Economic Myths from the Presidential Campaign

New York Times: “If you want to learn about the economy, there are good and bad places to go. Probably the worst source of reliable information is the current crop of presidential candidates. Dissembling and exaggeration are no strangers to politics, but this year’s campaigns have been particularly egregious.”

“Here are six economic myths that underlie much of the recent rhetoric.”

4 Comments

  1. The New York Times neglected to mention the the author of that article, Greg Mankiw was George W Bush’s top economics adviser.

    Given that, I was surprised that although that article just commented in broad terms at how much I agreed with.

    For instance, he actually admitted that tax cuts don’t pay for themselves.

    I’ve seen completely different numbers on how much the different quintiles pay in total tax than the CBO numbers, but at least he cited a credible source.

    The only thing I find ridiculous is this:

    “But to say that the economy is rigged, as Mr. Sanders and Mrs. Clinton have done, assumes that some small group of oligarchs planned this outcome. Clearly, the wealthy and powerful try to protect their interests, and they sometimes succeed. But the economy is a complex, decentralized system. Many outcomes are under no one’s control.

    Technological change, for instance, is an emergent process reflecting the decisions of thousands of engineers and entrepreneurs. Growth slows when the pace of innovation falls below historical norms. Inequality rises when the innovations that do occur are used by skilled workers and replace unskilled workers. Such skill-biased technological change, as economists call it, is widely considered a leading cause of the increasing inequality the United States has experienced in recent decades.”

    No, they do a lot more than ‘try to protect their interests.’ They give campaign donations to politicians and then hire lobbyists to write specific clauses into legislation written by those same politicians that favor their interests.

    To claim the system isn’t rigged is to deny reality.

    As one piece of evidence of that, every other advanced western country has had the same technological change but I don’t believe a single one of them has either the same level of income inequality or experienced the same growth in income inequality over the past 30-50 years.

    1. yeah, I saw that too and found Mankiw’s explanation for why “the economy is rigged” is a myth to be a straw-man non-answer. He basically says its a myth because changes driven by technology can also drive inequality. OK, fine, that may be right, but that doesn’t mean things aren’t rigged as well. Nobody is saying that all inequality is due to a rigged economy.

      That Mankiw can’t do any better than avoiding the rigged question, and resorted to the straw-man approach strongly suggests to me that in fact the economy is rigged (not that I didn’t already know it).

      1. He also breezily answers the first two questions by saying “yes, these changes will hurt the people who lose their job, but will make more money overall.” Who is it making money for? If people are losing their jobs for increased profits that go to the upper 1% of the economy, uh, yeah, I’d call that rigged.

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