If Bush Did It

[Posted by Karl] TNR’s Jonathan Cohn is serving the stimulus Kool-Aid: Republicans and their allies keep saying the Recovery Act didn’t work. The experts keep saying that it did. The latest is the Congressional Budget Office , which this week released a new economic projection and, in so doing, confirmed its earlier finding that the Recovery Act succeed in its primary goal: Saving or creating jobs in order to offset the effects of the recession. As of June, the agency says, between 1.0 and 2.9 million more people are working because of the Recovery Act. And that figure actually seems to understates the impact. As I draft this, Cohn’s item is the most viewed at TNR.  Progressives love the Kool-Aid, because they belong to what Jonah Goldberg terms the “ cult of experts .” Peter Suderman has likely tired of writing the same rebuttal again and again, so I quote him from the last round of Kool-Aid drinking: Here’s the problem: Those CBO reports don’t definitively prove anything about the real-world effect of the stimulus. That’s because in order to produce those reports, the CBO effectively re-runs the same models that it used to estimate the effects of the stimulus before it started. The reports aren’t based on a detailed measurement of real-world output. Instead, they’re based on measuring the input (how much money was spent), and then using models to project how big the multiplier effect has been. Measuring spending and modeling output means that you can believe the CBO when it says that the stimulus turned out to be more costly than expected , but you should remain wary about any claims made using the “real-world effects” side. Indeed, CBO director Doug Elmendorf has explicitly made this point , agreeing at a speech earlier this year that that “if the stimulus bill did not do what it was originally forecast to do, then that would not have been detected by the subsequent analysis.” Suderman was responding to the unhinged Andrew Sullivan, who was continuing to drink the Kool-Aid, even after acknowledging Suderman had a good point. At the risk of befouling the progressive punch bowl, if these Keynesian macroeconomic models were so great, maybe there wouldn’t be a yawning chasm between the unemployment numbers the Obama administration predicted under the stimulus and the dismal unemployment figures we’ve actually seen. Granted, I’m just a nutty wingnut who’s nuts, but economist Mark Thoma (not a Vast Right-Wing Conspirator) concedes not only that macroeconomic models have not fared well in recent years, but also that: A big part of the problem is that macroeconomists have not settled on a single model of the economy, and the various models often deliver very different, contradictory advice on how to solve economic problems. The basic problem is that economics is not an experimental science . We use historical data rather than experimental data, and it’s possible to construct more than one model that explains the historical data equally well. Time and more data may allow us to settle on a particular model someday – as new data arrives it may favor one model over the other – but as long as this problem is present, macroeconomists will continue to hold opposing views and give conflicting advice. This problem is not just of concern to macroeconomists; it has contributed to the dysfunction we are seeing in Washington as well. When Republicans need to find support for policies such as deregulation, they can enlist prominent economists – Nobel laureates perhaps – to back them up. Similarly, when Democrats need support for proposals to increase regulation, they can also count noted economists in their camp. If economists were largely unified, it would be harder for differences in Congress to persist, but unfortunately such unanimity is not generally present. Kinda sours Cohn’s “Republicans vs Experts” Kool-Aid, but there it is.  And what happens if we step away from the models?  Veronique de Rugy notes that Garett Jones and Daniel Rothschild have published two new papers looking at why the stimulus failed to create as many jobs as the administration promised, both based on extensive field research.  The papers primarily examine how people elected to use their stimulus dollars, finding that ”the most vociferous boosters of fiscal stimulus should discount their benefits calculations by a significant factor.”  She also notes that in attempting to rebut the findings, Cohn’s TNR colleague Jonathan Chait did not read these papers very closely.  Of course, progs like Kevin Drum see the papers as — wait for it — an argument for an even bigger stimulus, but at least Drum candidly admits that maybe it is just his “priors” and “intuition” talking.  Members of the progressive Cult of Experts like to accuse the right of ignoring expertise that conflicts with their ideology, but rarely notice the glass church in which they worship. –Karl

Go here to see the original:
The Cult of Experts (Stimulus Edition)