Menendez: "Thank God" Economists Don't Make Public Policy

Sen. Bob Menendez (D-NJ) is a coauthor with Clinton on the gas tax bill:

To me, the claims being made about this proposal are the same as saying tax cuts pay for themselves. Even if it has popular appeal, even if it wins votes and elections, economists are in wide agreement in saying that the proposal is misleading as stated by the campaign, and generally a bad idea. When literally all the experts around you are telling you that what you are saying is misleading (at best), yet you declare you are going to say it anyway, that’s no better than the Laffer curve stuff. Sure, it’s not much money, but what if this were attacking Iran instead and she declared she was just going to do it anyway? That’s a bigger deal, and refusing to listen to experts - dismissing them as out of touch and elitist - tells us something important.

I have refused, for the most part, to get into Dem vs. Dem issues, and I’ve focused on McCain, but the statement she made irked me. Economics has been undermined enough, and part of it has come from people at think tanks and elsewhere who aren't economists, but pretend to be, promoting ideas like tax cuts are self-financing in op-eds, TV appearances, the NRO, and elsewhere. It has confused people, the media turns it into a he said-she said issue rather than denouncing the falsehoods and misleading statements, and people are left confused and wondering if economists know what they are talking about. When Republicans do this, it ticks me off. Economics has been undermined enough by clowns pretending to be economists, and I won’t help our side undermine the profession even further.

If they want to do public policy without talking to economists, good luck with that. I'm tired of being told I don't understand how average Americans feel. The point here is that this is a lousy way to help people. It's not that we don't care, or don't understand, it's that we do care and understand all to well and we'd like to see policies put into place that actually have a chance to help people. Promising things that aren't likely to happen - telling people they will get relief when it will likely be a pittance (the $70 figure they cite is not supported by the underlying economics) - simply leads to disappointment and disenchantment with politicians. All we are asking is that promises have a chance to be realized. Let's help the people who need help, but let's do it in a way that is effective rather than in a way that plays off their difficulties and fears, but does not really address their needs.

Comments

[anonymous coward]

Is there analysis of how the benefit from the 'tax holiday' will be distributed across the income spectrum? Do you have a link? Is progressive or regressive? I would figure that having a 'tax holiday' on gas would be progressive.

Of course there is the matter of how to recoup the taxes that would have been received. I do not know if Clinton has given a proposal for that.

[save_the_rustbelt]

The first rule of politics is WIN.

I don't believe in "anything goes," but I can understand this as a political strategy.

And if economics has credibility problems, that could well be self-induced (not every economist has the common sense Mark has).

[Barkley Rosser]

This is probably an aside, but here is a tale I heard from a source who cannot be named about Bill Clinton and the political economy of oil prices.

At one point in his administration he released oil from the Strategic Petroleum Reserve during a brief spike in the price of crude oil. Prior to doing so there was a meeting between him, his Chief of Staff, Leon Panetta, and his CEA Chair, Joe Stiglitz. Stiglitz reportedly argued that they should do nothing because a) releasing the oil would have little impact on the price and b) the price was about to come down soon anyway (which it did). To this Panetta is reported to have replied, "Great! We can release the oil, cause no problems, and get the credit when the price goes down!" (which they at least claimed).

[kthomas]

Hear hear! Prof. Thoma, you got my vote.

[RW]

"...telling people they will get relief when it will likely be a pittance (the $70 figure they cite is not supported by the underlying economics)"

I was under the impression there was very little chance that gas prices would drop at all; assuming oil companies do not decide to exercise their pricing power to lower prices in the service of PR and/or their political friends (an aspect of this proposal I have not seen discussed).

That aside, you did mention McCain so not entirely OT, it seems worth mentioning that McCain has now added constitutional separation and balance of powers to the ever growing list of things he apparently doesn't understand (e.g., http://www.mcclatchydc.com/227/story/36007.html ).

[kthomas]

Barkley, are you suggesting something, as far as what Pres. Bush could/might do right now? Or simply making an historical observation?

[ndd]

What is interesting about Clinton's and Menendez' comments is that presumably they were already focus-group tested and found to be winners.

I recall in a discussion many moons ago about whether economics was a science, critiques of the "rational man" assumption, etc., Bruce Webb (I think) making the point that neoclassical economics had been used to set up our neoliberal GOP style political economy, and so attacking neoclassical economics as a discipline or science was part of the pushback.

Obviously the pushback must resonate with certain groups of voters (no doubt those who throw shoes at the teevee whenever they hear a variation on Kudlow's "greatest story never told" from some economist affiliated with the AEI, etc.).

[Dave]

Most politicians are indifferent to the supply and demand curves. Hillary and John have taken this one step further, and are openly hostile.

If you ever hear a Senator acknowledge the existance of economics, it is usually just so they can distort it and take it out-of-context. Hence the Laffer Curve.

Since the news has been bleating that "tax cuts will help the economy" for seven years, it is surprising that any of them have noticed that they were not quoting an economics textbook, but a campaign speech.

Since the MSM have been quoting lies for seven years, the McClintons are surprised to find that the media suddenly has one functioning brain cell. I say we stamp it out.

If the media starts to question falsehoods, then the next President will actually have to make sense, instead of just quoting bumper stickers.

If this keeps up, we may have to start thinking about our economic policies, instead of just doing whatever seems popular with the beer-drinking, gun-toting, anti-intellectual crowd.

[hari]

Two points -

First, I recall saying for HRC *means* and *ends* don't mean anything right now - a win in Ind and/or NC (or both) - means a lot.

Second, during my professional life (as I claimed) I decided NOT to include theoretical economists in my decision-making process. They were given the decision to *audit* and plan its execution.

My reason for it was very simple - using Pres. Truman's analogy - I was *fed up* with *two* handed economists who're always balancing their (professional) advise at highest level of international decision-making. The buck stops at my door, I told them. Basta!

Libertarians have not been proficient in protecting their jealous profession during the last few decades...the malise, if I may say, is the *gotcha* culture of the elite today. They've invariably sold their soul for the wrong reason!

HRC response to GS/ABC was relevant and politically defensible.

[erewhon]

As an outsider, I find economics useful but sometimes misleading. I like this blog. I find Clinton, Menendez and American culture very destructive. The gas tax baloney is just one example of national ADD- hopping from one symbolic gesture to another- at a time when our country has deep seated problems that will require persistent long term effort- climate change, curbing American militarism, actually doing something about healthcare in contrast to braying about it, etc. . Decline and fall of The Empire, here we are- either we have a fascist dictatorship or a mindless alternation of politicians whose words “signify nothing”..

[anne]

"At one point in his administration he released oil from the Strategic Petroleum Reserve during a brief spike in the price of crude oil. Prior to doing so there was a meeting between him, his Chief of Staff, Leon Panetta, and his CEA Chair, Joe Stiglitz. Stiglitz reportedly argued that they should do nothing because a) releasing the oil would have little impact on the price and b) the price was about to come down soon anyway (which it did)."

No, no, no; the price for home heating oil was being manipulated.

[Barkley Rosser]

kthomas,

I happen to support Obama's proposal to stop putting oil in the Strategic Petroleum Reserve. It will not have a huge impact on the market, but it will free up some supplies, and it is certainly more responsible than this goofy gas tax holidy proposal. Bush is still putting oil in. Let him just stop doing that, which is a policy to some extent. Taking some out briefly would be a PR stunt, kind of like this gas tax holiday proposal.

[Barkley Rosser]

Of course, if Hillary wins NC today, and sweeps IN big, look forward to having that gas tax holiday proposal pass the Congress, although probably only signed into law by Bush if it gets altered to look like McCain's version, missing the excess profits tax on the big oil companies. I can hardly wait. This will be the solution to all our problems. Wow!

[hari]

Look! HRC is trying to STOP Bracks bandwagon tonight...and if she can do it with such goofy ideas then she is right to use it. What in the world are you going to say if, in hindsight, she pushed first across the final line in IND and NC? Would you still claim it was a goofy propaganda?

