Empiricism Strikes Back

Posted on February 22, 2012 by reflectionephemeral

Just as with climate science and evolution, on economics, roughly everyone who knows anything about anything believes that the Republican Party is completely wrong:

The latest Chicago Booth poll of economists focuses on the 2009 stimulus. The first question asked whether the stimulus increased employment by the end of 2010. Eighty percent of the polled economists agreed. Four percent disagreed. Two percent were uncertain. The second question asked whether, over the long run, the benefits would outweigh the long-term costs (like paying down the extra debt). Forty-six percent agreed. Twelve percent disagreed. Twenty-seven percent were uncertain. …

Facing this reality, the Republican leadership doesn’t just say, “the president’s economic policies were inefficient” (probably false, but at least defensible). They say that they made things worse. (Mitt Romney: “He didn’t make it better, he made things worse. … Instead of creating private-sector jobs, [the stimulus] created government jobs.” Mitch McConnell: “the economic policies this President has tried have not alleviated the problem. In many ways, in fact, they’ve made things worse.” John Boehner: “Today, there’s no denying the fact that his ‘stimulus’ policies not only failed, they made things worse.”)

What can you even say at this point? Republicans have exposed themselves over and over again as a party with a deep-seated hatred for the American people. They want power, and will tell any lie, no matter how destructive for the economy and our policies, if they think it’ll make people dislike the president. They’re disregarding the advice of economists, working to derail sensible policies, in the hope that Americans will suffer and blame the president.

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  • http://poisonyourmind.com dedc79

    It’s a major reason they’re now pushing a crazy social agenda now. they’d like people to forget how batshit insane they were about the economy

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  • Steve Fischer

    “…roughly everyone who knows anything about anything believes that the Republican Party is completely wrong…”

    Everyone, apparently, except those surveyed economists who believe that the ARRA was a net negative (12%) or were uncertain of its net benefit (27%).

    • http://www.poisonyourmind.com nickgb

      And 15% didn’t even answer the damn question. Economists are not helpful!

    • http://poisonyourmind.com reflectionephemeral

      Four percent of economists say that the stimulus didn’t add to employment. A near-majority of 46 percent think that it will prove to be cost-effective over the long run.

      Yet just about every Republican politician says that it was a failure that didn’t create a single job. From the John Boehner link above: As economists Alan Blinder and Mark Zandi wrote in their study “How the Great Recession was Brought to an End,” the effects of the stimulus were “very substantial, raising 2010 real GDP by about 3.4%, holding the unemployment rate about 1½ percentage points lower, and adding almost 2.7 million jobs to U.S. payrolls.”

      I think that the Zandi study might be on the high side, but roughly all economists agree that the stimulus increased economic growth and ameliorated unemployment. Republicans are lying when they claim that it “made things worse”. It’s a statement of theology, not policy.

      • Steve

        I don’t think it’s fair to attribute the untenable position that the ARRA created absolutely no jobs to “just about every Republican.” If the government pays one person to dig holes and another to fill them in, two jobs are created–few people would argue otherwise. More common on the right is the contention that the ARRA’s benefits were smaller than its total economic costs–a view that fewer than half of the surveyed economists confidently dispute.

        According to the President’s Council of Economic Advisors, the ARRA has resulted in a net gain of about 2.4 million jobs–at a cost of about $278,000 per job “saved or created.” I always take these estimates with a grain of salt, but assuming these figures are roughly accurate, do they make the ARRA look like a wise use of public resources?

        http://www.whitehouse.gov/sites/default/files/cea_7th_arra_report.pdf

        • http://poisonyourmind.com dedc79

          will throw my two cents in, here. The stimulus wasn’t just about creating jobs is was about helping ailing states, weatherization, infrastructure projects, etc… So one result was to generate jobs but I don’t think it’s fair to cost it out aat $278,000 jobs per person when what also happened was that public projects were undertaken with that money.

          • http://www.poisonyourmind.com nickgb

            Well, one would assume that the economists are taking that into consideration when they answer whether it was a net positive or negative. I doubt many of these economists really researched the problem enough to answer fully or honestly, though, which makes the net pos/neg question somewhat useless. Meanwhile, the part about job creation is after-the-fact, so I trust the answers more.

          • http://poisonyourmind.com reflectionephemeral

            This is correct. There’s more going on here than just paying salary. That’s not a reasonable figure.

            We checked the White House report, and of the $666 billion stimulus total, 43 percent was spent on tax cuts for individuals and businesses; 19 percent went to state governments, primarily for education and Medicaid; and 13 percent paid for government benefits to individuals such as unemployment and food stamps.

            The remainder, about 24 percent, was spent on projects such as infrastructure improvement, health information technology and research on renewable energy.

            The White House points out that Recovery Act dollars didn’t just fund salaries — as the blog item implies. Lumping all stimulus costs together and classifying the total as salaries produces an inflated figure.

            Furthermore, the publication created its statistic with the report’s low-end jobs estimate. Had it gone with the 3.6 million job figure at the top end of the range, it would have come up with a smaller $185,000 per job figure.

            Republicans made a similar assertion in November 2009, using similar calculations to contend that the stimulus cost taxpayers more than $246,000 per job. Back then, they divided $160 billion in stimulus spending by the 650,000 jobs that the White House estimated the measure had created or preserved. A “fact check” conducted at the time by the Associated Press called that math “satisfyingly simple but highly misleading.”

