Friday, February 19, 2016

Drum: Sanders' Economic Proposals in Fantasyland

Kevin Drum gets into the specifics of the Sanders campaign proposals on the economy on Mother Jones. At issue is the campaign's reliance on UMass Amherst professor Gerald Friedman's predictions of the results of implementing all of Sanders' proposals.

WTF? Per-capita GDP will grow 4.5 percent? And not just in a single year: Friedman is projecting that it will grow by an average of 4.5 percent every year for the next decade. Productivity growth will double compared to CBO projections—and in case you're curious, there has never been a 10-year period since World War II in which productivity grew 3.18 percent. Not one. And miraculously, the employment-population ratio, which has been declining since 2000 and has never reached 65 percent ever in history, will rise to 65 percent in a mere ten years.

I've generally tried to go easy on Bernie Sanders. I like his vision, and I like his general attitude toward Wall Street. But this is insane. If anything, it's worse than the endless magic asterisks that Republicans use to pretend that their tax plans will supercharge the economy and pay for themselves. It's not even remotely in the realm of reality. If it were, France and Germany and Denmark would all be Croesian paradises by now.

A group of stuffy establishment economists says "no credible economic research" supports Friedman's analysis, which "undermines our reputation as the party of responsible arithmetic." Or, in Austan Goolsbee's more colorful language, Sanders' plans have "evolved into magic flying puppies with winning Lotto tickets tied to their collars."

Enough is enough. Everyone needs to get back to reality. This ain't it.

Sanders' defenders have countered by pointing out that Friedman is not officially part of the Sanders campaign. Drum counters:

The topic is Gerald Friedman's paper suggesting that Sanders' domestic spending program will supercharge the economy in wildly unlikely ways. And it's true that Friedman isn't officially part of the Sanders campaign team. But they've previously relied on his analysis of their universal health care plan, and the campaign's policy director has repeatedly praised Friedman's paper (on CNNnewspapers, and NPR).

The Sanders campaign also counters by touting a letter signed by 170 leading economists supporting his economic policies. However, the letter fails to specifically address these predictions. Rather, it compliments Sanders' stronger regulatory approach in reining in Wall Street.

Drum summarizes:

Obviously you can't prove that a forecast of the future is wrong. But you can say that Friedman is forecasting a sustained level of economic growth that's literally never happened before in history. Not here, not in Denmark, not anywhere. Mature economies simply don't grow 5 percent a year for a decade. Labor productivity doesn't double just because you create a bunch of social welfare programs. The number of people in the labor force doesn't skyrocket to new records even in the face of increasing rates of boomer retirement.

The discouraging thing here is that Friedman's critics aren't saying that Sanders' proposals are bad. You can support every single element of his plan with a clear conscience. Their criticism is solely about forecasting how his plan will affect economic growth. And on that score, it's not even remotely realistic. It's about like saying his Medicare-for-all plan will increase life expectancy ten years. It's beyond belief. No matter who you support, you shouldn't do it based on fantasies like this.

To be clear, I don't have an axe to grind in the Democratic primary. I feel sure that I will support the Democratic nominee, Clinton or Sanders, particularly against the eventual survivor of the clown-show GOP primary. The few policy proposals the Republican candidates have bothered to specify are even further out in Fantasyland. However, like Drum, despite the appeal of Sanders' stricter regulation proposals for Wall Street, I find his apparent embrace of wildly unrealistic economic forecasts disturbing.

No comments: