Today is the one-year anniversary of the landmark stimulus bill which most economists agree has staved off a second Great Depression. The evidence that the stimulus has worked is overwhelming – the New York Times has an in-depth article looking at its actual impact on jobs, and an indispensable graphic showing a timeline of key economic indicators before and after its passage. There’s another beautiful chart based on job loss data from Dec 2007 to Jan 2010 which also makes the impact of the stimulus crystal clear. The recognition of the stimulus’ success isn’t just data-driven – Republican lawmakers who have publicly denounced it for political gain have been quietly and hypocritically scrambling for stimulus money for their districts – as documented by the Wall Street Journal and by the Washington Times.
The only real flaw in the stimulus bill was that it wasn’t big enough . . .
Aziz, Aziz, Aziz. Where do we start with this?
- How about the leap from “most economists agree” to the sole source of his authority for this breathtaking proposition–“the New York Times has an in-depth article . . .” That’s it. I don’t even have to find economists who don’t agree and with this and try to figure out whether they are or aren’t “most”–Aziz thinks the New York Times is actually a trustworthy source for this preposterous statement. That actually tells me, in contrast, that the entire remainder of his article is not worthy of reading, because Aziz, who is not an economist, is not making a serious attempt to objectively see if his central premise is correct.
- Then there’s the fact that “most economists” didn’t agree what ended the first Great Depression until about 20 years ago (it wasn’t the New Deal, by the way). The idea that “most economists” would agree “the landmark stimulus bill . . . has staved off a second Great Depression” –and that they would have nothing to say about a trillion dollar deficit that has resulted–is, to any serious student of economics, truly laughable.
- And what exactly do “all economists” say? It would be too easy to merely cite Cato and Heritage economists who are predisposed not to agree. But what else is out there? Everyone knows the “jobs saved” metric is no metric at all, or at least not much more than half of one. On those lines, in the Atlantic, columnist Derek Thompson votes a lukewarm slightly-thumbs-up in a piece reprinting some Times charts and graphics from a couple of months ago, but much like the ones that make Aziz all woozy, regarding which one commenter writes, “I like the line for ‘if no stimulus’. It’s kind of like drawing the line of the number of girls I could have slept with if I weren’t married. Useless. A huge guess made to make the other number look good (or bad).” But beyond merely the jobs figure, the chief economics commentator of the Financial Times writes:
The policies that new-Keynesian economists are advocating stem from a theory that is built on sand. Before economists become policy advocates we need a theory that is internally consistent and that can explain the evidence from the Great Depression, the stagflation of the 1970s and the current economic collapse. The Keynes of The General Theory was right about the problem, but he was wrong about the solution. High unemployment can persist forever unless we do something about it. But fiscal policy is not the way to restore full employment.
If new-classical and new-Keynesian economics are both wrong, where do we go from here? The classical economists argue that the economy will repair itself. The new-Keynesians argue for more fiscal stimulus. I agree with the Keynesians that very high unemployment will persist if we don’t do something about it. But I do not believe that large fiscal deficits that will be paid for by our children and our grandchildren are the answer.
Okay, well, that’s the fat cats at the Financial Times, right? In contrast, we can count on NPR for objectivity, I suppose? It’s at least as dependable, politically, as the Times. What does NPR say?
Obama’s critics have been helped by the continuing flood of bad news on the jobs front. The unemployment rate, which stood at 7.7 percent in January when Obama took office, has shot up to 10 percent, even with the stimulus spending.
Most economists agree that the economy was even weaker at the beginning of 2009 than many experts, including those at the White House, had realized. But there is little agreement in the political world over what role the stimulus played.
“The problem with the stimulus is that while people have their own direct experiences with the economy, the impact of government action on the economy is almost always subtle and less than powerfully visible,” Franklin says.
It’s not that I know the answer to this question. I don’t. I’m not an economist; I’m an economics major who can’t balance a checkbook. But the breathless conclusion by Aziz is a joke, and just proof, not of how good the stimulus is, but–even still–how good that Kool-Aid really is.