Galbraith: Attacks on Sanders Economic Plan By Former CEA Chairs Are Irresponsible

[Jefferson23]

Professor James K. Galbraith, author of INEQUALITY, says the attacks were politically motivated assertions without evidence, and it was professionally irresponsible to criticize a fellow economist without having done the critical work

No transcript at this time, video running time approx. 12 minutes.

- March 4, 2016

Bio

James K. Galbraith teaches at the LBJ School of Public Affairs, The University of Texas at Austin. He is a Senior Scholar of the Levy Economics Institute and the Chair of the Board of Economists for Peace and Security. The son of a renowned economist, the late John Kenneth Galbraith, he writes occasional commentary for many publications, including Mother Jones, The Texas Observer, The American Prospect, and The Nation. He directs the University of Texas Inequality Project, an informal research group based at the LBJ School, and is President this year of the Association for Evolutionary Economics.

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=15793

[JaneyVee]

1. What's irresponsible is selling a fairy tale...

When was the last time per capita growth averaged 4.5 percent (more than double the rate over the past three decades), and the employment-to-population ratio suddenly reversed its long decline and reached 65 percent, the highest ever? Thats the math Bernie is relying on to achieve his cutsie charts his fans roll out.

I prefer reality based governing.

[Jefferson23]

2. He's not selling a fairy tale..if you would like to refute Galbraith go for it. n/t

[JaneyVee]

3. I just did.

[Jefferson23]

4. Huh? You're trying to be funny, repeating the nonsense critque and not addressing

Galbraith is not a refutation..you're being more than disingenuous.

[jsmirman]

6. Yes you did. All Galbraith is saying is that he did his math right.

"But the exercise here was not to put everything into paper that might happen in the world. The exercise was to take the kind of bare bones that economists use to assess and to compare the consequences of alternative programs, and to ask what kind of results do you get out? And that's what, again, what Jerry Friedman did. It was a reasonable exercise, he came up with a reasonable answer, and he reported it."

If you read the whole piece it still boils down to whether you find 5% annual growth absurd or not. And I find it absurd.

I am very sympathetic to the rationale behind Bernie's proposals, but they are not the kind of proposals that would lead to 4.5% annual growth. I also flat out don't see an advanced economy like ours managing 5% annual growth.

Heck, read this article which takes as sympathetic a view as one might expect - after being respectful as all get out to the possibilities, it still concludes that imagining sustained 5% increases is fanciful.

http://www.vox.com/2016/2/25/11113122/bernie-sanders-economic-growth

[Jefferson23]

9. No she did not, and his point clearly escapes you as well.

**What the Friedman paper shows, is that under conventional assumptions, the projected impact of Senator Sanders’ proposals stems from their scale and ambition. When you dare to do big things, big results should be expected. The Sanders program is big, and when you run it through a standard model, you get a big result.

That, by the way, is the lesson of the Reagan era – like it or not. It is a lesson that, among today’s political leaders, only Senator Sanders has learned.

http://big.assets.huffingtonpost.com/ResponsetoCEA.pdf

[JaneyVee]

13. Lets be serious, it's a fairy tale. And heres the thing....

This fairy tale economics is how he promises families wont be taxed up the wazoo, meaning, anything less than this ideal fairy tale economy (and it will be less...by a lot) will result in the middle class and poor seeing their tax rates skyrocket.

[Jefferson23]

15. I understand how partisan this discussion is for you, so no worries.

That you even imagine that scenario to be the by product of his polices
is without merit. I posted Galbraith as a reasonable counter to the
baseless spin...but I don't expect devotees to appreciate it.

I have differences with Bernie as I do with Obama, but your
accusations would rely on Bernie being a liar and or stupid,
he has no history of being either.

http://big.assets.huffingtonpost.com/ResponsetoCEA.pdf

[jsmirman]

14. Yes, the world economy and our relationship to it looks just like 1981

(it doesn't)

just as we're looking at the same situation of our national economy we were expanding from when Reagan took office (we aren't)

5.3% is a fantasy, but enjoy your fantasy

[Jefferson23]

16. That's not what Galbraith was referring to, not in a literal sense..you have as much

depth on this as your friend.

[jsmirman]

17. I'm sure you are certain you are right

congratulations and enjoy your day.

[Jefferson23]

18. I will. n/t

[pdsimdars]

11. He did talk about the growth rate too. Very clearly.

[JaneyVee]

12. Oops, I said 4.5%, Bernie is actually going with 5.3%. ABSURD is right.

[pdsimdars]

10. Hey, know it all, do you ever actually watch the video you are criticizing?

Or is your response just whatever happens to come to mind?