Politics, the late Palme (Sweden) wrote, was the art of the possible.

[anne]

"Sure, it’s not much money, but what if this were attacking Iran instead and she declared she was just going to do it anyway?"

Listening to experts got us into Iraq and will keep us in Iraq for ever so long to ccme, possibly worse. Remember the experts?

[bakho]

The amount of money involved in the gas tax suspension is pathetically small. It is a feel good step to gather support for taking on the oil companies and forcing new CAFE standards on a balky America. Again, the campaigns are being waged over pretty trivial issues.

Maybe the principle is not trival, but the money is.

[robertdfeinman]

It would seem that the attention being given to the gas tax holiday is politically motivated. There was much less discussion over the currently flowing "rebate" even though the amount is much larger.

I think Mark Thoma is going to have to get used to research being misapplied for political or economic gain. We have a seemingly unending set of examples from misrepresentations of global warming to the need for vaccinations to sex education.

Even the Rockefeller family was driven to speak out last week about the lies and policies being promoted by Exxon in its campaign to discredit both peak oil and greenhouse gas effects.

This present flap is just another example of the lack of a decent press in this country which is willing to reveal the lies and self-serving actions of the powerful. That the press is owned by these same powerful interests probably has a lot to do with it.

[Ken Houghton]

ndd - Speaking as a member of that group, Mark is forgetting the von Clausewitz rule: any positive action, even if ultimately harmful, is better than doing nothing.

The difference between the McCain and the Clinton plans--and one reason anne and I are complaining when you conflate them--is that McCain's is clearly harmful (crowds out), while Clinton's is at worst neutral-with-a-positive-spin.

If you relax the Krugman assumption (refineries are at capacity), you end up with Bill Polley's "five or six cents a gallon." Which Mark may not care jack about, but the liquidity-constrained driver who is choosing between five extra cents a gallon and dinner for his kids does.

Would I prefer just to "give everyone a check"? Yes, if the choice is the McCain plan, which is revenue-impairing due to the crowding-out and won't accrue in more than 32.6% (6/18.4 in the optimistic end of the Polley estimate) while having a full future bill of 18.4 cpg.

Would I prefer doing nothing to the Clinton plan, which is revenue-neutral? No, because it at least signals to the marginal voter that we're paying attention.

Would I prefer to belittle the gas tax idea, or declare that "it didn't work when I wanted it named after me"? Not if I'm answering to those voters.

Clinton took a "third way" between McCain's pander and Obama's determined silence and retroactive rationalisation—first, do something; second, do no harm—and is getting pilloried for it.

(Note: Polley also links to this paper, which belies Obama's Sunday claim, even if we all agree there would have been better ways to do it.)

(Given my choice, we would, of course, increase the gas tax and use those revenues to ease the choices that would be made, as with the Vancouver Model. That's what any sane economist discussing the externalities would suggest, and I'll bet you could get 100+ economists to sign that petition, too. (Mankiw has A Good Start.

(Anyone think Obama would back them on it? If so, cite your evidence.)

[tinbox]

Over at salon.com George Frost cites the only actual study on a gas tax moratorium that he could find and the results are sharply different from the pontificating from the "200 economists" letter. And since the vast majority of the signers likely have no special knowledge of the dynamics of this particular market, it is really just dogma.

Which economists have taken the time to take into account the variety of factors affecting gasoline consumption and pricing--volatility of crude oil prices, levels of gasoline inventory, distribution bottlenecks, refining capacity, income available from consumers? No, its Econ 101..just simple "tax incidence." When Paul Krugman, yes even Paul Krugman, says "Economists really do know something about tax incidence that the laity don’t," he needs to have evidence that this will apply to the US retail gasoline market.

[Joe]

Ken,
Obama has not been silent at all. Just because his solution is not a universally reviled pander does not mean he's suggests doing nothing.

You act like the most important thing is for the government to do something, which is wrong. Each and every driver can do something to make themselves more energy efficient and it would save them much more than the most fanciful prediction of savings for a gas tax holiday.

The crime here is not pandering, it's a complete lack of moral and political courage. What if Mrs. Clinton were to tell America that each 5mph they drive over 60mph is like paying 20 cents more per gallon? Would she dare? After all real men don't slow down right? Cowards.

Anne,
Experts did not get us into Iraq, ideologues, war mongers, moral absolutists, and extremely cynical political advisers did. If you want to debate whether Rumsfeld, Cheney, Libby, Wolfowitz, Feith, Perle, Addington, etc.. were experts or ideologues, bring it on. What did Hillary think of the expert assesment in the NIE among energy experts who assessed the aluminum tubes, etc....

[rex]

Anne said: "Listening to experts got us into Iraq and will keep us in Iraq for ever so long to ccme, possibly worse."

Wrong, wrong, wrong, absolutely wrong. All the experts who knew about WMD and the Middle East and Al Qaeda and the US Constitution and the US military told us not to do it. It was people posing as experts who urged us to go to war.
That's why it's good to actually examine their arguments, so you can tell the real experts from the phonies. Of course it's much easier just to brand them as "elitists" as HRC and the Gang of Four did.

[save_the_rustbelt]

I just received an e-mail from a GOP Congressman explaining that the price of oil is Nancy Pelosi's fault.

Wow.

Today Newt Gingrich warned the GOP that there could be a massacre in November unless the GOP gets attached to reality. Not much chance of that happening.

[blackswan]

I watched Obama on "Meet the Press" last Sunday. He said the corn ethanol was not cost effective, and was, in part, responsible for the global food shortage. That's a pretty brave stance for a farmbelt US Senator to take.

Hillary took even a braver stance:

"We’re going to go right at OPEC," she said. "They can no longer be a cartel, a monopoly that get together once every couple of months" at a hotel in "some plush place in the world" to set prices, she told a crowd at a volunteer fire house in Merillville.

If that is her long term energy strategy, it will probably be as effective as Nancy Reagan's "just say no" policy, to end America's substance abuse problems.

[Joe]

(1) Tinbox, why is it better to encourage demand rather than conservation (especially when conservation can save you more money both in the short and long term)?

(2) Why would economists who are strong Clinton supporters--Alice Rivlin comes to mind--choose to pontificate rather than find reasoning which would support her proposal? What is there motivation?

(3) Why is it OK to use the views of economists to bulwark policies you promote--have not Clinotn supporters leaned heavily on folks like Krugman on health care--but cast hem aside when they get in the way of your latest plan?

Answers?

[Bruce Wilder]

Hillary Clinton really lost me on this. She was my second choice, anyway, but a really close second choice, and I was resisting the psychological impulse to exaggerate my slight preference.

I will demur, however, on the expertise issue. Maybe there's a continuum of wrong economic analyses, and this gas tax thing, like the Laffer Curve, is extreme in its wrongness. But, a lot of big-name economists seem to get a pass on assertions, which are only slightly less wrong. Everytime Greg Mankiw goes out, with the imprimatur of his Harvard dayjob, and confidently tells people that almost all economists oppose the minimum wage and that the weight of logic and evidence is all on one side -- effectively doesn't even admit to significant controversy, while expressing his policy preference -- he undermines the credibility of economics. And, Mankiw is not even the bought-and-paid-for hack that, say, Glenn Hubbard, who also served as Bush's CEA chairman for a time, is.

This is only a demur, because I am in agreement that Democrats should not be contributing to the denigration of legitimate expertise. But, let's not lose sight of the fact that legitimate expertise has been under assault from the Right for a long time, and right-wing economists have contributed to this assault, with complicity and enthusiasm.

Of course, the assault on expertise is not limited to economics. The Iraq War example stands out. On Iraq, the Media -- including prestige outlets like the New York Times and Charlie Rose on PBS -- systematically exclude both real expertise and substantive criticism of Bush policy. "Serious" people are being chosen by the New York Times OP-ED editor and Charlie Rose and Charlie Gibson and Tim Russert and these "serious" talking heads are polluting the national political discourse with utter crapola on subjects of the utmost importance -- ranging from war and peace to economic issues like social security and the causes of the current economic decline.

