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.

Links on the Kerfuffle about Friedman’s Sanders Analysis

There’s been quite a fuss about our columnist Jerry Friedman’s analysis of the macroeconomic effects that implementation of all of Bernie Sanders’ proposals would have. (The analysis was the basis of two of Jerry’s recent columns for us, here and here.) Here’s a minimally annotated round-up of articles and blog posts related to the kerfuffle:

Jackie Calmes, New York TimesLeft-Leaning Economists Question Cost of Sanders’s Plans I linked to this in my last blog post; this article mentions Jerry Friedman and his analysis, but doesn’t quote him (they apparently didn’t contact him before running the piece–I am sure he would have spoken to them if they had!). The piece also makes it sound as if Jared Bernstein, about the only truly left-leaning economist they quote, is harsher on Friedman than he is, and even more misleadingly, that he is skeptical of Sanders’ plans (more on this below).

Dean Baker, Beat the Press, NYT Invents Left-Leaning Economists to Attack Bernie Sanders.  Lots of good points here critiquing the Calmes NYT piece, especially how the people they quote aren’t leftists, and in one case (Ezra Klein) not an economist.

Doug Henwood, FAIR blog, NYT Rounds Up ‘Left-Leaning Economists’ for a Unicorn HuntAlso a very good critique of the Calmes NYT piece, plus a great new metaphor for hippie-punching–the “unicorn hunt.” Since the kerfuffle really blew up, though, Henwood has been harsh about Friedman on Twitter, calling his analysis “embarrassing.” (Henwood finds Jerry’s the growth-rate projections “risible.” Ouch, comrade.)

Alan Krueger, Austan Goolsbee, Christina Romer, Laura D’Andrea Tyson, An Open Letter from Past CEA Chairs to Senator Sanders and Professor Gerald FriedmanHere is the real driver of the kerfuffle. It is amazing that they take Friedman to task for growth projections that they say are not credible (and take Sanders to task for relying on them–though the Sanders campaign did not commission this analysis), but they don’t give any specific empirical criticism of his analysis. Instead, they fault Sanders/Friedman for making projections that are outlandish in the way that GOP projections standardly are. (But see below–many observers have defended Friedman on this score.)

Jim Tankersley, at WashPo’s Wonkblog, The economist who vouched for Bernie Sanders’ big liberal plans is voting for Hillary Clinton.  Ok, this is just weird. Not an entirely unsympathetic article, but I wish Jerry were more careful not to feed into Clinton’s “one-issue candidate” talking point. (“I agree with Bernie on economic issues, but there are other issues.”)

James K. Galbraith, open letter (dated February 18) to Kreuger, Goolsbee, Romer, and Tyson (posted here). A lengthy response, starting by taking them to task for not providing any substantive critique or analysis of Friedman’s research: “You write that you have applied rigor to your analyses of economic proposals by Democrats and Republicans. On reading this sentence I looked to the bottom of the page, to find a reference or link to your rigorous review of Professor Friedman’s study. I found nothing there.” Then there are a couple of pages of analysis defending Friedman’s analysis and methods. (“There is no ‘magic asterisk,’ no strange theory involved here.” The conclusion: “What the Friedman paper shows, is that under conventional assumptions, the projected impact of Senator Sanders’ proposals stems from their scale and ambition. When you dare to do big things, big results should be expected. The Sanders program is big, and when you run it through a standard model, you get a big result.”

Matthew Klein, FT Alphaville, “Extreme” doesn’t mean what it used to, Sanders vs the CEA.  This piece (which you have to be registered to see) explains why Friedman’s growth projections may not be as outlandish as Kreuger et al. suggest, using this chart, showing that Friedman’s optimistic growth rate under Sanders programs only brings the growth rate back to the 1984-2007 pre-recession trend line:

Sanders-growth-590x275

Matthew Yglesias, Vox, Top Democratic economists don’t think much of Bernienomics. He doesn’t care.  Surprisingly, a piece from Vox that is pretty sympathetic to Sanders and Friedman (though he identifies the parts of Friedman’s analysis that he thinks are implausible). Under the heading “Imperious dismissals only make Sanders stronger,” Yglesias writes: “It’s noteworthy that the former CEA chairs criticizing Friedman didn’t bother to run through a detailed explanation of their problems with the paper. To them, the 5.3 percent figure was simply absurd on its face, and it was good enough for them to say so, relying on their authority to generate media coverage.”

Nick Timiraos and Laura Meckler, Wall Street Journal, Democratic Economists Say Bernie Sanders’s Math Doesn’t Add Up. Reporting on the past CEA chairs’ open letter; does better than the NYT piece on reporting Jared Bernstein’s actual views. Requires subscription.

