Economist says awesome things about Sanders's economic plan

[UltraVires]

In other news, a guy named Scalia came out and said that I am the best lawyer he has ever seen.

Yeah, Jimmy Scalia, the local drunk loves me.

[Fuzzy_wuzzy]

Plenty of economists backed the economic policies of Chavez in Venezuela. Here’s a link to an economic paper from 2008. I couldn’t be bothered reading it all so I scrolled down to the conclusion. The conclusion is that Venezuela did not benefit from an oil boom. That imo is evidence if (it is needed) that much of the “science” of economics is bunkum. Far too much biased political opinion is mixed in with economics.

http://cepr.net/documents/publications/venezuela_update_2008_02.pdf

[septimus]

@UltraVires

In other news, a guy named Scalia came out and said that I am the best lawyer he has ever seen.

Yeah, Jimmy Scalia, the local drunk loves me.

Gerald Friedman is a full Professor at the University of Massachusetts Amherst (which in turn is ranked the 29th best public university in the nation). You can see some of his credentials here.

I’m not qualified to comment on his comments and neither are you. Comparing him to the “local drunk” is the sort of Limbaughesque gibberish which makes right-wing “thought” a laughingstock.

[Shodan]

@septimus

I’m not qualified to comment on his comments and neither are you.

I agree with the first half of this, but the second half is bullshit. If you don’t want to debate, don’t debate.

As to the OP, Japan tried to use infrastructure spending to stimulate their economy.

As the decade of the 1990s wore on, many other countries–especially in Europe–were paring back government spending to spur growth, but Japan was doing just the opposite. By 2000, its government outlays had jumped to 38.3 percent of GDP, while Canada had reduced its government’s share from 52.3 percent in 1991 to 41.1 percent, and the United Kingdom had gone from 44 percent to 37.5 percent, to cite just a few of the many developed nations that were actively shrinking government over that period to bolster their private sectors.

While Krugman is correct in noting that Japan cut back spending in 1997 (to 35.1 percent from a 36.4 percent share of GDP), it soon shot up to around 38 percent, where it remains today. As a 2001 Heritage Foundation report noted, a substantial portion of Japan’s stimulus spending was focused on infrastructure:[7]

Beginning in 1991-1992, Japan adopted the spending approach now advocated by many in the U.S. Congress when it embarked on a massive nationwide program of infrastructure investment. Between 1992 and 2000, Japan implemented 10 separate spending stimulus packages in which public infrastructure investment was a major component. Excluding the 2000 program, for which final costs are not yet available, additional spending on the infrastructure component alone amounted to 30.4 trillion yen, or $254 billion at the current exchange rate.

Cutting spending seems not to have deterred prosperity in most of the European countries that have done so since 1990, while the relative prosperity of the Japanese has been on the decline as government spending has advanced. After peaking at 86 percent of U.S. income in 1991 and 1992, Japanese income continually fell behind the U.S., and by 2000, Japan’s per capita gross national income had fallen to 73.7 percent of that of the U.S. despite the increased spending stimulus in Japan during the 1990s and into the 2000s. This decline in relative performance reflects the fact that the Japanese economy grew at an annual rate of only 0.6 percent between 1992 and 2007. In 1991, only the United States, Austria, and Switzerland had higher per capita incomes than Japan. By 2006 (the most recent OECD numbers), Japan’s per capita income was surpassed by Austria, Australia, Belgium, Canada, Denmark, Finland, Ireland, Holland, Switzerland, Sweden, and the U.S.[

Cite.

Gee whiz, they found a socialist economist who assures us that socialism will work just peachy. All we need to do is tax the hell out of everything that moves, change the subject when anyone mentions the $3T shortfall in the healthcare plan, and put every unemployed person in the US building bridges. And life will be wonderful!

Regards,
Shodan

[RickJay]

I think the forest is being missed for the trees here.

The point is not whether stimulus can work or whether infrastructure spending is a good idea. Either of those things can be true.

The point is that the projections cited in the OP are goddamned ridiculous. He is essentially saying that Bernie Sanders is the most miraculous Jew since Jesus Christ, and claiming his plan is going to cause the greatest economic growth spurt in the history of measured things. Poverty and unemployment will be driven to the point of essentially not existing anymore and people will be stupendously wealthy.