This problem is far broader than Hillary Clinton's shortcomings as a political leader.

[anne]

"All the experts who knew about WMD and the Middle East and Al Qaeda and the US Constitution and the US military told us not to do it. It was people posing as experts who urged us to go to war."

Nonense.

http://delong.typepad.com/sdj/2008/04/paul-berman-is.html

April 1, 2008

For the record, I was in favor of the war on Iraq in the winter of 2003. I reasoned:

Condi Rice is not-stupid and not-malevolent, and is for the war.

Colin Powell is not-stupid and not-malevolent, and is for the war.

This means that even though the public intelligence is bs, that there must be solid evidence of an advanced nuclear program in Iraq and of a willingness to give serious weapons to terrorist groups--otherwise attacking Iraq while we have real enemies like Osama bin Laden running loose would be really stupid.

And although Bush is really stupid, not everyone in the administration is.

Wrong on all counts. I am very sorry.

I may be the stupidest man alive.

-- Brad DeLong

[Mark Thoma]

Ken: Please quit saying I don't care about people who are struggling. My point is that there is a much better way to help them. Getting a tiny fraction when more is available is not something to be satisfied with (why give tax rebates to the wealthy if the goal is to help the poor? Why not use a policy that is targeted directly at those who are struggling and leaves out the "elites" - and that's just a tiny fraction of how it could be make better).

There is harm. The harm is to undermine experts for political gain. Will she do the same to climatologists, etc. if it's convenient? The harm is to tell people they will get $70 when they won't. Why mislead people just to get elected? She is harming eonomics and economists by casting them as elitists uninterested in the common person, and not worth listening to. That may not matter to you, but I've spent my life trying to use what I've learned to help people and this attack of my profession pisses me off. We have lots to offer whether you think so or not. She's harming chances of addressing global warming in the future - will she be able to sign onto a tax to cover externalities after this, or does this now force her into suboptimal climate fighting stances?

And be honest about what Polley concluded - that "This proposal does not have to be literally pointless for it to be a really bad idea. I think that is a worthwhile point to make. ... UPDATE: I have sent a message adding my name to the open letter."

[Barkley Rosser]

Ken,

Obama has proposed to stop putting oil in the Strategic Petroleum Reserve. This is an excellent proposal. Do you disagree with it?

anne,

I hate to pile on along with Joe and rex, but... We all know that you feel that Hillary has been mistreated, and that you support her, perhaps ultimately because she may well be better on health care (and this may well be true). But, please, please, please do not repeat this nonsense about how "listening to experts" is what got us into Iraq. Wrong, wrong, wrong. Joe and Rex are right.

What is more disturbing is that Hillary is now channeling I am not sure whom to support "obliterating Iran" if it uses its nonexistent nuclear weapons against Israel, and apparently also if it uses them against some large set of other countries in the Middle East as well. She was the only Dem candidate to vote to support Bush doing what he wants against Iran, and there is now a very strong and concerted campaign of disinformation coming out of the administration about Iran, and especially about its role in Iraq, that Hillary is going along with. This current campaign looks in many ways worse than the one on Iraq, outright lies (no, Iran does not back Moqtada al-Sadr; they back the current Iraqi government against him; no, the Iranian government is not responsible for Iranian arms showing up in Iraq;, no, Iran is not actively pursuing nuclear weapons, and so on and on), with the MSM spouting this stuff enthusiastically, and Hillary being to the right of McCain, if anything, in spouting this stuff as well. Cheney is pushing for war against Iran, and Hillary is helping him to do so.

So, please, do not shill for her joining in this mass lying. Indeed, in this case, she is again, "not listening to the experts," just as with some other things. Not a reason to support her, even if her views on health care might be better than Obama's, or maybe in the end she might be a stronger candidate than Obama against McCain.

[anne]

"All the experts who knew about WMD and the Middle East and Al Qaeda and the US Constitution and the US military told us not to do it."

All sorts of experts who knew about WMD and the Middle East and al-Qaeda and the US Constitution and the US military told us to do it.

All sorts of experts told us to occupy Iraq.
All sorts of experts are telling us to occupy Iraq still.

I am no expert and I have opposed war and occupation always. Me, but not lots of experts

[Barkley Rosser]

anne,

Brad Delong is not and was not an expert on the Middle East or Iraq.

[anne]

"So, please, do not shill for her joining in this mass lying."

Notice the language; there we have the vile bullying.

[Ken Houghton]

Joe's "universally reviled pander" (Bryan Caplan isn't in this universe any more? [I accept that I'm not, and we already know what he thinks of anne.]) slander doesn't indicate an ObamaNation solution, so I'm still waiting.

Utility analysis at the margins--see Caplan and Polley (as cited above)--indicates some minor gain to consumers. Not enough to make it an economically preferrable course, but enough that McCain would attract more voters than Obama's "Stop Buying for the SPR."

At least Clinton's counterproposal was fiscally sound.

[Eric Dewey, Portland OR]

Prof Thoma, having been in the position of advising leaders in the banking industry for some time that their advertising tactics were misleading consumers, I absolutely understand and empathize with your thoughts above.

Perhaps there needs to be a patron saint of economists. To avoid political incorrectness, I'd nominate Cassandra of Troy, who was granted the gift of prescience by Apollo. Then, when she refused to become his lover, he placed a curse on her that caused her to never be believed.

http://en.wikipedia.org/wiki/Cassandra

Seems an appropriate patroness for dismal scientists...

[anne]

"So, please, do not shill for her joining in this mass lying."

To the gutter we merrily go, hey hey.

[blackswan]

"All sorts of experts who knew about WMD and the Middle East and al-Qaeda and the US Constitution and the US military told us to do it."

The Bush administration cherry picked its information to support its conformation bias. Hillary knew better, went along with it, and was the last Democratic Presidential candidate to admit that she had been wrong. Enough said. There is no defense for such poor judgment, nor for the stance she took (or didn't take) before, during or after her enabling Iraq war vote.

[anne]

I am no expert, but I have opposed war and occupation always. Me, but not lots and lots and lots of experts. I worry lots about Clinton and Obama on Iraq. Get it?

says...

Even if Delong is not an WMD expert, wouldn't Condi and Colin count?

[Cynthia]

In the spirit of Brad DeLong, the title should instead read: "Why oh why do we let politicians make public policy?"

[anne]

I am no expert, but I have opposed war and occupation always. Me, but not lots and lots and lots and lots and lots of experts.

We need to leave Iraq completely and immediately. Get it?

[anne]

Cynthia:

In the spirit of Brad DeLong, the title should instead read: "Why oh why do we let politicians make public policy?"

[Lovely.]

[Joe]

Ken, you didn't answer a single one of my questions. Were they really that hard?

I retract my statement about "universally reviled" because if Bryan Caplan is for it, well he lives in the universe, right I hope that averts the lawsuit. So i look forward to your close association with Prof. Caplan on all sorts of policy matters.

Why do you use the term "Obamanation"?

Obama's policy solution is fairly straightforward. Your problem is you are looking for a quick fix, fake solution coming from him,and his position is that there is not one. Once you get over the fact that there is no pander coming, you might be able to see the future more clearly.

Mrs. Clinton said she had other uses for a windfall profits tax. So which is it. Paid for or overdrawn? To be sure McCain's plan that robs the highway trust funds is the worst suggestion of the three candidates and he will have his head handed to him by Obama on that too.

By the way, since Anne is convinced that Obama's rhetoric on health care and social security is in fact undermine those programs forever, how do we feel about Mrs. Clinton's use of the "tax relief" frame. Gearge Laykoff would be turning over in his grave if he were dead.

[blackswan]

Do you remember what happened when Larry Lindsey, Bush's economist at the time, gave the public his projection of what the Iraq war would cost? He quickly became Bush's ex-economist. That was some serious cherry picking.

