Thursday, February 18, 2016

Bernie's Economics: Motives vs. Ideas

There have been some critiques of Bernie's economic proposals by some liberal economists. I find the way the Sanders' campaign as symptomatic of his entire campaign.

"With his expansive plans to increase the size and role of government, Senator Bernie Sanders has provoked a debate not only with his Democratic rival for president, Hillary Clinton, but also with liberal-leaning economists who share his goals but question his numbers and political realism."

"The reviews of some of these economists, especially on Mr. Sanders’s health care plans, suggest that Mrs. Clinton could have been too conservative in their debate last week when she said his agenda in total would increase the size of the federal government by 40 percent. That level would surpass any government expansion since the buildup in World War II."

"The increase could exceed 50 percent, some experts suggest, based on an analysis by a respected health economist that Mr. Sanders’s single-payer health plan could cost twice what the senator, who represents Vermont, asserts, and on critics’ belief that his economic assumptions are overly optimistic."

"His campaign strongly contests both critiques, defending its numbers and attacking prominent critics as Clinton sympathizers and industry consultants."

"I think it’s not surprising that some of the same establishment economists who told us how wonderful Nafta and unfettered free trade would be are now attacking Sen. Sanders’s economic agenda,” he said, referring to the North American Free Trade Agreement. He said that given the dire problems of the American middle class, “It’s too late for establishment economics and establishment politics.”

See also:

Typical Bernie argument. Don't engage with the argument but rather-what you think-is-the motivation for having made the argument. I notice this is how Bernie supporters tend to argue online as well.

They don't dispute what you said so much as get into an argument as to why you said it.

Many object to the analogy of Jeb Bush promising 4 percent GDP growth or Huckabee promising 6 percent. But Bernie has made some pretty rosy predictions himself-5.7% GDP?

This is totally outside historical trends.

Jared Bernstein makes the point that the real difference between Hillary and Bernie on healthcare is the issue of the time path dependence of policy. Bernie assumes there is very little.

"–Sanders’ policy aspirations mirror many of those I write about here: deep infrastructure investments, efficiency improvements in health care, college affordability, and so on. FTR, Clinton’s do too, though she dials back the extent of her proposed interventions. She’s admittedly more of an incrementalist as her theory of change is much more path dependent than Bernie’s. (Path dependency: your options in terms of where you end up depend on where you’re starting from.) I return to this important difference below."

"–If you roughly sum up the costs of what Sanders is proposing, you will find that federal government spending under his agenda grows to something like 30% of GDP instead of the historical average of around 20%. That’s not at all unheard of in European and Scandinavian social democracies, as the candidate himself often notes. It is, however, as I suggested in the piece, unheard of in our own history. Again, that’s one way to interpret his call for a “political revolution.” And it’s more evidence of his path-non-dependency."

"–I did not find the macro estimates of Bernie’s agenda by economist Jerry Friedman, who, according to Dean Baker is “not affiliated” with the Sanders’ campaign, very plausible. 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)."

"And, in the current case, evaluate for yourself how heavily to weigh path dependency. Krugman gives it a very heavy weight. Baker less so. I give it a heavy weight with regard to health care–defend the ACA against the marauding hordes!–build on its successes so far!–perhaps because I was there in the sausage factory when we somehow managed to pass the damn thing. But beyond that, I’m not sure how heavily to weigh path dependency."
Bernstein note is being careful not to endorse or not endorse anyone which is smart. He wants to remain just an academic and secondly if he were to outright not endorse Bernie the Bernie bots would start stalking him.

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