If someone makes a claim that they are going to literally fix everything, you should not believe them. It doesn’t matter where on the political spectrum you or they are.

[XT]

@sweeteviljesus

An economist named Friedman published a study going on about all the great things Bernie Sanders’s plan will do for the economy.

Link on CNN Money

The upshot is that increased funding for infrastructure, education and social security will lead to growth not seen since the '60s when the US was the only game in town.

Other economists scoffed at the idea that Sanders could bring us >5% GDP growth, according to the article. The economist is, I gather, while not a shill, certainly a fellow traveller.

That said, would the plan lead to growth?

Yeah, I linked to this in another thread, and Brainglutton had the same reaction…why COULDN’T all this fantasy actually happen?? Would the plan lead to growth? Well, assuming that Bernie actually could get it through as he envisions, along with the tax increases and other policy changes, it could potentially lead to some short term growth…similar to what China has been using to buff up there GDP. It worked for them for quite a while, but the chickens seem to be coming home to roost lately.

All that said, I don’t think investment in infrastructure is necessarily a bad thing. We probably need to be doing a lot on that score. But to say that doing this will have all the magical effects this economist fanboy is saying is a bit off the wall.

[puddleglum]

It would not work at all. This is just cheerleading, not actual economics.
The idea that you can permanently raise economic growth through infrastructure spending is totally wrong. It may be possible to temporarily raise measured growth but to do it permanently the infrastructure spending must be new. Infrastructure spending rapidly runs into diminishing returns. The US has been spending billions on infrastructure for decades and any new spending is likely to have very few actual returns. For example, if you have two cities with a river between them, then building a bridge over the river can stimulate enough trade to grow both economies substantially. Building a second bridge over the river will only help grow the economies if the first bridge is overcrowded. Building a third and fourth bridge will do even less for the economy than the second bridge. Since the US has been building infrastructure for two hundred years, all of the low hanging fruit have been picked and any new infrastructure is likely to have slight, if any economic benefits. Also since the projects chosen for infrastructure improvements are going to be chosen for political benefit and not economic benefits, they are even less likely to work. Japan tried to break out of low economic growth in the 1990s by massive infrastructure spending and all they got was two decades of stagnant growth and the highest debt to GDP ratio in the world.
Other Sander’s ideas such as free college and Medicare for all will not be stimulative at all. These programs are not creating any new economic value but just changing who pays. This is like trying to make a dinner with friends cheaper by not asking for separate checks. The money the government spends must be first taken out of the economy through taxes before it goes back in as government spending. Taxes are also subject to dead weight loss and the higher the tax rates the more deadweight loss.
This was just wishful thinking from this economist and any actual resemblance to reality is purely coincidental.

[davida03801]

An economist, as in one ? What does that tell you ?

[Exapno_Mapcase]

“The 5.3% number is a fantasy,” said Jim Kessler, senior vice president at Third Way, a centrist think tank.

That’s unfortunately true.

But that doesn’t mean all the criticisms here are meaningful either. puddleglum, for example, appears to have the weird idea that infrastructure spending means new projects only. Studies show that the U.S. currently needs at least $1 trillion in infrastructure maintenance, repair, and replacement. That’s without a single political bridge to nowhere. In addition, rotten infrastructure will surely take lives as it fails, so it’s a job that’s vital to health and safety in the country. Massive infrastructure spending is probably the single most important and economically valuable change in budgeting we can do. Not to mention that it creates jobs, helps communities, decreases travel holdups, and keeps most of the money in country to provide multiplier effects.

[Shodan]

@XT

…why COULDN’T all this fantasy actually happen??

It couldn’t because it assumes that there is a huge amount of pent-up demand for infrastructure spending, over and above what is already planned, and that that infrastructure spending will more than pay for itself in productivity improvements. And that’s an assumption.