The Professor did go over this pretty clearly. Watch it , you may learn something.

[Doctor_J]

5. That makes the attacks by delusional hillarians downright moronic

[Uncle Joe]

7. That's a good article.

Thanks for the thread, Jefferson.

[pdsimdars]

8. This is a gem, thanks for posting it.

[AzDar]

19. K & R

[Jefferson23]

20. Bill Black: Krugman Triples Down on His Smear of Friedman and Bernie

Posted on February 23, 2016 by Yves Smith

Yves here. Krugman’s behavior is utterly disgraceful and he deserves to be called out on it. Again, I urge readers to contact the Times’ Public Editor about this shameful lapse. A classic management error is the “firm within a firm,” where an individual or tem gets to write their own rules and ignore management. AIG and Drexel are case studies of the sorry results. Does the Times regard Krugman as Too Big to Discipline?

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Originally published at New Economic Perspectives

Paul Krugman is plumbing new depths of moral obtuseness, arrogance, and intellectual dishonesty in what is now his third smear of the well-respected economist Gerald Friedman in two days. My prior column discussed Krugman’s two columns on February 17, 2016. Here is Krugman’s lead in his column dated February 19.

On Wednesday four former Democratic chairmen and chairwomen of the president’s Council of Economic Advisers — three who served under Barack Obama, one who served under Bill Clinton — released a stinging open letter to Bernie Sanders and Gerald Friedman, a University of Massachusetts professor who has been a major source of the Sanders campaign’s numbers. The economists called out the campaign for citing “extreme claims” by Mr. Friedman that “exceed even the most grandiose predictions by Republicans” and could “undermine the credibility of the progressive economic agenda.”

That’s harsh. But it’s harsh for a reason.

But why did they send a “harsh” and “stinging” letter in a manner calculated to try to destroy the career of an economist? If they found a grievous error in Friedman’s work, why didn’t they email him and point it out? Why did they personalize the attack and suggest that he must be doing it for Bernie? Why did they personalize their attack on Bernie, who did not commission Friedman’s study? Why has Krugman tripled-down on the personal attacks on Friedman and Bernie?

Here are a few things that a reader would want to know, but would never learn from the Gang of 4 or any of Krugman’s three efforts to smear Friedman. First, Friedman is a political supporter of Hillary Clinton. He did not gin up an economic study to benefit his favored candidate. He looked at the economic impact of Bernie’s proposals because that is what macroeconomists do. It is not clear whether the Gang of 4 did the minimal due diligence to discover this fact before they decided to smear Friedman by implying that he was a political hack shilling for Bernie. It is certain that they know now and should immediately correct their open letter, formally withdraw it, and apologize to everyone they smeared.

It is certain that Paul Krugman has known since, at the latest, his second post smearing Friedman and Bernie that Friedman, like Krugman, is a Hillary support. Krugman has not bothered to tell his readers that critical fact, and continues to smear Friedman in a manner designed to convey the opposite to his readers. This is unworthy of him.

It is clear that Krugman realized almost immediately after his morning post on February 17, 2016 that the Gang of 4 and he had been caught red-handed in a smear of Friedman and Sanders. His second post, two hours later, admitted that the Gang of 4’s smear was devoid of any logical criticism of Friedman. As Krugman phrased it, the open letter “didn’t get into specifics.” Yes, that’s part of what makes it a smear. You call an economist’s work garbage ginned up to support his favorite candidate – and you never provide a logical explanation with a single specific of what the economist supposedly did so wrong that he should be, not corrected, but publicly humiliated. And no, they did not leave the specifics out of their open letter in order to avoid humiliating Friedman while sending him a detailed private email detailing his grievous specific errors.

The truth is that the Gang of 4 and Krugman launched their smear of Friedman without pointing out a single error in his work. Indeed, that only begins to reveal the truth, for Krugman plainly did not evaluate the accuracy of Friedman’s modelling before he chose to smear Friedman. Two of the economists, Austan Goolsbee,and Laura D’Andrea Tyson do not do macro modelling and Alan Krueger is overwhelmingly a labor economist. Christina Romer is the only true macroeconomist. Goolsbee and Tyson would not have been able to critique Friedman’s modeling and even with Alan Krueger’s econometric skills he would have had to invest a great deal of time to be able to do so. I would love to take the deposition of each member of the Gang of 4 and Krugman. Journalists need to ask just how long each spent reading Friedman’s studies and obtain the contemporaneous notes they made during their reading an analysis of the studies before they wrote the letter. I guarantee that the answers will shock readers.