[save_the_rustbelt]

The gas tax proposal may be one of the few questions on which most economists agree.

Since on other questions economists provide a wide range of answers, which economists should the politicians heed? Likely those of a similar ideological bent, and that is one more piece of evidence that economics is not exactly a science.

And some of my best friends are economists.

[JRossi]

Prof. Thoma,
Would you favor us with your thoughts another hot public policy topic-subsidies to farmers to grown corn for fuel? Does that make economic sense?

[Joe]

Rusty,

There are many issues of micro-economics where most economists agree. I think it is fair to say there is a consensus that reducing gas taxes is a bad policy if the intention is to reduce burdens on consumers.

Much of macro-economics is up in the air and that is where most of our debates take place. I would say there is little consensus on most issues. Macro is much more political than micro in my humble opinion. I'm sure there are exceptions.

Anyway this is not a referendum on economists, it is a referendum on politicians who use expert advice as weapons of convenience.

All predictions are far from perfect. we should always demand our experts give their level of confidence in predictions. And we should keep a record of them to determine whom to trust in the future. If politicians want to get into the act then we should keep track of the outcome of their predictions too.

Some of my best friends are lawyers. Imagine that.

[anne]

Blackswan, you are right in the criticism of all that has gone before. I know.

[Mark Thoma]

One more comment, then that's enough for me.

If your goal is to help those who struggle, and if you have 9 billion dollars to spend, then to give lower income people, say, $6 when they could have had $100 is an economic loss. Economists ought to point out the economic loss, and they ought to fight back against those who would try to undermine them for doing so.

Remember, that 9 billion dollars has an opportunity cost, and when it's misapplied relative to the goal of the policy there are losses. If you took the 9 billion and simply gave it to the poor on a per capita basis, and covered it by reducing war spending, raising taxes on the wealthy (and call them elites for political effect if you want), etc., how much more would the poor have gotten? Those who call themselves economists ought to understand that there are losses from suboptimal policy (and this policy is suboptimal relative to the stated goal).

And that doesn't even account for the longer run losses I talked about above.

JRossi: You can start here:

http://economistsview.typepad.com/economistsview/2006/11/bad_economic_po.html

I searched the word "corn" on my blog, and everything I've said is similar to the piece I linked (and all of this was before the food crisis). Here too:

http://economistsview.typepad.com/economistsview/2007/01/paul_krugman_th_1.html

As to why this is important, those who are citing the incidence thing can do so, but that's not why I objected (as I've explained). Nice try to divert attention, red herrings and all that, but that has little to do with it for me. It's the response to having incidence explained that is the problem (hands over ears, shoot the messenger, do it anyway), and that is very different.

And most important of all, I really want struggling households to get that extra $94, and economists can help to bring that about (and yes, our knowledge of incidence will help, but incidence isn't the point - it's a tool we can use to help the policy achieve its goals - ignoring that knowledge means doing less than is possible - much less in this case - for those we are trying to help and that, along with undermining the profession, is the upsetting part).

[anne]

Mark Thoma"

"If your goal is to help those who struggle, and if you have 9 billion dollars to spend, then to give lower income people, say, $6 when they could have had $100 is an economic loss. Economists ought to point out the economic loss, and they ought to fight back against those who would try to undermine them for doing so."

Right.

[Ken Houghton]

Joe - Ah, Barkley cites it. So now I have something to work with.

Barkley - Let's see: stop buying for the SPR. That puts a few more barrels on the market. Does it cut the price to the consumer? Not under all the other assumptions you guys are making (capacity refinement, inelastic short-term demand). Does it encourage all the things Joe suggests in behavior modification? Again, no.

Does it make economic sense? That depends on whether the SPR is currently oversupplied. I don't know (do you?), but let's run the scenarios.

If you assume yes, then the ideal move is to sell some it (since the weighted-average price is below the current market)—increase supply and raise revenues. But you're not telling me Obama's suggesting that, so I assume he doesn't believe it is oversupplied.

If you assume it's optimal, then not adding to it now is not a response to the McCain proposal.

If you assume it's undersupplied (as the current administration appears to do), then you should keep buying--if you're assuming oil prices are going to go up anyway.

So the only situation under which "not adding to the SPR" actually addressed the question raised by McCain's proposal—what to do about gas prices to consumers—that makes economic sense is the one in which you should be selling the SPR onto the open market.

And even that isn't likely to do consumers so much good as even Polley's pessimistic assumption.

Mark - Sorry if the phrasing was infelicitous, but you make a decent living with (presumably) an above-median salary, so you are unlikely to be so liquidity constrained as to have to choose between, say, driving to work and eating a meal.

(Part of that is, of course, that you presumably live fairly close to your office; I have high school classmates who drive the sixty-ish miles to Indianapolis each day for $40-50K jobs—the demographic for which the "gas tax holiday" would appeal, and the voters who are at the polls today.)

Yes, there are better ways to help. But the reason economists don't get to make public policy comes back to Median Voter Theory trumping Rational Expectations. Given the McCain proposal (Greg Mankiw points out the obvious), the responses have been:

Obama: an apparently irrelevant suggestion that does nothing and inspires no one who doesn't believe the SPR is oversuplied. (If Obama believes the SPR is undersupplied and that oil prices will remain where they are or go higher, then it's actually a damaging proposal; absent other evidence, though, let us assume he simply believes it is currently optimal.)

HRC: A minor suggestion that at least improves McCain's proposal by not "crowding out" so much, a possibility that the tax added stays (again, revenue generating at worst, behavior modifying at best), and—since it shows she's listening to voter concerns—a counter to McCain.

Am I thrilled by Hillary's proposal? Hardly, but it was at least an incremental gain over, and doesn't deserve to be tarred as the same as, Johnny Mc's.

Obama's response, if Barkley's citing the whole of it, is, well, uninspiring at its best.

Indeed, Polley's closing emphasizes the economic ("really bad idea") at the expense of the political ("not pointless"; see keep the SPR at current levels), which rather ignores that it was a political response.

If I were an Obama supporter (and, as someone who will be voting against McCain in the general election, I am told by DeLong, Lemieux, and Hilzoy that I will de facto become so), I'd be worried that the Voter Appeal of my candidate's proposal is somewhat lower than his opponent's, instead of obsessing over HRC's rather-too-glib response to the guy who was valedictorian the year before Obama graduated.

[Barkley Rosser]

anne,

I shall apologize for using the word "shill," although I do not see that as either "vile bullying" or going into "the gutter." I also know that you have long wanted to get out of Iraq. However, I have seen you say very little about this Iran situation. This is likely to be the most serious foreign policy issue facing our next president. There is a very clear and sharp difference between Obama and Hillary on it.

And, no, I am not going to withdraw my remark about Hillary supporting the mass lying on Iran. She is supporting it, very strongly, and that is a fact, not something that is "vile bullying" to mention, nor is it "going into the gutter." Are you prepared to defend her remarks on Iran, any of them? Obama is not perfect on this issue either, but he is way better than either Hillary or McCain, much as he uis with this gas tax holiday nonsense.

says,

Condi was not a Middle East expert. She was an expert on the Soviet Union.

Colin Powell was, and we all knew all along that he was unhappy about the push to war in Iraq. He was the dove of the administration, but he was outnumbered and overruled, and also he was a good soldier who followed orders. We know that Bush ordered him to go along, and to make that awful presentation to the UN. On that one, he was conned by pre-fabbed data, massaged by the Office of Special Plans and George Tenet trying to save his job as Cheney kept coming over to the CIA to make it "behave," even though there were people in the CIA and even the DIA who knew this was a pile of crap.

Outside experts who should have been listened to included Brent Scowcroft. Also, people who actually could read Arabic should have been listened to. Mostly they were not.