Take Bernie’s notion of free college tuition. Free doesn’t mean free, it means taxpayer-funded. Unless there are a huge number of people who don’t go to medical school or MIT because they can’t afford it, it isn’t going to pay for itself. Or else the idea is that people can graduate without debt. That’s great, for the graduates. It’s not going to make any difference to the economy - the taxpayer spent the money up front instead of the graduate paying it back over years. Overall cost is the same, with the added advantage that the graduate didn’t incur any of the risk of studying something that doesn’t pay, like Black studies or theater or whatever. It will also be more difficult to support yourself while attending school, since Bernie’s minimum wage increase will reduce the number of jobs available.

A somewhat less optimistic take on Sanders’ tax plan is here.

Our analysis finds that the plan would increase federal revenues by $13.6 trillion over the next decade. The plan would also increase marginal tax rates on both labor and capital. As a result, the plan would reduce the size of gross domestic product (GDP) by 9.5 percent over the long term. This decrease in GDP would translate into an 18.6 percent smaller capital stock and 6.0 million fewer full-time equivalent jobs. After accounting for the economic effects of the tax changes, the plan would end up increasing federal tax revenues by $9.8 trillion over the next decade.

And

On a static basis, the Sanders tax plan would reduce the after-tax incomes of taxpayers in every income group. The bottom 50 percent of taxpayers would see their after-tax incomes decrease by at least 4.87 percent. The top 50 percent of taxpayers would see their after-tax incomes decrease by at least 8.57 percent. Finally, the top 1 percent of taxpayers would see their after-tax incomes fall by 17.91 percent.

For those who are comforted when their incomes drop by the fact that their rich neighbor suffered a greater proportionate drop, no doubt this would be good news.

Regards,
Shodan

[davida03801]

And……………you said he was a fellow traveler. So then where this one economist get his degree ? Hugo Chavez U ?

[XT]

@davida03801

And……………you said he was a fellow traveler. So then where this one economist get his degree ? Hugo Chavez U ?

From CNN article linked in OP: Gerald Friedman, a University of Massachusetts Amherst economics professor.

Gerald Friedman
Professor
926 Thompson Hall
545-6357
gfriedma@econs.umass.edu
Education:
Ph.D., Economics, Harvard University, 1986. Dissertation: Politics and Unions: Government, Ideology, and the Labor Movement in the United States and France, 1880-1914.
B.A., Economics and History, Columbia University, 1977
Professional Experience:
University of Massachusetts at Amherst: Department of Economics, September 1984-present
Tufts University: Department of Economics, Lecturer, September 1983-June 1984
Clark University: Department of Economics, Part-time Instructor, Spring 1983
International Ladies Garment Workers’ Union: Research Assistant, June 1977-July 1978
Research Interests:
Economic History: 19th and 20th century United States
New World Slavery: 19th and 20th century France
Labor History: Europe and North America
Labor Economics
Political Economy
The Economics of Health Care
Honors and Awards:
German Marshall Fund of the United States Fellowship, 1989-90
Certificate of Excellence in Undergraduate Teaching, Harvard-Danforth Center for Teaching, Harvard University, 1981
Phi Beta Kappa and Magna Cum Laude from Columbia University
Professional Activities:

Drafted financing plans for single-payer health care systems for Maryland, Massachusetts and the United States.
Associate Editor of Labor History 2003-present.
Member of the Editorial Board, The Journal of Economic History (September 1994 - 1998).
Member of the Editorial Board, The American Journal of Sociology (September 1995 - 1997).

Affiliations:
American Economic Association
Economic History Association
Labor and Working Class History Association
Social Science History Association
Society for French Historical Studies

[septimus]

@Exapno_Mapcase

But that doesn’t mean all the criticisms here are meaningful either. puddleglum, for example, appears to have the weird idea that infrastructure spending means new projects only.

Thank you,** Mr. Mapcase.** It’s safe to say that the projections of Sanders and Friedman are at least a little over-optimistic, but their views are less wrong than those of their detractors posting in this thread. It might be good if some Dopers took time out from their busy schedule of partisan mud-slinging on the Dope and spent a little time to actually learn some basic economics.

@puddleglum

It would not work at all. This is just cheerleading, not actual economics.
The idea that you can permanently raise economic growth through infrastructure spending is totally wrong. It may be possible to temporarily raise measured growth but to do it permanently the infrastructure spending must be new.