Did even one of you consider the ethics of trying to destroy Friedman’s career as a cynical means to your desired end of harming Bernie’s election prospects? What you have done is an unethical abuse of power and status for the most unseemly of goals – political advantage.

One of the reasons we can be so confident that any deposition and document discovery request revealing the Gang of 4 and Krugman’s contemporaneous notes would be so shocking is that a journalist has gotten into the fray and tried to bail out the Gang of 4 and Krugman. She did not understand that she was actually damning both by checking with the Gang of 4 on what work they actually did before launching their public smear campaign. She reported on the sole basis for the Gang of 4’s smear: “This was not because they reran the numbers, to be fair, but because they seem far-fetched.”

I will take this slowly for the benefits of journalists who wish to write about this subject. That sentence condemns the Gang of 4 and Krugman. Note that her effort at “fair[ness]” lasted exactly one clause. You can condemn a study without having rerun the numbers if (a) the researcher gimmicked the inputs or (b) used a bogus model. As I noted in my first column on this subject many of us would agree that the standard macro models are grossly unreliable. But that is not what the Gang of 4 and Krugman are asserting, for Friedman used the same models that the five smearers embrace.

That leaves us with two sources of criticism. Data entry and computational errors are one source, but there is no suggestion that the Gang of 4 and Krugman have done the analysis necessary to discover such errors. They do not assert any such error.

The remaining source of criticism would be that Friedman gamed his inputs. He could, for example, have put in a fiscal multiplier vastly larger than economists such as the Gang of 4 and Krugman believe exists. That is not, however, their criticism. It isn’t for two reasons. First, several of the economists involved are not expert in the debate about proper multipliers. Second, the economists involved that are most expert on multipliers have been arguing for years that the multipliers are substantial, and arguably larger than those that Friedman used in his study.

What an economist cannot do is what the Gang of 4 and Krugman have done: I have no problem with your inputs, your model, or your math – but I hate your results so I’m going to abuse my status to smear and try to destroy you and the candidate I oppose. Reread the journalist’s sentence that unintentionally condemns the Gang of 4 and Krugman: “This was not because they reran the numbers, to be fair, but because they seem far-fetched.” Focus on the second (vague) misuse of the word “they.” You can complain about inputs on the basis that they “are” (not “seem”) “far-fetched” – i.e., contrary to the known facts about multipliers. There is a critical difference between inputs to and outputs from a model. You cannot dismiss a study just because the outputs “seem far-fetched” – and you certainly can’t smear the economist on the basis of your “priors” about what those outputs would be. Your contrary priors, after all, have just been falsified by the model. The phrase “seems far-fetched” is a statement of the Gang of 4 and Krugman’s “priors” – priors that were implicitly falsified by Friedman’s study.

The Gang of 4, Krugman, and the journalist love the meme that Friedman is so bad that he is like a Republican. The journalist assumes that Friedman must have done something bizarre in his model, just like Republicans who game their models. She contrasts Republicans with their honorable “New Democrat” opposites.

[Republicans] have insisted on “dynamic scoring,” measuring the budget impact of various pieces of legislation according to how much magic sparkling pixie dust they believe such pieces of legislation will bestow on the economy. They have put forward tax plans that do not — cannot — add up, and kept on insisting that they would. They have promised everyone no taxes, awesome jobs, and a pony — all for free.

Democrats, say what you will, have avoided doing this to anything like the same degree. They have admitted that tax cuts do not pay for themselves. They have recognized that government spending needs to be financed with budget cuts, revenue increases, or a jump in the deficit.

The journalist, in her effort to come to the Gang of 4 and Krugman’s aid, again ends up condemning them and revealing her ideological views and lack of understanding of economics. First, the economy is in fact “dynamic” and changes in demand do have critical impacts on the economy. The problem with “dynamic scoring” as practiced by Republicans is two-fold. First it is asymmetric in ways that make no economic sense. Tax reductions are modeled as increasing growth, but increased spending is not though both operate by increasing demand. Second, they assume that tax reductions lead to large increases in hours worked that are far in excess of what the data show. Note that both of these failures are deliberate modeling errors designed to support Republican ideological priors.

Here’s the problem – Friedman didn’t do any of these things or anything similar. If he had, Romer would have spotted it and based the open letter on the “pixie dust.”

