just that. But what this does mean, going forward, is that we have the opportunity to turn potential into actual. We’ve got time, we’ve got organizing, we’ve got money: let’s make use of it all.” Others have pointed out that Clinton’s wins on Tuesday were in the south, states which (with the exception of Virginia) neither Democrat would be likely to win in the general election. So Sanders’ wins in Oklahoma and Colorado may be more significant. What’s more, in the 2008 Democratic primaries, Clinton won CA, NY, NJ, MA, FL, CA, PA, TX, and a bunch of smaller states, and still lost to Obama, as this map shows:

IMG_20160304_115604

(*Remember that the delegates assigned from the MI and FL primaries were disqualified, because those states held their primaries earlier than the DNC allowed. Still, the rest of the states I listed are big states.) This surely had to do partly with the (small) margins by which she won those big states and the (large) margins by which she lost the less populous states that Obama won. But all this is to say that it is far from clear that Clinton will inevitably win the primaries. As Robin says, “Clinton’s strongest weapon is the aura of inevitability that she and her supporters and the media have concocted around her.” I would add that one of her weaknesses may be a sense of complacency among her supporters about the upcoming primaries; Sanders supporters can take advantage of that by heeding Robin’s advice to make use of the time, money, and organizing that we have on our side. (I myself canvassed in NH and MA and will make phone calls to likely Democratic voters in upcoming primary states. Maybe you should too.)

More Links on Kerfuffle about Friedman’s Sanders Analysis

Here are more links related to the kerfuffle surrounding our columnist Gerald Friedman’s research paper on the likely macroeconomic effects if Bernie Sanders economic policies were implemented. (Find the full 53-page paper here.)

David Dayen, The New Republic,  The Pious Attacks on Bernie Sanders’s “Fuzzy” Economics.  “I don’t feel it necessary to defend Friedman, though it’s worth pointing out that his economic growth numbers would simply eliminate the GDP gap [links to the FT Alphaville piece we linked to the other day] that was created by the Great Recession and was never filled in the subsequent years of slow growth—which should be the goal of public policy, however “extreme” it sounds. What I do want to challenge is the idea that there’s one serious, evidence-based way to perform economic forecasting. The truth is that most economic forecasts that look several years into the future are flawed, almost by definition.”

Dean Baker, HuffPo, The Four Economists’ Big Letter. Dean says he agrees with the substance of the CEA ex-chair’s critique (he’s skeptical of Friedman’s growth projections), but not their “tone” of authority. “I respect all four of these people as economists, but I want to hear their argument, not their credentials. How about just giving the evidence? It might not be as dramatic, but it could have considerably more impact.” More recently at his CEPR blog Beat the Press, there’s this from Dean: President Obama’s Council of Economic Advisers Confirms Sanders’ Growth Projections, in which he discusses a section of the 2016 Economic Report of the President and a section “an that provides insight into the question of how fast the economy can grow, and more importantly how low the unemployment rate can go” and the non-accelerating inflation rate of unemployment (NAIRU). Obama’s CEA report “is hardly an endorsement of the specifics or the even the size of the Sanders agenda (and certainly not the now famous growth projections from Gerald Friedman), but it does argue for pushing the envelope in terms of bringing down the unemployment rate.” (Why Dean is engaged in line-drawing here, subtly suggesting that Jerry’s not credible, is beyond me.)

Gerald Friedman, Response to Krugman.  A response to a really condescending blog post by Krugman, Lack of Power Corrupts.  Krugman really smears Friedman.

Bill Black, New Economic Perspectives blog, Krugman and the Gang of 4 Need to Apologize for Smearing Gerald Friedman.  Excellent skewering of the “Gang of 4” CEA ex-chairs. See also Yves Smith’s introduction to her reposting of Bill’s post at Naked Capitalism, Krugman and His Gang’s Libeling of Economist Gerald Friedman for Finding That Conventional Models Show That Sanders Plan Could Work.

Richard Wolff, via email: “As a colleague of Jerry Friedman for decades, I know directly of his consistently careful work in economic history and applied economics, his exceptional commitment to teaching, and the immense time and effort he has committed to doing detailed explorations of the economics of health insurance–explorations his detractors might have learned from had their commitments not been otherwise. Shame on them.”