I will grant that there was not unanimity among real experts on Iraq. The most famous outside expert who supported the war was the deeply knowledgeable and scholarly Bernard Lewis. Also, pretty much everybody mistakenly thought that Saddam had chemical weapons, although calling them "WMD" was always a joke, especially given his lack of any delivery systems. They were never reasonable grounds for invading, even if they had been there.

[Barkley Rosser]

Ken,

I have no idea what the "optimal" level of oil in the SPR is. I would say that there is plenty for right now, so it does not need to be filled up any further. I prefer not to have "hurky-jerky" policies, so let us stop filling it before we turn around and start emptying it out again.

Prices at the pump will reflect pass throughs of prices from the crude market. Anything that pushes down prices at the crude level will get passed through to some extent to the pump. So, mayby Obama's proposal does not have the PR sex appeal of the gas tax holiday, however financed, but it does in fact push in the same direction.

BTW, I would note that recently when truckers circled the Capitol in Washington and demanded action about gas and diesel prices, they called for selling oil out of the SPR. Stopping putting oil into the SPR is at least a move in that direction. I would note what these professionals who spend more time driving than anybody else did not call for: a gas tax holiday of any sort, and I would hope that pointing this out is not "vile bullying" or going into "the gutter."

[Jack]

While the point about the flippant and irresponsible use politicians make of what economists (scientists, priests) say and their willingness to dismiss an entire profession when it's members don't agree with any particular piece of their own demogogy is well said, I think the frustration concerning economists' perceived opposition or indifference to the interests common citizens is misplaced. Economists have caused a great deal of corruption in the present generation by adhereing to and propogating a more or less crude from of psychological egoism in order to keep their "science" relevant. This has the undesirable effect of sanctioning and even endorsing actions that common conceptions of morality would condemn (it should be remembered that the slogan "private vice creates public virtue" still recognizes that it is vice that is being advocated). Those blinded by the term "science" attached to economics often conclude that common morality is in fact naive (which is false), and that breaking normal ethical codes and even performing what would usually be called evil is in fact sactified by economic theory (which is true). This is deeply misconceived and creates an extermely dangerous situation the consequences of which we are partially suffering now.
Add into this the fact that most economists are aggressively in favor of free trade, but, as Dean Baker points out, free trade agreements almost exclusively target lower income jobs and unskilled labor, imposing free market competition resulting in lower living standards, it is easy to perceive that economists are engaing in what is basically acts of class warfare. When people who are in constant fear of losing their jobs and having their lives destroyed due to outsourcing are told that if the dare protest free trade they are merely exposing their ignorance and that they should read Ricardo in order to understand why they must sacrifice themselves so as to make money for the already rich, well, one can understand why economists would be held in such low regard socially. Considering that most economists enjoy relatively well-paying and secure jobs, such low regard is certainly warranted.

[Joe]

Jack, wtf are you talking about?

Ken, you continue to miss the point that "the plan" is not a short term change in oil prices. Taking oil out of SPR is really neither here nor there, and no one responsible would argue it "solves" anything. On the margins it may increase supply and threaten a speculative bubble, but I wouldn;t count on it.

The plan is (1) don't try to lower oil prices in the short term with any kind of tax or subsidy gimmick, especially not one that takes funds right out of HTF (2) implement a long-term energy strategy that encourages/induces conservation (reducing demand) and development of alternative energy sources (3) deliver an additional rebate on the current stimulus package, (3) make the tax code more progressive.

So there is an energy policy (1+2) and an income policy (3+4).

Is that so hard to understand?

[Ken Houghton]

To Joe's three questions (sorry, I missed them earlier):

(1) You want to encourage conservation? Provide incentives. Talk is cheap; so is gasoline in the United States. (I was paying over $1/liter—$4/gallon—in Israel in 1999. As European Tim Worstall noted at AB, "We've had much higher gas taxes than the US for decades and, guess what? We use less gas!")

Or are you claiming that just telling people, "you should slow down; it will cut gas consumption" is going to miraculously cause them to do so? That worked so well for Carter; what has changed to make it more plausible since?

(2) Let any economist compare her plan to McCain's and Obama's and tell them they have to support one or the other. See where Rivlin falls out. Or Polley. Or DeLong or Thoma or Mankiw. Or anyone who actually compares the plans, instead of confusing McCain's giveaway with Clinton's book balancing.

(I'm with Mark T. on this; if there really is enough cash in the budget to pay for the "holiday," as McCain's proposal suggests, then just write checks to the lower-earning section [those most impacted by gas, or indeed any consumption, tax] of the population and let them spend it as they see fit. Where we appear to disagree is in his belief that Clinton's plan matches McCain's, instead of being revenue-neutral. Obama's suggestion--stop buying into the SPR--is irrelevant at best and irresponsible at worst [either it will cost more to buy in the future or he should have the courage of his convictions and suggest selling some of it].)

3. Same as the first part of the above. On a relative equity/efficiency model, no economist comparing the Clinton and McCain proposals would conclude that hers was worse. No economist who doesn't believe that the SPR is not currently oversupplied is likely to prefer Obama's plan on its economic merits.

As I noted, the Pigou Club is filled with Economists who support a substantial increase in the gas tax. (Economists care about externalities, possibly more than the Median Voter does.) I don't see any of the major Presidential candidates getting behind that. (I haven't seen anything about it from Obama classmate and 2008 Presidential candidate Wayne Root either.) So until a candidate starts supporting the Pigou Club Proposal, you'll have to forgive me for believing that HRC isn't the only one "not listening to economists," and that people who complain about her saying that are trying to make a political, not an economic, point.

[Barkley Rosser]

Jack,

Many of us who tend to support free trade and also perhaps delude ourselves into thinking that we are progressive, also support vigorous adjustment assistance, retraining, and so on for impacted workers. It is done in Sweden, and it works pretty well there.

Ken,

Ummm, you really think the SPR is something that has something to do with national security? If so, you are deluded. Stopping adding to the SPR without removing anything from it is perfectly reasonable and not irresponsible. And, it will tend to have the effect of lowering gas prices at the pump somewhat.

That said, I have always been for higher gas taxes, for externality and other reasons. But, gee whiz, some of us economists are aware of the real world and how the anti-tax hysteria in this country simply will not allow politicians to push such and get away with it. Heck, all this gas tax holiday drivel is just a replay of what went on during the 1996 election, when both Clinton and Dole called for gas tax cuts when the prices went up a teensy little bit then.

So, I am for some kind of cap and trade to deal with those externalities, at least those related to global warming, even if the Pigou Club may be right on the merits.

[Mark Thoma]

Ken:

As I explained, I never said the two plans are the same - quit misrepresenting what I said. In fact, what I wrote seems to have clarified your thinking on this - you didn't couch in terms of size of government until I explained that in the other thread on this.

It's getting really annoying to have you say I made claims I never made, and then take me to task for them.

I have done a full incidence analysis of all the plans, including Obama's plan to use a windfall profits tax to pay for the $1,000 to struggling families (why aren't you more in favor of that instead of defending Clinton?), and yes, I do understand the differences in the plans in detail. You would do well to take the time to do so yourself. I disagree with some of the estimates, e.g. I didn't use SR elasticities to calculate the incidence from lifting the tax since it's been in place for awhile and ought to have already produced a longer term response, so I get about 1/4 to consumers rather than the 1/2 others get, and that makes my numbers differ a bit, but the conclusions are the same.

On the other side of the equation, consult Alan Aeurbach (sp?) on the incidence of the windfall profits tax and you will see we don't know enough, but it can be worked out approximately. When you do so, you find that it's a progressive tax. Combine it with the rebate above, and you get the full incidence. It turns out to be a very small transfer from rich to lower incomes, but given the opportunity cost - what should and could have been be done to help - and the longer run problems this creates, that benefit is not enough. If you do the welfare analysis, the $1,000 to the poor is far superior.

For McCain's plan,the analysis is a bit different and you have to make assumptions about where he will cut (or if), but it can be done.

