The Cult of Experts (Stimulus Edition)
[Posted by Karl]
TNR’s Jonathan Cohn is serving the stimulus Kool-Aid:
Republicans and their allies keep saying the Recovery Act didn’t work. The experts keep saying that it did. The latest is the Congressional Budget Office, which this week released a new economic projection and, in so doing, confirmed its earlier finding that the Recovery Act succeed in its primary goal: Saving or creating jobs in order to offset the effects of the recession.
As of June, the agency says, between 1.0 and 2.9 million more people are working because of the Recovery Act. And that figure actually seems to understates the impact.
As I draft this, Cohn’s item is the most viewed at TNR. Progressives love the Kool-Aid, because they belong to what Jonah Goldberg terms the “cult of experts.”
Peter Suderman has likely tired of writing the same rebuttal again and again, so I quote him from the last round of Kool-Aid drinking:
Here’s the problem: Those CBO reports don’t definitively prove anything about the real-world effect of the stimulus. That’s because in order to produce those reports, the CBO effectively re-runs the same models that it used to estimate the effects of the stimulus before it started.
The reports aren’t based on a detailed measurement of real-world output. Instead, they’re based on measuring the input (how much money was spent), and then using models to project how big the multiplier effect has been. Measuring spending and modeling output means that you can believe the CBO when it says that the stimulus turned out to be more costly than expected, but you should remain wary about any claims made using the “real-world effects” side.
Indeed, CBO director Doug Elmendorf has explicitly made this point, agreeing at a speech earlier this year that that “if the stimulus bill did not do what it was originally forecast to do, then that would not have been detected by the subsequent analysis.”
Suderman was responding to the unhinged Andrew Sullivan, who was continuing to drink the Kool-Aid, even after acknowledging Suderman had a good point.
At the risk of befouling the progressive punch bowl, if these Keynesian macroeconomic models were so great, maybe there wouldn’t be a yawning chasm between the unemployment numbers the Obama administration predicted under the stimulus and the dismal unemployment figures we’ve actually seen.
Granted, I’m just a nutty wingnut who’s nuts, but economist Mark Thoma (not a Vast Right-Wing Conspirator) concedes not only that macroeconomic models have not fared well in recent years, but also that:
A big part of the problem is that macroeconomists have not settled on a single model of the economy, and the various models often deliver very different, contradictory advice on how to solve economic problems. The basic problem is that economics is not an experimental science. We use historical data rather than experimental data, and it’s possible to construct more than one model that explains the historical data equally well. Time and more data may allow us to settle on a particular model someday – as new data arrives it may favor one model over the other – but as long as this problem is present, macroeconomists will continue to hold opposing views and give conflicting advice.
This problem is not just of concern to macroeconomists; it has contributed to the dysfunction we are seeing in Washington as well. When Republicans need to find support for policies such as deregulation, they can enlist prominent economists – Nobel laureates perhaps – to back them up. Similarly, when Democrats need support for proposals to increase regulation, they can also count noted economists in their camp. If economists were largely unified, it would be harder for differences in Congress to persist, but unfortunately such unanimity is not generally present.
Kinda sours Cohn’s “Republicans vs Experts” Kool-Aid, but there it is. And what happens if we step away from the models? Veronique de Rugy notes that Garett Jones and Daniel Rothschild have published two new papers looking at why the stimulus failed to create as many jobs as the administration promised, both based on extensive field research. The papers primarily examine how people elected to use their stimulus dollars, finding that “the most vociferous boosters of fiscal stimulus should discount their benefits calculations by a significant factor.” She also notes that in attempting to rebut the findings, Cohn’s TNR colleague Jonathan Chait did not read these papers very closely. Of course, progs like Kevin Drum see the papers as — wait for it — an argument for an even bigger stimulus, but at least Drum candidly admits that maybe it is just his “priors” and “intuition” talking. Members of the progressive Cult of Experts like to accuse the right of ignoring expertise that conflicts with their ideology, but rarely notice the glass church in which they worship.