J.W. Mason, at his blog (The Slack Wire), Plausibility.  A follow up to the earlier post of his we linked to, Can Sanders Do It?. He gives two scatter-plot graphs, one showing “the initial deviation of real per-capita GDP from its long run trend, and the average growth rate over the following ten years, for 1925 through 2005,” the other showing the same thing for just 1947-2005 (so it eliminates the Depression and WWII years). He argues that for either, Friedman’s GDP growth projections don’t look so implausible; even less so if you take out “the seven points well below the line in the middle are 1999-2005, whose 10-year growth windows include the Great Recession.” His upshot: “Should the exceptionally poor performance of this period make us more pessimistic about medium-term growth prospects (it’s sign of supply-side exhaustion) or more optimistic (it’s a sign of a demand gap that can be filled)? This is not an easy question to answer. But just counting up previous growth rates won’t help answer it.” His earlier blog post has been republished under a new title at the Jacobin website: When Wonks Attack.  Subtitle/teaser: “Beltway wonks are dismissing Bernie Sanders’s economic plan as unserious and unrealistic. Here’s why they’re wrong.”

Brad DeLong, at his blog (Grasping Reality…) No: We Can’t Wave a Magic Demand Wand Now and Get the Recovery We Threw Away in 2009.  Responding to the Mike Konczal post we linked to. I wish people would stop the talk of magic wands and unicorns and fantasy and voodoo and puppies and unicorns. It’s just uncharitable and undignified. It reminds me of the infantilizing language Republicans and Clintonites use about Sanders’ proposals (e.g., saying that he’s promising people “free stuff” including “free ponies”). It’s that grown-up stance, talking down to the rest of us.

Kevin Drum, Mother Jones blog, On Second Thought, Maybe Bernie Sanders’ Growth Claims Aren’t As Crazy As I Thought.  Back-pedaling, in light (it seems) of Jamie Galbraith’s full-throated defense of the plausibility of Friedman’s analysis.   No apology for calling his GDP growth projections “insane” without having examined the analysis. (I asked for an apology on Twitter. But that never works.)

Jasper Craven, VTDigger.org, Economist, Others, Defend Sanders ‘Stimulus’ Plans as Realistic. A local Vermont summary of the kerfuffle. Hat-tip Nancy B. A nice piece (though he identifies the D&S Economy in Numbers columns as Jerry’s reports, but again, Jerry’s main Sanders report is “yuge”–some 53 pages long, including appendices and sources).

Andrew Perez and David Sirota, International Business Times‘ Political Capital blog, Bernie Sanders Economic Plans Questioned By Critics With Ties To Wall Street, Hillary Clinton.

Ron Baiman, Postscript (Feb 21) to his earlier D&S blog post (Feb 19), The Poverty of Neoclassical Analysis: “Unfortunately, even, politically liberal, mainstream or ‘Neoclassical’, economists do not believe that massive increases in effective demand, or other large scale public spending and policy measures, can produce lasting major and fundamental structural changes in the economy (in spite of the examples of the New Deal, WWII, etc. ). They also don’t accept Verdoorn’s law (which Friedman employs) in spite of numerous empirical studies and common sense validation: long-term growth in demand leads to increased investment and thus increases in productivity and by implication structural changes in the economy. NC ‘Keynesians’ believe only in short-term Keynesianism — not in a long term principle of effective demand. To the extent that Friedman (rightly) employs a long-term ‘Post Keynesian’ principle like Verdoorn’s law (in addition to all of the other standard techniques that he uses) he crosses a line that NC economists will not cross. I belatedly remembered after writing and posting this piece, that Friedman had employed Verdoorn’s Law in his study of the long-term economic impact of Bernienomics.”

And in case you missed it two weeks ago:

Tami Luhby, CNN Money (Feb. 8), Under Sanders, income and jobs would soar, economist says. The article that likely ignited the kerfuffle (rather than our two columns by Friedman based on his research); this is where a large audience saw Friedman’s big GDP growth estimates. And this is where the Sanders campaign appeared to endorse Friedman’s findings. “Sanders’ policy director, Warren Gunnels, also defended the estimates, noting the candidate is thinking big.”

That’s it for now. I’m sure there will be another follow-up to this post.