When you did this, what assumptions did you make and what did you get? Or are you just relying on what you have been told by others? When you sent it to other people and asked for comments, as I did, what did they say?

Anyway, I'll be happy if you quit misrepresenting what I've said, or implying that I believe things I don't.

[Mark Thoma]

Jack: What makes you think that Fable of the Bees is endorsed by the profession today?

I think I acknowledged that simple-minded presentations of issues like trade - particularly by those who pretend to be economists but do not have the credentials - has been a problem. But if you listened to people that actually understood trade theory instead of the hacks in the media (which is what the public mostly hears), you would have heard that there are winners and losers, etc., the theory was there. The answer to this isn't to give up and let the hacks take over so this problem gets even worse, the answer is to stand up and explain what theory really says, and what the evidence really is. If you could see the people I see, people who sit in their office all day doing nothing but trying to solve economic problems, very sincerely and without any political ax to grind, you would be very disappointed at the public perception of our profession. It's not at all like what you see on blogs, TV, op-eds, etc. So it's too bad the simple-minded and often unqualified voices had such a large platform and have affected how we are seen (they make it appear there is disagreement even when there isn't, for the most part, and people then believe there's always another hand, a deceptive, misleading hand trying to lead them in a political direction). We have a lot to offer, and dismissing us out of hand is a mistake. I started this after the last election because I was so disappointed in how economists and economics had been represented in the media. It's far from an accurate picture - there has been an interest in undermining us, and the right has played that card hard for academics generally, going after universities as nothing but a bunch of out of touch elites. It's disappointing to see so many people buy into this as it allows stupid policy to be enacted. But that was the point, to get academics out of the way and allow dumb policy, e.g. tax cuts no matter what, no action on global warming, etc., etc. Plus, the elitist description hardly fits my life or the working class background I came from. I have family, kids, etc. all of whom are affected by the state of the economy, and I care about what happens to them, maybe more than I care about myself. This stuff matters to me for a whole host of reasons.

On competition, a substantial fraction of the faculty here is foreign, and try to get into graduate school these days (it's tough with foreign applicants - really tough). And yes, if you work your butt off for several years on step scale in a big city while those who went to the private sector clean up and manage to get tenure, there is security and that's great. But the intense competition for academic jobs causes the security to be capitalized into the salary so you pay for that insurance. And it isn't cheap (I send students to the private sector and they sometimes make more than I do - it's at those moments when you realize what security costs, but to me it's worth it). With student loans, state pay scales, etc. the return on investment really isn't as high as you might presume, and things like consulting are far more lucrative. So you have to want to do this for other reasons. Most people who choose economics do so becasue they are attracted to the policy issues economics can address, and they spend their lives on one narrow aspect of economics trying to find ways to make it better. We should listen to those people, they have important things to offer, instead of participating in efforts to undermine their credibility.

[dale]

I won't miss Bush when he's gone. But I already miss the anti-Bush inspired solidarity that once existed among Democrats. Our primary here in Oregon is finally coming up later this month. I'll probably vote BO. But HRC is a fine candidate as well. I suppose if I were the emperor of the world this primary campaign would have taken a more principled, high minded tack. But I am not shocked by politicians acting like politicians.

If BO ends up our candidate, I hope he takes a lesson from HRC about fighting to win and never giving up. And if HRC wins the nomination and then the Oval Office, I hope she becomes self reflective about the public's facination with the promise of a rigorous populism that at the same time strives for a more principled way of doing politics.

The facts and priciples involved with these gas tax positions are important- but not all that important. Electing either HRC or BO as our next President- now that's what's important. Stay focused.

[Betsy L. Angert]

Dearest Mark . . .

I thank you so much. I welcome you to the world as I experience it and have for soooooo long. In recent years, even before Bush 43, Educators are not expects on pedagogy. Economists know nothing of monetary matters. Physicians can no longer properly diagnose; accountants decide what doctors were trained to do. Quick fixes flourish and are fine [for now.] Solutions are provided, but only on the cheap. People are not a priority; profits are.

For me, the fallacy that Hillary Clinton's Health Care Plan was ever Universal is emblematic of the pattern, pervasive in the Clinton Camp. I have long felt that the Senator from New York thinks we are all fools. She is not the first. She wants to lead us, as we have been led. I prefer this country be as the forefathers envisioned of, by, and for the people. I want to live in a nation where all, in every profession are revered.

I have refused, for the most part, to get into Dem vs. Dem issues, and I’ve focused on McCain, but the statement she made irked me. Economics has been undermined enough, and part of it has come from people at think tanks and elsewhere who aren't economists, but pretend to be, promoting ideas like tax cuts are self-financing in op-eds, TV appearances, the NRO, and elsewhere. It has confused people, the media turns it into a he said-she said issue rather than denouncing the falsehoods and misleading statements, and people are left confused and wondering if economists know what they are talking about. When Republicans do this, it ticks me off. Economics has been undermined enough by clowns pretending to be economists, and I won’t help our side undermine the profession even further.

If they want to do public policy without talking to economists, good luck with that. I'm tired of being told I don't understand how average Americans feel.

I wonder. Is the common man, the one who knows what it must be like to be an average American unemployed? Certainly, he or she must not be a teacher, an Economist, or a doctor. Apparently, Jane and John Doe did not witness the bridge fall in Minnesota; nor do they travel on crumbling highways. Perchance, in the mind of many a politician, not all, the Average American is whatever he or she defines us to be.

For me this gas tax holiday tale is as the Magnequench legend.
Clinton: 'President Must Remember China and Magnequench.' First Lady Forgets.
Perchance, Bosnia, or previous positions on the North American Free Trade Agreement come to mind as we reflect on this recent clarification for what is real.

For me, last evening, Keith Olbermann spoke volumes. The Journalist offered the Clinton litany of "new metrics." Economist, take out your slide rule.

Countdown: Olbermann Defines Hillary's Goalposts

Mark, I welcome you to the fray. Frustration drove many of us to enter.

Betsy L. Angert
BeThink.org

[Betsy L. Angert]

Dearest Mark . . .

I thank you so much. I welcome you to the world as I experience it and have for soooooo long. In recent years, even before Bush 43, Educators are not expects on pedagogy. Economists know nothing of monetary matters. Physicians can no longer properly diagnose; accountants decide what doctors were trained to do. Quick fixes flourish and are fine [for now.] Solutions are provided, but only on the cheap. People are not a priority; profits are.

For me, the fallacy that Hillary Clinton's Health Care Plan was ever Universal is emblematic of the pattern, pervasive in the Clinton Camp. I have long felt that the Senator from New York thinks we are all fools. She is not the first. She wants to lead us, as we have been led. I prefer this country be as the forefathers envisioned of, by, and for the people. I want to live in a nation where all, in every profession are revered.

I have refused, for the most part, to get into Dem vs. Dem issues, and I’ve focused on McCain, but the statement she made irked me. Economics has been undermined enough, and part of it has come from people at think tanks and elsewhere who aren't economists, but pretend to be, promoting ideas like tax cuts are self-financing in op-eds, TV appearances, the NRO, and elsewhere. It has confused people, the media turns it into a he said-she said issue rather than denouncing the falsehoods and misleading statements, and people are left confused and wondering if economists know what they are talking about. When Republicans do this, it ticks me off. Economics has been undermined enough by clowns pretending to be economists, and I won’t help our side undermine the profession even further.

If they want to do public policy without talking to economists, good luck with that. I'm tired of being told I don't understand how average Americans feel.

I wonder. Is the common man, the one who knows what it must be like to be an average American unemployed? Certainly, he or she must not be a teacher, an Economist, or a doctor. Apparently, Jane and John Doe did not witness the bridge fall in Minnesota; nor do they travel on crumbling highways. Perchance, in the mind of many a politician, not all, the Average American is whatever he or she defines us to be.

For me this gas tax holiday tale is as the Magnequench legend.
Clinton: 'President Must Remember China and Magnequench.' First Lady Forgets.
Perchance, Bosnia, or previous positions on the North American Free Trade Agreement come to mind as we reflect on this recent clarification for what is real.