            “Any cost-per-job figure pays not just for the worker, but for the material, supplies and that workers’ output — a portion of a road paved, patients treated in a health clinic, goods shipped from a factory floor, railroad tracks laid,” the 2009 Associated Press item noted.

            The Weekly Standard claimed that the stimulus actually “has been working in reverse the last six months, causing the economy to shed jobs.” It derives this conclusion from the fact that as of two quarters ago, the stimulus had added or saved just under 2.7 million jobs — or 288,000 more than it has now.

            Moody’s chief economist Mark Zandi says the Weekly Standard misinterpreted that data. …

            The Republican attacks on the stimulus plan are not rooted in reality. “Not cost effective” would probably be wrong, but it would be defensible. “Made things worse” makes no sense. The GOP works– including in the National Republican Senatorial Committee ad linked above claiming that the stimulus created zero jobs– to give people the false impression that the stimulus was pure pork that made things worse.

            As on climate change, and biology, and whether or not revenue cuts reduce revenues, the entirety of the GOP is on the wrong side of the facts here.

          • Steve

            Lumping all stimulus costs together and classifying the total as salaries produces an inflated figure.

            Well, actually, every penny spent went to *somebody’s* salary, but I digress. In any case, employment is a major economic indicator, and the effectiveness of an economic “stimulus” plan can be reasonably evaluated (provided you’re working with reliable data) in terms of new jobs/money spent.

            “Made things worse” makes no sense.

            Unless you’re concerned about the negative effects of enormous deficits. (Please don’t throw out the red herring of GOP hypocrisy–I’m well aware that Congressional Republicans swam in red ink throughout the Bush years, but this fact is irrelevant to an analysis of ARRA. ) Anyway, after you total up the economic “value” (a very subjective concept) of ARRA’s benefits (including jobs created, infrastructure improvements, research projects, etc.), the conclusion that it was a net negative is not patently absurd.

            As on climate change, and biology, and whether or not revenue cuts reduce revenues, the entirety of the GOP is on the wrong side of the facts here.

            You’re painting with a broad brush, my friend. While you’ll always be able to cite examples of prominent Republicans saying stupid things, you’ll have a hard time finding one that represents “the entirety of the GOP.” Bear in mind the constant temptation to showcase compete idiots as the archetypes of political/economic/academic camps with which one disagrees. I can turn it right around and do the same with Democrats, but because I recognize the logical error, I choose not to. Go ahead and argue that stupidity/insanity/evil is more prevalent among GOP leaders, but I really hate how policy debates often degenerate into a game of “my horse is bigger than your horse.”

          • http://poisonyourmind.com dedc79

            I’m not going to say that there aren’t Democrats saying crazy things, but I don’t think there’s anything like a complete equivalence between the two parties now. It’s not just that we go out looking for crazy quotes; it is actually pretty hard to find a Republican who isn’t spouting nonsense right now. And if you look at what’s going on this cycle, the last remnants of the moderate wing of the Republican party are under attack (see e.g. Lugar) from within. The republicans just had a debate where the crowd booed when the phrase “birth control” ‘was uttered. Send me examples of sane Republicans in Congress and I’ll happily write a post (or multiple posts) praising them

          • Steve

            …it is actually pretty hard to find a Republican who isn’t spouting nonsense right now.

            If by “Republican” you mean “Republican Politician,” I agree. The same goes for Democratic Politicians. Nonsense is the currency of politics. You win elections by spouting the nonsense that the electorate wants to hear, and the candate who scrupulously eschews nonsense will not be around for long (e.g. Jon Huntsman). If you think the nonsense is concentrated within one political camp, I invite you to consider the possibility that you’ve bought into a lot of nonsense.

            Anyway, you missed my point. “My horse is bigger than your horse” is a poor substitute for policy analysis.

            Anyway

          • http://poisonyourmind.com dedc79

            I get what you’re saying, I just don’t think its fair to throw up our hands and say they both do it. One party is broken, the other party is a bunch of cowards. These are two different problems with two different solutions, and I think it would be a mistake to treat them the same.

            I vote Democratic because I think it’s the lesser of two evils. I’m not in denial about what a mess the Democratic party is.

            I also take no pleasure in the collapse of the Republican party because I think (and I believe my co-bloggers share this belief) that we all suffer from the fact that there is only one sane political party because it presents sane people with no alternatives. The democrats know they have our votes and that is not a good thing.

          • http://poisonyourmind.com reflectionephemeral

            My computer’s misbehaving, so, real quick:

            1) seems to me that GOP rhetoric is about “the stimulus didn’t create a single job”; maybe I’m wrong.

            2) there are no sane, honorable GOP leaders. Isn’t ever so, but the party is devoid of statesmen at the moment.

  • Steve

    I don’t think it’s fair to attribute the untenable position that the ARRA created absolutely no jobs to “just about every Republican.” If the government pays one person to dig holes and another to fill them in, two jobs are created–few people would argue otherwise. More common on the right is the contention that the ARRA’s benefits were smaller than its total economic costs–a view that fewer than half of the surveyed economists confidently dispute.

    According to the President’s Council of Economic Advisors, the ARRA has resulted in a net gain of about 2.4 million jobs–at a cost of about $278,000 per job “saved or created.” I always take these estimates with a grain of salt, but assuming these figures are roughly accurate, do they make the ARRA look like a wise use of public resources?

    http://www.whitehouse.gov/sites/default/files/cea_7th_arra_report.pdf

    • Steve

      Oops–this was supposed to be a reply to Reflectionephemeral below.

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