Tuesday, June 8, 2010

The Left Still Doesn't Get Economics

Lakeshore Laments highlights a study showing that those identifying as liberal or progressive don't score well on questions of basic economics.

Nate Silver takes to his blog today to denounce the study as "junk science" for, among other things, poorly worded questions:
Finally, there are some questions about which there is considerable disagreement even within circles of academic economists -- as Klein should know, since he's commissioned several surveys of them. Economists are about evenly split, for instance, when it comes to the minimum wage. There is much closer to being a consensus on free trade, but there are an ample number of heterodox views [E.A.]
Far be it from me to quibble with Silver, whose reputation was made analyzing polling data. So let's stipulate that the survey is junk. Let's go further and just look at an area where even Silver acknowledges widespread agreement, free trade.

Here's economics professor Anthony Evans:

I think useful testing points are Greg Mankiw and Paul Krugman. Firstly, here's what Mankiw has said on this topic:

Few propositions command as much consensus among professional economists as that open world trade increases economic growth and raises living standards. Smith’s insights are now standard fare in Econ 101.

Finally, Paul Krugman - have a look at Pop Internationalism, or his essay on "Ricardo's Difficult Idea" (note: I don't think the principle of comparative advantage is difficult). Despite his more recent NYT columns, if you look at the body of Krugman's academic work you find someone who uses the basic principle of trade theory, and accepts it. When Mankiw and Krugman agree , I'd say that's pretty close to a definition of consensus.

I'd say that's a powerful argument for the existence of a consensus that free trade is on net a positive. But that's hardly what you will hear from liberals and progressives today.

Virginia Democratic Congressman Tom Perriello was profiled on NPR yesterday and apparently, he doesn't agree that free trade and low prices benefit his contsituents:

And when the congressman sits down to talk with the workers, jobs are what's on everyone's mind.

Rep. PERRIELLO: I mean, I think part of what got us into this mess was we said to people we're going to take your job away but we're going to give you really cheap stuff at Wal-Mart. It's going to work out great for you, and it doesn't. People need a job. They need to be able to support their family and...

He's right of course, people do need jobs, but there's not even a whiff of the consensus on free trade in that sound bite. It's as if he can't recognize that his constituents are not only wage earners, but consumers as well. Elsewhere, Perriello denounces demagoguery in relation to death panels, but apparently he has no qualms about engaging in the same when it comes to Wal-Mart.

While liberal economists may call for additional fiscal and monetary stimulus to reduce unemployment, it appears liberal members of congress and many self-described liberals would prefer to turn back the clock and live in a world that includes jobs, but fewer goods at higher prices. Those that do, exhibit a startling lack of economic knowledge on a topic that even Mr. Silver notes there is a broad consensus.

I realize this is just an anecdote, but if you polled people on whether or not they agree with Mr. Perriello, I suspect you would find liberals and progressives agreeing with him by wide margins. Whether this particular study was in fact junk science or not, Mr. Silver is going to have to do a lot better to convince me that the majority of self-identified liberals and progressives really do understand even widely held economic concepts.

1 comment:

J. Strupp said...

And I would agree for the most part. I would say that Liberals, on average, have a very difficult time understanding basic economics.

But I wouldn't assume that the same isn't true for the opposite side. For example, if you polled the statment, "do tax cuts increase employment and reduce the deficit?" you'd have a large segment of Republicans and conservatives in this country answer "true" to this statment. Nevermind that a simple look at the data indicates that this has not been the case for over two decades. Yet I'll bet a simple google search will turn up dozens of "conservative" politicians claiming that, "if only we'd cut taxes and gave the money back to the people, we would be on our way to a healthier economy and smaller deficit." Except we did (via a rebate check) and, of course, it didn't work. This kind of stuff is based on complete myth. But it's been repeated so many times that it's good political rhetoric when speaking to people of like mind. Same goes for Democratic politicans and the, "keep our jobs in America" banter. It's complete nonsense, but it wins you votes in a Democratic primary when you're talking to a group of steelworkers in Pittsburgh no?