A look at Faux Economics, increasingly popular but bizarrely wrong
There are many schools of economics, such as Classical, Keynesian, and Austrian. And now there’s Faux Economics, against which economists struggle in vain — logic and data defeated by well-funded lies. They are the foundation of Faux Economics, as shown in this enlightening exchange of salvos.
(1) A straight-forward statement about ”Republicans and Obama’s New Deal“, Peter Wallison (attorney, fellow of the American Enterprise Institute; bio), Wall Street Journal; 21 May 2010 — Wallison is also a enthusiastic propagandist for the government caused the housing bubble myth (see an example here; a sliver of the rebuttal evidence appears here). Opening:
In the rapturous days after Barack Obama’s victory and the Democratic congressional sweep that accompanied it, House Financial Services Committee Chairman Barney Frank declared that the new Congress would enact a “new New Deal.” Few people really thought at the time that he or his party meant this seriously. After all, the original New Deal — as anyone who has read history knows–failed to revive the economy. Indeed, the modern era of rapid economic growth commenced after both Democratic and Republican presidents undertook to lift costly and stultifying New Deal regulations.
(2) A clear rebuttal: “Peter Wallison: Opinions without Data“, Richard Green (Prof Business at UCSC), 21 May 2010
Using the National Income and Products Account, I looked at real annual GDP growth between 1933 and 1980 (the stultifying years) and 1980 to 2009 (the “rapid economic growth” years). Between 1933 and 1980, GDP grew by about 8-fold, or more than 4% per year (actually 4.5% per year). Between 1980 and 2009, real GDP did slightly better than doubling, or 2.7% per year.
Intense propaganda has convinced many Americans of the lie that growth was slower in the post-New Deal era than the post-Reagan era. In fact rapid growth occurred during a period of high taxes, heavy regulation, strong unions – and (seldom mentioned by liberals) low rates of immigration. That does not, of course, imply causation!
(3) The discussion continues elsewhere, as two economists examine the complex nature of growth, and its political and economic foundations.
- “Down the Memory Hole“, Paul Krugman, blog of the New York Times, 22 May 2010
- Scott Sumner (Prof Economics, Bentley U), posted at The Money Illusion, 23 May 2010
- “Lies, Damned Lies, and Growth“, Paul Krugman, blog of the New York Times, 24 May 2010
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