Jared Bernstein, at his blog, I Endorse…(No One!)  Does the best at explaining Jared Bernstein’s actual views. He thinks Friedman’s projections are overly optimistic, but he repudiates the CEA chairs’ comparison with Republican “fairy dust”: “I do give Friedman credit for running all of Sanders’ plans through a macro model, versus Republican candidates’ hand-waving claims that the power of their personalities leavened with massive sprinklings of supply-side fairy dust will generate GDP growth of 4, 6, 8 percent! But such models are a function of your assumptions, and his, including his multipliers, the sharp increase in labor supply and productivity, diminished health care inflation, and a passive Fed amidst all this stellar growth, all seemed way too sunny to me (I called them ‘wishful thinking’ in the NYT).”

Paul Krugman, his NYT blog, Worried Wonks.  (Plus he has two other blog posts on the kerfuffle.) What’s interesting about them is not what Krugman says (which is what you’d expected now that he is in Hillary shill mode) but how many of the commenters (more than three quarters, I would say) are unsympathetic to his siding with Kreuger, et al.

Kevin Drum, Mother Jones, The Sanders Campaign Has Crossed into Neverland. Another piece highly unsympathetic to Friedman, but with no actual counter-analysis–just name-calling (see below). Surprising, for MoJo and Drum.

Ryan Cooper, The Week, Why are big-shot liberal economists hippie-punching Bernie Sanders?  A vigorous defense of Friedman and Sanders. “Ironically, in the frenzy to destroy Friedman’s reputation, nobody actually explained in detail what the problems were with his paper. The CEA pronouncement had no data or economic argument at all — it was 100 percent political handwringing. Krugman gave a very brief gloss suggesting that Sanders couldn’t possibly get labor force participation back up to 1990s levels due to aging, and trying to do so would cause inflation. Kevin Drum gave a similar incredulous stare argument about worker productivity and GDP growth, pronouncing it ‘insane,’ worse than Republican ‘magic asterisks.'” Cooper does what the big-name wonks should have, and has a mixed assessment Friedman’s analysis. But his point is: “Friedman is just a professor who thought it might be interesting to game out the Sanders platform. He doesn’t work for the campaign, or have platoons of graduate students, think-tankers, or public relations experts at his beck and call. His major error, it seems to me, is that he didn’t realize he’d be walking into a buzzsaw of Clinton supporters if he didn’t fiddle with his numbers to make them look ‘sensible.'”

Mike Konczal Roosevelt Institute Rortybomb blog, In Praise of the Wonk: Dissecting the CEA Letter and Sanders’s Other Proposals. This is a nice discussion, which agrees with Kreuger, et al. that Democrats and the left need to have good policy analyses (hence “In Priase of the Wonk”), but takes them to task for not explaining why they reject Friedman’s idea that an expansionary policy could get us back to the historical trend of growth (he uses Klein’s graph from the FT Alphaville post). “To reject Friedman’s analysis, as the former CEA chairs do, seems to involve rejecting that component of the analysis. If so, they have an obligation to explain what happened to that potential output trend from 2007.” He discusses various possibilities, plausible and not.

J.W. Mason, at his blog, Can Sanders Do It?  A nicely argued defense of Friedman, by a former student of Friedman’s who now teaches at John Jay College. He says the discussion should focus on this question “Is it reasonable to think that better macroeconomic policy could deliver substantially higher output and employment?”, where many of Friedman’s critics have focused on whether Sanders programs will get us there, or on whether Friedman has just the right numbers. Mason: “Is it plausible that there could be 5 percent-plus real GDP growth and 300,000 new jobs per month over the eight years of a Sanders presidency? I think it is — or at least, I don’t think there is a good economic argument that it’s not.” He gets there via five points (with arguments for each point–read the post for the arguments):

  1. It’s not controversial to say that a historically deep recession ought to be followed by a period of historically strong growth.
  2. Friedman’s growth estimates are just what you need to get output and employment back to trend.
  3. In other contexts, it’s taken for granted that more expansionary policy could deliver substantially higher growth.
  4. Friedman’s projections are unreasonable only if you think the US is already at full employment.
  5. The argument against Friedman’s piece comes down to the claim that the economy is already close to potential.

Ron Baiman, Chicago Political Economy Group, posting at the D&S blog, The Poverty of Neoclassical Economic Analysis. I’ll give Ron the last word: “No one assumes that Bernie’s economic program will be passed as currently conceived. The fate of these proposals depends on the power of the ‘political revolution’ that the Sander’s campaign is leading. Like the Clinton campaign, the NC-economics trained, former CEA Chairs exhibit abundant ‘pessimism of the intellect” but no ‘optimism of the will’. This is not an economic debate. It’s a political and ideological debate that reflects the deep division in fundamental theoretical outlook between NC progressive and radical democratic socialist economists.”

This is all I have for now. I am sure there will be more.