Voodoo Economics - Crawford Style

MaxSpeak, You Listen!: Business School Professors to Bush - Your Policies Stink

Just in time for the next announcement from the Bureau of Labor Statistics due tomorrow, October 8th, the same day on which we get to see if the preznut grew some charm wings since the Debacle in Miami. Rumor has it that the job numbers will improve, and why wouldn't they? Heck, even after the unemployment benefits time out, dad and mom still can work at Wal-Mart for seven bucks an hour, without benefits, and get great deals on 24 packs of Eggo Waffles. You can even buy Tatter-Tots by the truck load and survive on them for weeks until the signs of carbo-bloating take effect.

Dear Mr. President:

As professors of economics and business, we are concerned that U.S. economic policy has taken a dangerous turn under your stewardship. Nearly every major economic indicator has deteriorated since you took office in January 2001. Real GDP growth during your term is the lowest of any presidential term in recent memory. Total non-farm employment has contracted and the unemployment rate has increased. Bankruptcies are up sharply, as is our dependence on foreign capital to finance an exploding current account deficit. All three major stock indexes are lower now than at the time of your inauguration. The percentage of Americans in poverty has increased, real median income has declined, and income inequality has grown.

The data make clear that your policy of slashing taxes - primarily for those at the upper reaches of the income distribution - has not worked. The fiscal reversal that has taken place under your leadership is so extreme that it would have been unimaginable just a few years ago. The federal budget surplus of over $200 billion that we enjoyed in the year 2000 has disappeared, and we are now facing a massive annual deficit of over $400 billion. In fact, if transfers from the Social Security trust fund are excluded, the federal deficit is even worse - well in excess of a half a trillion dollars this year alone. Although some members of your administration have suggested that the mountain of new debt accumulated on your watch is mainly the consequence of 9-11 and the war on terror, budget experts know that this is simply false. Your economic policies have played a significant role in driving this fiscal collapse. And the economic proposals you have suggested for a potential second term - from diverting Social Security contributions into private accounts to making the recent tax cuts permanent - only promise to exacerbate the crisis by further narrowing the federal revenue base.

These sorts of deficits crowd out private investment and are politically addictive. They also place a heavy burden on monetary policy and create additional pressure for higher interest rates by stoking inflationary expectations. If your economic advisers are telling you that these deficits can be defeated through further reductions in tax rates, then you need new advisers. More robust economic growth could certainly help, but nearly every one of your administration's economic forecasts - both before and after 9-11 - has proved overly optimistic. Expenditure cuts could be part of the answer, but your record so far has been one of increasing expenditures, not reducing them.

Here's another libural (spoken in the vernacular, Texan) perspective on the current economic state of affairs, from The Economist, of all places.

George Bush comes out worst in our poll of academic economists

WOULD John Kerry or George Bush do a better job stewarding America's economy? Judging by the polls, voters are not sure. Within the past couple of months both candidates have had narrow leads on the issue. Ask economics professors, however, and you get a clearer answer.

In an informal poll of 100 academics, conducted by The Economist, Mr Bush's policies win low marks. More than 70% of the 56 professors who responded to our survey rate Mr Bush's first-term economic policies as bad or very bad. Fewer than 20% give positive marks to Mr Bush's second-term economic agenda, and almost six out of ten disapproved. Mr Kerry hardly got rave reviews either, but his economic plan still fared better than the president's did. In all, four out of ten professors rated Mr Kerry's economic plan as good or very good, but 27% gave it negative scores.

A third of the country's economists believe that the economy is in good or very good shape (often among the investor class); about half give a neutral response, and one in five believes that this economy to be in bad shape. They are almost equally split about how much responsibility the current administration deserves for the state of today's economy. Just over a third assign some or all credit or blame to the preznut; another third think he has had little or nothing to do with it.

The sample polling result of economists, PDF reader required. For the less travelled or immediately suspicious - yes, I am speaking to you Rethugs who see facts as minor inconviences, below is the methodology for selecting the economists for this study:

Are our economists partisans? We chose their names, at random, from among the referees of the American Economic Review, one of the profession's more prestigious publications. Conservatives often moan that university professors are all left-wingers. Though most of our professors claim they are not interested in working in Washington, 80% of those who would accept a policy job would prefer to work for Mr Kerry. However, even if you allow for some partisanship, the results are fairly striking.

Left-winger economists unite! The investor class is killing us. And if you hold less than a $100,000 portfolio, friends, you are not part of the investor class. You don't get to speak to an analyst at Goldman-Sachs, you get the overseas boiler room/call center speaking to Sanjay who goes by the name Donald Trump each time he recommends a "sure-fire winner with solid growth potential and a great P/E ratio." By the way, he's speaking to you through an Avaya switch made in Singapore.