Political Economics

Published on Real-World Economics Review RWER Blog, by Peter Radford, Oct. 24, 2012.

Like everything in America the economics profession is deeply politicized. The chasm that divides the two sides of the cultural war is mirrored exactly by two sides equally entrenched in economics. This means that nothing an economist says can be taken at face value. The entire profession is now bogged down, failing to move forward, and has lost all pretense of being scientific.  

The latest examples of this are the various attempts by right wing economists to provide support for the Romney/Ryan tax plan, and their attack on Obama’s handling of the economy since 2009.

As you know Romney has made a big deal out of his tax plan. It will, he says, solve all our economic woes. It will unleash capitalists from the fetters of overburdening taxes, eliminate the federal deficit, spur growth, create 12 million jobs, and generally leap tall buildings with amazing agility and grace. It is, in short, magical.

The only problem is that he never actually says what it is. He offers hints. Like the 20% reduction in taxes will be offset by getting rid of loopholes. Sometimes he argues it will be revenue neutral. Other times he claims it will close the deficit, presumably by being anything but revenue neutral. It appears to be the economic policy equivalent of a Swiss Army knife. Whenever challenged to explain how a massive tax cut can possibly be neutral without raising taxes revenue at the same time – that’s what closing loopholes is supposed to do – he simply says that there are six studies proving him correct.

Except those six studies aren’t studies.

Three are right wing blog articles, one of whose authors has distanced himself from the Romney claim; two are from the same right wing think tank and use fantasy assumptions about supply side trickle down effects; and the sixth is from a Harvard professor who has worked for various Republican administrations and whose study uses radically different definitions of things like the middle class in order to stretch – and I mean stretch – the Romney plan towards its target. None are objective or credible … //

… Actually, now I think about it, all that work in the Walras tradition has produced one great piece of economic knowledge: markets don’t work very well or very often without lots of institutional, government, legal, and sundry other support.

Just don’t tell that to Feldstein or Taylor. They’re too busy auditioning for jobs with Romney.
(full text).

Links:

Food, Fuel, Forests and Climate, on RWER Blog, by Greenpeace, Oct. 22, 2012;

The economics of social security in the presidential race, on RWER Blog, by Dean Baker, October 24, 2012;

Global Grain Production at Record High Despite Extreme Climatic Events, on EWorldwatch Institute, by Danielle Nierenberg and Katie Spoden, September 25, 2012.

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