I think Mr. Mapcase refuted this, but for slower learners I’ll offer some links.

Business leaders agree that degraded road networks cost many billions of dollars annually; the cost is growing rapidly.
24% of the nation’s bridges are structurally deficient or functionally obsolete. Inland waterways are so degraded that barge operators are asking for their taxes to be increased!
One estimate is that “Aging infrastructure costs businesses and families $130 billion a year.”
Despite that it scores very high on air travel infrastructure, the U.S. scores behind several other countries, inluding Spain, on overall infrastructure.

@Shodan

Regards,
Shodan

I recall that your economic theory has a novel definition of “investment.” Have you published? Does government spending on infrastructure count as investment in your system?

[Shodan]

You are not qualified to comment on my comments either.

Regards,
Shodan

[Exapno_Mapcase]

@Shodan

It couldn’t because it assumes that there is a huge amount of pent-up demand for infrastructure spending, over and above what is already planned, and that that infrastructure spending will more than pay for itself in productivity improvements. And that’s an assumption.

I find the first assumption to be as firmly grounded as global climate change. And with a frighteningly similar set of horrible and widespread small disasters unless we start doing things to combat it right this minute.

The second assumption will of course depend on particulars of individual spending and is much harder to quantify. It’s like asking whether proper maintenance and repair and remodeling will earn back the expense when you sell your house. Maybe. Maybe not. But the lack of doing so will eventually catch up with somebody, either you or the next owner, and be an overall negative that spreads throughout communities if large numbers of households are treated this way.

[Shodan]

@Exapno_Mapcase

The second assumption will of course depend on particulars of individual spending and is much harder to quantify. It’s like asking whether proper maintenance and repair and remodeling will earn back the expense when you sell your house. Maybe. Maybe not.

Maintenance and repair are different from remodeling. Everyone agrees we need to maintain the house. Sanders wants to add a second story.

Sanders has called for $18T in new spending, and the analysis presented above says that his tax plan will raise $9.8T in new federal revenue. With the current deficit of $400B a year, and additional spending of a trillion a year, what Sanders is proposing is greatly increased taxes, the elimination of 6 million jobs, a GDP cut of 9.5%, and raising the deficit back up to what it was during Obama’s first year or so in office. Assuming we don’t go into recession.

Oh yes, we’ll be sitting pretty all right.

Regards,
Shodan

[Left_Hand_of_Dorkness]

I’m a pretty big supporter of Sanders, and as near as I can tell the doom and gloom people are predicting over his economics is highly speculative and not well-supported.

And this economist reads to me like satire. Are we 100% certain it isn’t?

[OldGuy]

@Ravenman

This would be a much bigger story if the economist was Milton Friedman instead of Gerald Friedman.

Particularly as Milton has been dead for almost a decade.

[Exapno_Mapcase]

@Shodan

Maintenance and repair are different from remodeling. Everyone agrees we need to maintain the house. Sanders wants to add a second story.

Sanders has called for $18T in new spending, and the analysis presented above says that his tax plan will raise $9.8T in new federal revenue. With the current deficit of $400B a year, and additional spending of a trillion a year, what Sanders is proposing is greatly increased taxes, the elimination of 6 million jobs, a GDP cut of 9.5%, and raising the deficit back up to what it was during Obama’s first year or so in office. Assuming we don’t go into recession.

First, Republicans are violently opposed to maintenance. Second, my comments are completely unrelated to any of Sanders’ proposals.

[Damuri_Ajashi]

@Some_Call_Me.Tim

There was one time when he was asked “When you think about something like 90 percent, you don’t think that’s obviously too high?” to which Sanders replied, “No.”

That was, of course, not a proposal to change the current marginal tax rate. Would you please supply a cite for when he made such a proposal with the 90% number as you claim?

I stand corrected. I saw this on Wikipedia:

“Sanders has suggested that he would be open to a 90% top marginal tax rate” and jumped to conclusions. I see now that his top marginal tax rate would be 52%. A little higher than I think is reasonable but if it pays for health care and college tuition for everyone, I’d be willing to pay it.