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,, 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.

Thursday Links: Buffett, Chicago/Illinois, Atlanta Teachers


Here are today’s topics, in no particular order:

(1) Warren Buffett, the Greedy Grandfather of Omaha:  Joe Nocera had a puff piece in the New York Times last March invitingly called  How Warren Buffett Does It, discussing the magic of Buffett’s “value investing.” Thankfully, lots of the online comments called b.s. on Nocera, pointing out the unseemly sources of some of Buffett’s wealth. Several comments mentioned the great work of David Cay Johnston, in whose 2012 book The Fine Print: How Big Companies Use “Plain English” and Other Tricks to Rob You Blind Buffett makes several appearances. (Find Steve Pressman’s review of The Fine Print from our Nov/Dec 2012 issue here; check out DCJ’s 2011 Tax Analysts piece, Warren Buffett Wants Your Taxes, on Buffett’s tendency to divert tax dollars into his own pocket; read Dean Baker and David Cay Johnston, in an October 2012 FDL Book Salon on The Fine Print).

Now two more bits of evidence about how Warren Buffett really does it:  First, Naked Capitalism republished Raúl Ilargi Meijer’s Automatic Earth piece, Warren Buffett Is Everything That’s Wrong with America, about Buffett’s plan with Brazilian 3G Capital to merge the food giants Heinz, Kraft, and Oscar Mayer. Here is the money quote: “Buffett, the supposed genius, can only do these deals because nobody demands anybody to pay for the externalities that arise as a result of Warren pushing crap posing as food upon the American people. And then when he’s done getting even richer off of poisoning your kids, he’ll donate billions to their well-being.”

The more shocking recent piece comes from Daniel Wagner and Mike Baker, written for the Center for Public Integrity and the Seattle TimesWarren Buffett’s mobile home empire preys on the poor, with the subtitle “Billionaire profits at every step, from building to selling to high cost lending.” This investigative report is about how Clayton Homes, which is owned by Buffett’s Berkshire Hathaway, and which in turn owns a chain of mobile home companies with different names, helps push people into high-priced mobile-home mortgages through predatory lenders also owned by Clayton itself. And Berkshire Hathaway has its hand in the mobile-home manufacturing business too, so the whole predatory web funnels profits from people of modest means into the billionaire’s pockets.

I think it’s time to take to Twitter and ask @WarrenBuffett and @claytonhomes how they respond to the charges made in Daniel Wagner and Mike Baker’s piece Warren Buffett’s mobile home empire preys on the poor.

(2) Chicago and Illinois:  The main election result in Chicago, Rahm “Mayor 1%” Emanuel winning re-election (spending some ten times what his run-off opponent, Jesús “Chuy” García, did) was super-depressing, but even worse, for me, was the fact that Chicago’s UNITE-HERE Local 1 endorsed Emanuel (though with some laudable push-back from other unions in the city, who gleefully mocked the #RahmLove hashtag on Twitter, and by former UNITE-HERE staffers, according to Micah Uetricht’s post, Over 40 Former UNITE HERE Staff, Volunteers Rebuke Union for Endorsing Rahm Emanuel, at Working In These Times.

Just before the elections, Naked Capitalism’s Lambert Strether had a post, Rahm Emanuel and Rick Perry Hold Public in Bipartisan Contempt, about how Chicago’s Emanuel and Texas’s Perry have figured out how to dole out multi-millions of dollars to companies (campaign donors, surely) with no bidding process, no transparency, and no accountability (e.g., about whether the companies create jobs they are supposed to create.

There was at least one (possible) positive outcome to the elections in Chicago, as Kari Lydersen reported, also at Working In These Times: On Chicago’s Southeast Side, Union-backed Sue Sadlowski Garza May Have Defeated a Rahm Emanuel Ally.  Sue Sadlowski Garza was one of several teachers to challenge pro-Rahm incumbents, but I think the only one to get to the run-offs, and she was just a few votes ahead last I checked, but hopefully she will prevail.

And Chicagoans also have to worry about Governor 1%: Bruce Rauner. In great interview from a while ago on Doug Henwood’s Behind the News, longtime lefty union organizer Jane McAlevey talks about Gov. Bruce Rauner’s attack on public-sector unions in Illinois, and about how the reactionaries like Rauner have an analysis of power that they pursue with precision, and the left needs to get one instead of floundering around. She made similar arguments in a piece in The NationWe Need Syriza in Illinois.

There was a lot of fuss on The Facebook among progressives about the so-called “religious freedom” law in Indiana, and rightly so. Mainstream and right-wing commentators claimed that the Indiana law was the same as the federal law and the law in a bunch of other states–but they were wrong. (David Brooks, unsurprisingly, was one of those to get it wrong (here).) The two best pieces I saw on this were from Garrett Epps in The Atlantic (What Makes Indiana’s Religious-Freedom Law Different?), and from Bill Black at New Economic Perspectives (The Homophobic Law and the Indiana Governor Who Dares Not Speak Its Purpose, plus this post responding to criticisms). Indiana has no LGBT anti-discrimination law, for one thing; but Bill very usefully points out how the Indiana law pointedly drafted to be extreme. (What I thought was the really wacky part of the law was the provision that allows you to make up your own religion: “Sec. 5. As used in this chapter, ‘exercise of religion’ includes any exercise of religion, whether or not compelled by, or central to, a system of religious belief.”

But once you listen to Jane McAlevey on Rauner’s coup in Illinois, you’ll wish there were as much of an uproar on social media about what’s going on in Illinois as there has been about what’s going on in Indiana.

(3) Atlanta Teachers vs. Wall Street Bankers:  Bill Black had a great post on New Economic Perspectives (cross-posted on Naked Capitalism) about the recent sentencing to prison of teachers who changed their students’ high-stakes test scores: We Send Teachers to Prison for Rigging the Numbers, Why Not Bankers? Bill focuses on all the investigative and prosecutorial resources that went into the cheating scandal, when massive bank fraud is considered too difficult to prosecute. David Dayen made similar points at The Fiscal Times (The Biggest Outrage in Atlanta’s Crazy Teacher Cheating Case), but he emphasizes (what I’m betting Bill would agree with) that it’s not obvious the teachers should have been prosecuted at all.

And there was this really wonderful unsigned (as far as I could tell) post at the Crunk Feminist Collective website: Teachers Are Not Magical Negroes–an homage to teachers who encourage Black students to succeed, connecting their struggles to the Atlanta cheating scandal (or the scandal of the harsh punishment those teachers received). Money quote: “We treat smart Black kids and dedicated Black teachers like magical Negro unicorns that can individually save the world when the truth is that we need massive dedicated resources and structures to support us. We put students and teachers in impossible positions, berate them daily, and then wonder why our school systems are struggling. If we really believe that black lives matter, they need to matter in the classroom and in the schoolhouse too.” (For an explanation of the “Magical Negro” trope, see this entry at the wonderful and often radical TV Tropes site, or this Wikipedia entry.)

–Chris Sturr