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American Republicans Are Bad Economic Managers
2020-11-01 829 words
Project Syndicate 2020-11-01
American Republicans Are Bad
Economic Managers
J. Bradford DeLong
U.C. Berkeley
& WCEG
<
https://www.icloud.com/pages/0X3WOZxicKKMrstEB66_3N7eA
>
<
https://github.com/braddelong/public-fi les/blob/master/delong-project-
syndicate-2020-11-01.pdf
>
2020-11-01
We hear many strange things today. They—and it is a complicated
“they”—are flooding the zone with misinformation. Why? For lots of
reasons. But democracy breaks down under a flood of misinformation.
Democracies’ excellences spring from its ability to consider ideas from
different places in society, and converge on the good ones. But that
requires that the flow of information into the public-sphere be reality-
based—or at least that there be confrontations in which the people can
watch Lincoln debate Douglas and decide who is trustworthy and correct
and who is not. And we have lost that.
But we keep on trying. Here Sisyphus. Here rock. Here hill. And, as
Camus wrote now long ago, we _must_ imagine Sisyphus happy, with
what he meant depending on which of the many possible ways we choose
to read the word “must”.
One piece of misinformation I see more and more these days is that on
election day America faces a tradeoff. On the one hand, electing a
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American Republicans Are Bad Economic Managers
2020-11-01 829 words
Democrat means that America will no longer have a government that
permanently kidnaps children just because it can. On the other hand,
electing a Democrat “who will be radical and hurt the economy…”, as the
Wall Street Journal
columnist Peggy “No Republicans Should Ever Stab
Trump in the Back” Noonan puts it, before writing that “[Biden] should
not be going out for ice cream in a mask like John Dillinger on the lam…”
and that “[Kamala Harris] is embarrassing. Apparently you’re not allowed
to say these things because she’s a woman…. I will not sweat it, I will be
myself…. If you can’t imitate gravity, could you at least try for
seriousness?…”
So let me give the microphone to economists Alan Blinder and Mark
Watson, who write that: “The superiority of economic performance under
Democrats rather than Republicans is nearly ubiquitous: it holds almost
regardless of how you defi ne success…. The performance gap… strains
credulity…. 1.8 percentage points [per year]… from Truman through
Obama
…”
And note that if they went back two more presidents—to
Hoover-Roosevelt—the gap would be even bigger: about 3
%
/year.
Note that in this context Trump was an unusually good president as far as
economic performance in his fi rst three years was concerned. In teh fi rst
three years of his presidency the economy matched the 2.4
%
/year growth
it achieved in Obama’s second term. Even matching the previous
Democrat is something that Trump’s and only Trump’s, of all post-WWII
Republican presidencies, has seen.
Blinder and Watson are flummoxed on where this performance gap comes
from: greater fi xed investment, more consumer optimism and thus
spending on durables, fewer unfavorable oil shocks, and perhaps stronger
growth abroad. But these can explain less than half of the gap. It is not that
Democrats pursue overinflationary policies that borrow growth from the
future and move it into the present.
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American Republicans Are Bad Economic Managers
2020-11-01 829 words
When I fi rst read Blinder and Watson, the oil factor jumped out at me.
Both President George Bushes—and also Nixon and Ford’s Secretary of
State Henry Kissinger—were deeply confused about whether the U.S.
wanted a high or a low price of oil as far as boosting real income growth
was concerned. Other presidents grabbed for chances to make or keep oil
prices lower.
When we look back at history, it seems that Republican presidents and
their administrations have little sense of what economic policies are likely
to work. It simply never entered George W. Bush’s mind, or the mind of
anyone in his administration, that a fi nancial crisis could be produced by
underregulation and would be a bad thing. It simply never entered Ronald
Reagan’s mind, or the mind of anyone in his administration, that the big
budget defi cits they created gave America a choice between seeing
investment collapse—slowing growth—or borrowing from abroad and in
the process importing lots more manufactures—thus turning the Midwest
into a rust belt. And Nixon’s belief that low interest rates plus wage-and-
price controls could keep both inflation and unemployment low was hard
to fathom either at the time.
Here we can say of Trump that he has played true to type. NAFTA: worst
trade deal in American history. TPP: second worst. Add some TPP
provisions to NAFTA and call it USMCA, and all of a sudden it makes
America great again. A trade war with China: “good, and easy to win”. But
the result has been no change in manufacturing employment, a widened
manufacturing trade defi cit, U.S. consumers suffering reduced real
incomes because they, not China, have paid the tariffs. Why? Because
Robert Lighthizer and company had no clue how to plan or fi ght a trade
war.
Republican presidents with their repeated failures to understand how the
economy works have been hurting it since at least 1928. There is no
tradeoff here.
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American Republicans Are Bad Economic Managers
2020-11-01 829 words
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