Second, the virtuous Democrats that the journalist described are also a major part of the problem. “Democrats” have not “admitted” that increasing government spending must lead to “a jump in the deficit.” That is the economically illiterate (according to both Krugman and Christine Romer) admission of the pro-austerity wing of the Democratic Party associated with the Clintons. The reality, as Krugman and Romer (a member of the Gang of 4) have stressed, is that “government spending” increases, in many circumstances, will lead to an eventual reduction in deficits by spurring employment and growth, which increases government revenue and reduces many government expenditures. Indeed, that is largely why the standard model that the Gang of 4 and Krugman embrace, without any “pixie dust,” produces the results that Friedman found. The standard model shows that both the pro-austerity “New Democrats” that the journalist praises and the Republicans with their gamed “dynamic scoring” models that she scorns are wrong. Bolder turns out to be much better. The standard macro model, therefore, finds that Bernie’s plan will “have huge beneficial impacts” (to quote the Gang of 4). (Also, the journalist and the New Democrats do not understand money, so the entire “needs to be financed” theory is wrong.)

The journalist and Krugman, of course, do not bother to reveal that many economists have reacted with horror to the Gang of 4 and Krugman’s efforts to smear Friedman (as a convenient way to smear Bernie). I noted in my first column that Jamie Galbraith destroyed Krugman and the Gang of 4 in his column.

You can tell how desperate Krugman is by the rhetorical gambit he has chosen to rely on. Recall that all of this began with a scathing, personalized and public attack on an economist by for the high crime of running competently and carefully a standard macro model and finding evidence that supported the economic plans of a candidate (Bernie) that he did not support. The smear is bizarre and insanely over the top. The assumption of journalists is – surely economists of this status would not perform a public lynching of this nature unless Friedman used “pixie dust.” If he had done so the Gang of 4 and Krugman would have pointed that out in their open letter and Krugman’s three columns attacking Friedman.

Krugman’s rhetoric reveals that he has nothing beyond ever-escalating Trumpian insults – labeling Friedman’s use of the standard macro models (that Krugman endorses) “voodoo,” “horrifying,” “fuzzy math,” “embarrassing,” “outlandish,” and requiring a “miracle.” None of the ad hominem remarks would have been required if Paul had found that Friedman actually committed “voodoo” by using the equivalent of a “magic asterisk.” The Gang of 4’s effort would still obviously be political (a chance to bash Bernie) but at least it would have a clear economic basis.

Krugman exemplifies the old law joke. “When I’m strong on the facts I pound the facts, when I’m strong on the law I pound the law, and when I’m weak on both I pound the table.” He has decreed two revealing edicts complete with impassioned pounding. First, no one is allowed to critique the Gang of 4 and Krugman’s smears of Friedman. Prominent economists that do, such as Jamie Galbraith, simply do not exist in Krugmania. This is understandable, of course, given Jamie’s evisceration of Paul and the Gang of 4, but it is still unprincipled.

But Krugman reaches a depth he has not publicly plumbed before in his second edict. He tries to cast the people who launched the smear, the Gang of 4, as the victims of a smear because economists have had the temerity to point out their errors. Krugman is enraged that people believe that the Gang of 4 wrote the letter as a means to attack a candidate they oppose – Bernie. Given that the Gang of 4 openly did so and attacked Bernie for the work of an economist (Friedman) who supports Hillary, the entire world has figured out that the Gang of 4 and Krugman are seeking to defeat Bernie.

The curves of Krugman’s intellectual dishonesty, arrogance, and moral blindness, however, intersect at their respective maxima in this sentence.

Mr. Sanders really needs to crack down on his campaign’s instinct to lash out.

When you are the midst of your third writing in two days lashing out in an effort to smear an economist and a candidate you oppose, it takes a special form of hypocrisy and chutzpah to smear Sanders on the grounds that it is illegitimate for economists like Jamie Galbraith to successfully refute the Gang of 4 and Krugman’s smears of Friedman and Bernie. Paul, we know you love your “pecking order” of economists, but no one is entitled to a free pass based on status. The same rules apply to the Gang of 4 and you. You have to bring logic and facts rather than a rolling barrage of ad hominem smears at those who use your own models and find that they predict the completely unsurprising result that bold plans like Bernie’s “have huge beneficial impacts.”

You, after all, made precisely this point about why the 2008 stimulus program should have been far larger. Recall how the “freshwater” modelers responded to your point – they abused the results of your model’s predictions in rhetoric every bit as frenzied as you now hurl at Friedman and Bernie. They at least believed your models were wrong. Friedman’s unpardonable sin in your book is that he has emulated your work using your model and found as you did that much bolder is much better. Paul, please complete the irony by predicting that Bernie’s plan will produce hyper-inflation – any day now.

http://www.nakedcapitalism.com/2016/02/bill-black-krugman-triples-down-on-his-smear-of-friedman-and-bernie.html

[Cheese Sandwich]

21. rec

[kristopher]

22. Rec your rec