Thursday, November 5, 2015

Republicans' claims about economic growth: How they know what isn't so and why they sell it anyway

Let's start with some facts about economic growth provided by Paul Krugman in his NY Times column.

The arithmetic on partisan differences is actually stunning. Last year the economists Alan Blinder and Mark Watson circulated a paper comparing economic performance under Democratic and Republican presidents since 1947. Under Democrats, the economy grew, on average, 4.35 percent per year; under Republicans, only 2.54 percent. Over the whole period, the economy was in recession for 49 quarters; Democrats held the White House during only eight of those quarters.

The advantage even extends to the comparison between the Obama and Bush years. But the cause of the Democratic advantage remains unknown.

Mr. Blinder and Mr. Watson look at a variety of possible explanations, and find all of them wanting. There’s no indication that the Democratic advantage can be explained by better monetary and fiscal policies. Democrats seem, on average, to have had better luck than Republicans on oil prices and technological progress. Overall, however, the pattern remains mysterious. Certainly no Democratic candidate would be justified in promising dramatically higher growth if elected. And in fact, Democrats never do.

Republicans, however, always make such claims: Every candidate with a real chance of getting the G.O.P. nomination is claiming that his tax plan would produce a huge growth surge — a claim that has no basis in historical experience. Why?

Part of the answer is epistemic closure: modern conservatives generally live in a bubble into which inconvenient facts can’t penetrate. One constantly hears assertions that Ronald Reagan achieved economic and job growth never matched before or since, when the reality is that Bill Clinton surpassed him on both measures. Right-wing news media trumpet the economic disappointments of the Obama years, while hardly ever mentioning the good news. So the myth of conservative economic superiority goes unchallenged.

Beyond that, however, Republicans need to promise economic miracles as a way to sell policies that overwhelmingly favor the donor class. [Scriber: "donor class" aka the 1%.]

But Americans overwhelmingly believe that the wealthy pay less than their fair share of taxes, and even Republicans are closely divided on the issue. And the public wants to see Social Security expanded, not cut. So how can a politician sell the tax-cut agenda? The answer is, by promising those miracles, by insisting that tax cuts on high incomes would both pay for themselves and produce wonderful economic gains.

Republicans must sell an essentially unpopular agenda by confidently declaring that they have the ultimate recipe for prosperity — and hope that nobody points out their historically poor track record.

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