For me, last evening, Keith Olbermann spoke volumes. The Journalist offered the Clinton litany of "new metrics." Economist, take out your slide rule.

Countdown: Olbermann Defines Hillary's Goalposts

Mark, I welcome you to the fray. Frustration drove many of us to enter.

Betsy L. Angert
BeThink.org

[Mark Thoma]

Here's another way to look at it. Obama proposes giving each low income household $1,000 financed by a windfall profits tax. The cost estimate is 15 billion, so let's scale it back to 8.5 billion, the estimated cost of lifting the taxes for 90 days. For this amount, financed by a windfall profit tax, we could give each household $567.

Instead, at best - with exactly the same source of funds - the proposal is to give them $70, and much less is almost certain. Where does the other $497 go? Am I supposed to call the $70 a good policy when eight times that amount could be given to help (eat your soup and shut-up, you're lucky to get $70, so it's a positive, even though you could have had steak?)?

This would have been a great issue to take on McCain - his proposal is worse, I was ready, and it played right into the he's ignorant about economics theme - but Hillary's move makes that hard to do. Another cost of this action.

[Betsy L. Angert]

Dearest Mark . . .

Wow! I love Economists. Now, this is perspective!

Here's another way to look at it. Obama proposes giving each low income household $1,000 financed by a windfall profits tax. The cost estimate is 15 billion, so let's scale it back to 8.5 billion, the estimated cost of lifting the taxes for 90 days. For this amount, financed by a windfall profit tax, we could give each household $567.

Instead, at best - with exactly the same source of funds - the proposal is to give them $70, and much less is almost certain. Where does the other $497 go? Am I supposed to call the $70 a good policy when eight times that amount could be given to help (eat your soup and shut-up, you're lucky to get $70, so it's a positive, even though you could have had steak?)?

I thank you Mark. Please feel free to telephone Hillary and share this truth. Perchance, the Economist View is what she might wish to seek. I suspect she hopes to separate herself from the experts. They are perceived as elite. Those who analyze fiscal policy are no longer her friends. They may look at her personal assets and campaign debts. Yikes.

Betsy L. Angert
BeThink.org

[Brooks]

mark Thoma,

I must say, you're 100% right with this post.

Leaving aside the fact that Clinton's (and Menendez') position on this issue and that her related campaign tactics are disingenuous and immoral (knowingly promoting bad policy to get elected), there's another bothersome aspect of all of this.

It's quite irritating when people miss the distinction (or pretend to) between ANALYSIS, which IDENTIFIES and QUANTIFIES trade-offs, and advocacy of particular choices among trade-offs as reflected in policy choices. Economists have been trying to point out that the ACTUAL cost/benefit consequences of a gas tax holiday are inconsistent not just with their own values and priorities, but also with HILLARY'S own stated values and priorities -- or put differently, they contradict the positions on trade-offs she claims to believe in. When she rejects what all the economists have to say, it's not really a values argument regarding trade-offs, it's an argument for IGNORING the real trade-offs.

[Lafayette]

There would be no fuss, if American gas taxes where of the French kind in the matter.

The Value Added Tax on petrol (gas) or diesel fuel at the pump is compensatory; that is, when the base cost goes up, the tax revenue comes down -- not always in equal measures but enough to assure reasonable price increases. (That has not prevented price increases as have recently occurred, because the government needs every cent it can get due to budget deficit problems. It has simply mitigated somewhat the price shock.)

Besides, the major oil companies (in France) are confiscated their windfall profits at times of exaggerated price increases. Yes, that happens in a country with a Rightist government, at present.

So, if America wants to continue to genuflect at the altar of BigBusiness, then it merits the consequences of that ill-spent adulation - a plutocracy of purely business interests.

No one lamented the fact that BigOil interests spent 50 megabucks on lead-head's first election. So, no one should lament the same when a similar amount is spent on McCain.

[a]

"When literally all the experts around you are telling you that what you are saying is misleading (at best), yet you declare you are going to say it anyway, that’s no better than the Laffer curve stuff."

Almost all economic experts say that free trade is great. Well ok, now there are a few (very few!) voices who can heard against (like Dean Baker), but for Hilary's gas tax you have Krugman and probably some others.

Anyway, what I would like to ask is an epistemological question: how does the certainty that economists have with the theory that says free trade is great compare with their certainty in the theory that says Hilary's gas tax is a bad idea? Would economists say they are *more* sure in their models for the latter than they are in the former? Or is their confidence comparable?

Since free trade is a bad idea, and since economic experts all (or almost all) say that free trade is a great idea, what are we supposed to do about free trade? Just meekly follow the experts?

I think the issue is important because it seems to me that there is a structural bias among economists, who, while thinking they are selfishly pursuing truth, seem more like the defenders of the moneyed classes. So agreement among the experts may not, in fact, be anything else but a manifestation of this bias.

[Here's a Dime, Go Buy a Clue]

Nobody ever talked about unfettered, anything goes, trade. The premise is false. Yes, trade is good, but it has distributional consequences (and others too) that have long been recognized. Setting up false constructions - that economists never recognized these consequences, ignored power relationships, all of that, saying Deam Baker was the first to raise these issues (how many academic papers has he written on this issue?) - and acting like you are making points is kind of pointless. Saying that these issues are only now being raised simply shows your ignorance. Go read what was actually written.

[Lafayette]

A bit of hubris

a: Since free trade is a bad idea, and since economic experts all (or almost all) say that free trade is a great idea, what are we supposed to do about free trade? Just meekly follow the experts?

Moot point. Economists are telling us an empirical fact that has been part of civilization of mankind since time began. Humans have always traded goods and services; humans will always trade. Only inept politicians will try to curtail trade by setting up tariff barriers.

The "race to the bottom" crowd, which believes that trade is the devil's handiwork, is pathetically myopic. All they see is dislocated jobs, typically theirs either in the past or menacing in the future.

Progress that causes employment dislocations must not be lamented, since that is useless -- whether due to technological innovation or wage competition. Either of those two parameters will be part of our Economic Equation for the foreseeable future. Globalization will assure that fact.

Both America and Europe were cocooned into the notion that their economic prowess would last forever guaranteeing the collective well-being. The bit of hubris was a falsehood. Besides, it's over and gone.

Let's get ourselves into traction (in terms of Economic Policy) rather than agonizing in immobility -- because, tears or no tears, those consequences are squarely upon us.

[a]

I said "Almost all economic experts say that free trade is great." Here's a Dime, Go Buy a Clue said, "trade is good, but it has distributional consequences". So HaDGBaC is relying on the difference between "good" and "great"? No problem to change what I said to, "Almost all economic experts say that free trade is good." Does that make HaDGBaC feel better?

"Saying that these issues are only now being raised simply shows your ignorance." Since I guess you take it that you are not ignorant, perhaps then you can answer my question, which doesn't change even if "the premise is false". How does the level of confidence among economists that free trade is good compare to the level of confidence that HRC's gas tax (and taxation of oil companies) is a bad idea?

[Lafayette]

BW: This problem is far broader than Hillary Clinton's shortcomings as a political leader.

I tend to agree. Just as bad money drives out good, bad words pollute the communication media of all words.

That's one of the problems with "freedom of speech", everybody and his dog thinks they have a right to say disreputable crap.

The thing is ... the dog has often better sense.

PS: The point is moot, also. Hillary is history. All aboard the BO bandwagon. Let's hope Kerry isn't the driver.

[Barkley Rosser]

a says,

Read what is written here. Moving from a protectionist situation to free trade generates losers. But there are ways to deal with this, and they have already been mentioned here. Read the comments.

Sweden: except for agriculture, essentially a totally free trade country, but with lots of adjustment assistance. That is the way to go.

