The points made in the short video are largely valid, but Reich made a few misleading, disingenuous statements. Just for fun, would anyone like to identify them and point them out?
Quote:
Originally Posted by TexTushHog
Thomas Sowell couldn't pour piss out of a boot. Joe Stiglitz, Paul Krugman, Brad deLong. . . . Those are some smart economists, and frankly, Smarter than Reich. But Sowell??!!! If you're going to pick an economist who is wrong almost all the time, at least pick one who is admittedly smart, but wrong -- like Robert Barro.
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Thomas Sowell has more knowledge of sound economics in his little finger than somebody like Krugman has in his entire brain.
Notice that I said
sound economics. In Krugman's world, almost no amount of borrowing, spending, and money-printing is enough. It's as though his brain somehow got stuck in the 1970s. He has no idea how the economy works and how the capital markets work in the real world. Last spring he advocated QE in the
$8-10 trillion range. That's not a typo; that's what he actually said. And he also complained almost incessantly that the $860 billion "stimulus package" of 2009 was much too small(!)
Stiglitz doesn't quite go that far, but he's certainly pretty far to the left on most issues. For instance, he has said that the the top tax rate on capital gains should be "at least as high" as that on ordinary income. Since he is unlikely to be very affluent, I suppose it's understandable that he has little idea of how taxation works in the real world. But it's astonishing to me that a prominent Ph.D. economist would be so apparently unaware of the distortive effects of very high capital gains taxes or of the strong inverse correlation between capital gains realizations and the top tax rate on cap gains. You might note that not even the finance ministers of most European social democracies advocate capital gains tax rates above about 25-30%, at the most -- even though tax rates on high salaries are typically much higher. There are very good reasons for that.
DeLong has written some pretty interesting stuff, and I've always enjoyed his writing. However, he too seems to have a pantry stocked with a little too much Keynesian Kool-Aid.
But I don't consider the stuff propounded by Krugman and some others to be Keynesianism, but rather a
bastardization of Keynesianism. As I said in a nearby thread, I don't believe for a minute that Keynes would have approved of a lot of the snake oil being peddled in his name, especially in the face of very large structural budget deficits and balance-of-payments deficits that no one is likely to meaningfully address until forced by continuing crises.
At least TexTushHog acknowledged that Barro is smart -- but before claiming that he's wrong, it might be a good idea to undertake more than a cursory examination of his work, or at least read a little bit about it. Barro has probably done more than any other well-known economist to debunk high-multiplier myths peddled by people like Mark Zandi, who claims that things like spending on food stamps and other social welfare programs produce multipliers of about 1.75. "Intellectual cover" such as this enables big-spending politicians to do what they love most, which is to buy votes with other people's money.
But Barro's research shows that "multipliers" for such spending are actually in the 0.60 to 0.80 range, at best, and are often significantly closer to zero.
If we paid more attention to people like Barro, and less to those who have learned nothing from the history of the U.S. and Europe over the last forty years or so, we would be much better off.
7 Economic Lies