[anne]

http://krugman.blogs.nytimes.com/2008/05/07/talleyrand-and-the-gas-tax-holiday/

May 7, 2008

Talleyrand and the Gas Tax Holiday
By Paul Krugman

I'm on record as saying that Hillary Clinton's advocacy of a gas-tax holiday, while it wasn't good policy, didn't rise to the level of a crime.

Judging from last night's results, however, it was worse than a crime: it was a mistake.

[Barkley Rosser]

anne,

Fair enough. And, for the record again, I apologize to you for using the word "shill" in what became our somewhat shrill discussion. However, I continue to maintain that it was not "gutter language," which tends to involve words containing only four letters...

[anne]

I know; Obama will be the nominee which will be fine, but Obama will likely be the more conservative President.

[ECONOMISTA NON GRATA]

Anne:

You said..... "I am no expert,"

We've noticed.... ;-)

HRC is done.... She is a victim of her own devices. Let's move on here and start to focus on that MORON that Obama is going up against for the White House...

To paraphrase a former governor of Louisiana, Edwin Edwards, the only thing that's going to keep Obama out of the White House is if he gets caught in bed with a dead girl or a live boy.

Let's get focused on McCaine, Let's get the word "LOOSER" tattooed on his forehead. Hillary was able to pull out the "white trash" card and use it with some success, because she is white trash. Rich white trash, but white trash just the same. Vile and disgusting, however, true. It's over now, done, finished. The moment that we were able to get the label and contrast using definitions such as "blue collar, less educated, catholic and less than, in the MSM suddenly this demographic began to turn to Obama. Why...? You might want to ask yourself.... Think about it....

Let's focus on the future and let go of the past.

Best regards,

Econolicious

[Barkley Rosser]

anne,

It has really been over since Wisconsin, but only now is it really sinking in. I expect a major rush of superdels to go to him shortly, and old George McGovern just switched his support from Hillary to Obama. It really is over.

Regarding who would be more "liberal" as prez, aside from all these definitional and rating problems, I would say that it is hard to tell. They vary according to the issue. I know that you have a major focus on health care, and on that one Hillary is arguably "more liberal." But, there is a fairly extensive list of issues where the opposite appears to be the case, as well as many where there appears to be no discernible difference between the two.

economist non grata,

"McCain" not "McCaine" (no, there is not a mutiny against him), and "LOSER" not "LOOSER." The latter makes him sound some sort of hip, cool guy.

[anne]

I'm thinking now.

[anne]

http://krugman.blogs.nytimes.com/2008/05/07/phase-two/

May 7, 2008

Phase Two
By Paul Krugman

[Chart] Does economics determine all?

OK, barring some truly shocking revelation, Barack Obama will be the Democratic nominee. Will he win in November?

The political scientists I talk to basically have the view that nothing much matters in presidential elections except the rate of change in economic conditions — not the level — in the year or less preceding the election. If that’s true, the Democrats should have it in the bag. This year’s economy will almost certainly be at least as bad as 1992, and stands a chance, in terms of stagnant real personal income per capita, of being as bad as 1980.

Most current polling nonetheless shows a close race. The poli-sci guys say never mind: polls are all over the place when the GE is 5 or 6 months out, but converge to fundamentals as election day draws near.

A simple scatterplot — the chart above is from Larry Bartels’ Unequal Democracy — can leave a Democrat both optimistic and worried. Yes, economics has a big influence — but there have also been some big deviations.

More on this as I think more about it.

[Mark Thoma]

anne:

Yahoo! I don't have to decide who to vote for - it won't matter. I may fill out my ballot today and mail it in.

More seriously, I plan to focus on McCain as I have in the past - but that doesn't mean we can't keep hammering on Obama (in a constructive way of course) to pursue key issues, e.g. keep the pressure on over health care. That would have been true of Clinton too, both had things I wanted them to change, but at least now I can begin to focus on the key issues and on drawing a stark contrast with Republicans even while trying to nudge Obama's policy in one direction or another.

I just gave a (non-partisan but honest) talk about the economics of the gas tax and other economic proposals for the campaigns, I went through all three candidate's proposals. Apparently Austan Goolsbee recommended they get in touch with me, he reads the blog "religiously," or so I was told by the head of Obama's Oregon campaign (which surprised me), so we can at least deliver the message where it might do some good.

[anne]

Enough gutter language.

[anne]

Mark Thoma:

"More seriously, I plan to focus on McCain as I have in the past - but that doesn't mean we can't keep hammering on Obama (in a constructive way of course) to pursue key issues, e.g. keep the pressure on over health care. That would have been true of Clinton too, both had things I wanted them to change, but at least now I can begin to focus on the key issues and on drawing a stark contrast with Republicans even while trying to nudge Obama's policy in one direction or another.

"I just gave a (non-partisan but honest) talk about the economics of the gas tax and other economic proposals for the Obama campaign, I went through all three candiadate's proposals. Apparently Austan Goolsbee recommended they get in touch with me, he reads the blog 'religiously,' or so I was told by the head of Obama's Oregon campaign (which surprised me), so we can at least deliver the message where it might do some good."

Nice, nice, nice.

[swells]

I finally got a chance to vote for Obama in NC yesterday. It was weird. I'd never voted for a presidential candidate before and I'm 56 years old. It felt good to finally have someone I could, in good conscience, vote for. I don't pretend I'll like everything he does or doesn't do. But, if I understand him correctly, he is talking about politics that doesn't start from an agenda etched in stone where everything is done to achieve the preconceived end. I'll take my lumps on things I don't like if that is the kind of administration he runs.

But then again, I tend to think that what is said is more important than who said it.

I hope it will be the case that scientists will be taken seriously in the next administration. So far as I know, it's our best chance for solving some really, really serious problems we are facing.

[a]

"Read what is written here. Moving from a protectionist situation to free trade generates losers. But there are ways to deal with this, and they have already been mentioned here. Read the comments."

Read what I've read first. Thanks.

anne says...

http://delong.typepad.com/sdj/2008/05/oderint-dum-met.html

May 6, 2008

Oderint dum Metuant *
By Brad DeLong

Paul Krugman gets it wrong, I think:

Gas tax hysterics - Paul Krugman: ** OK, this has gone overboard. Hillary Clinton’s proposed gas tax holiday is not, in my view, a good idea. But the furor over what is, when all is said and done, a small and temporary policy proposal is entirely disproportionate. What’s going on?

Part of it, clearly, is the fact that many people in the media really, really want Obama to win and Clinton to lose — read Kurt Andersen — and have seized on the gas tax as their latest proof that she is ee-ee-vil. But there’s also something going on with economists, a phenomenon I recognize wearing my other hat: the tendency to place excessive weight on issues where professional judgment differs from lay opinion.... [E]conomists then become like the little boy with a hammer, to whom everything looks like a nail. Because protectionism is an issue on which they believe they have some special insight, they inflate its importance, and make free trade versus protectionism THE crucial issue in economic policy — which it isn’t. Trade barriers are a minor issue.... Yet economists talk much more about trade than they do about health care policy, because they think they know something about it in a way the laity don’t.

The gas tax holiday is in this category.... There’s a lot of troubling stuff in both Democrats’ proposals. Mandates aside, Obama is seriously low-balling the cost of health care reform, and promising way too much in middle-class tax cuts. Clinton’s numbers don’t quite add up either, though she’s probably closer to the mark — and both Dems are towering figures of responsibility compared with McCain. Amid all this, the gas tax holiday is a real issue, but a small one; don’t let economist’s tendency to overemphasize their areas of expertise distort your view.

Two points...

First, there's not a lot of troubling stuff in both Democrats' proposals. There's a little troubling stuff in both Democrats' proposals. All in all, they are quite good--economists these days sit around their department lounge and feel pity for John McCain's guy Doug Holtz-Eakin; they don't feel pity for Austan Goolsbee or Laura Tyson.

Second, it is important that presidential candidates fear economists even in the campaign. If they don't fear their economists, then we get campaign promises of really lousy economic policy, some of which will then make it into post-election real policy, and then we are i