–Karl
Obama stole the concept used for his saved or created directly from the pagan practice of lighting bonfires and dancing around them at the winter solstice. After all, just think what would have happened if it were not done?
cedarhill (358fcd) — 9/2/2011 @ 3:58 amFuzzy-navel math
Icy Texan (b90006) — 9/2/2011 @ 4:06 amHad it been a conservative stimulus plan, you can be sure the cult of experts would have declared it a failure.
quasimodo (183df8) — 9/2/2011 @ 5:01 amA physicist, a chemical engineer, and an economist are stranded on a desert island with nothing to eat but a shipping crate of canned food that washed up on shore. Each of the three takes turns in explaining the best way to open the cans.
The physicist suggests that one of the three climb a tall palm tree and drop the cans onto a hard surface. The force of impact should be enough to break open the cans.
The chemical engineer suggests that they soak the cans in salt water for several days, and the corrosive effects of the salt water should weaken the metal and allow them to break the cans open by merely tossing them at the side of the shipping container.
The economist sighs at his two colleagues. “It’s very simple,” he says. “First, assume a can opener.”
Hadlowe (2a0728) — 9/2/2011 @ 5:11 amHadlowe,
You can bet Cohn has never heard that joke.
Karl (37b303) — 9/2/2011 @ 7:15 amExperts say Gorebull Warming will hit in 5 seconds.
DohBiden (d54602) — 9/2/2011 @ 7:35 amcolonel ask question
ColonelHaiku (ac06bc) — 9/2/2011 @ 8:54 amwho piss in the punch bowl now?
lefties drink deeply
We actually had an event that could be used to analyze the macroeconomics that gave us the GReat Depression and the Obama Depression. In 1920, the country was mired in a deep recession with 25% unemployment and a 6% decline in GDP. It was the end of World War I and the remaining impediments to recovery that were the Wilson Administration. In 1920, Harding and Coolidge were elected by a 60% majority. They took office in March 1921. By early 1922, the recession was over and the economy was booming, a period called the Roaring 20s.
No one I am aware of has ever analyzed the actions of Harding and compared them to Hoover in 1929-33. Many people believe that Hoover was conservative and reacted to the crash in conservative fashion. This is untrue. Hoover and Roosevelt followed Progressive orthodoxy in reacting to the crisis, mush as Obama has done.
It would be nice if someone did a good analysis of what worked under Harding and compared it to Hoover/Roosevelt/Obama. So far, the 1920 depression is omitted from history books.
Mike K (8f3f19) — 9/2/2011 @ 9:40 amMike K,
http://www.realclearpolitics.com/articles/2009/02/obama_should_channel_harding_n.html
Karl (f07e38) — 9/2/2011 @ 9:52 amAs State and Local govts thin the ranks of their workers now that the Stimulus (ARRA) funds run out, we are seeing just what jobs were “created and saved” by the expenditure of 700-800 Billion$, or more.
Another Drew - Restore the Republic / Obama Sucks! (e26a22) — 9/2/2011 @ 10:48 amIf you took all the economists in the world and laid them end to end, they would not reach a conclusion.
daleyrocks (bf33e9) — 9/2/2011 @ 11:17 amOr, like HST, we can search for a one-armed economist, because he was tired of hearing those four words:
Another Drew - Restore the Republic / Obama Sucks! (e26a22) — 9/2/2011 @ 12:27 pm“…on the other hand…”.
An economist sees a $10 note on the street and immediately schedules a neurological checkup, because if it were really there someone would have picked it up by now.
Milhouse (ea66e3) — 9/2/2011 @ 1:08 pm(This is stolen from “The Curious Incident of the Dog in the Night-Time” which btw is a must-read…)
An economist, a statistician, and a mathematician are riding in a train through Scotland. They look out the window and see a white cow grazing in a pasture.
“How about that,” says the economist. “All the cows in Scotland are white.”
“No,” says the statistician, “there are are many cows in Scotland, and some of them are white.”
The mathematician turns to his colleagues and says, “There is at least one cow in Scotland, and the part of her that we can see is white.”
…
No word on what Al Gore would have said, had he joined them.
d. in c. (ac417f) — 9/2/2011 @ 11:11 pm______________________________________________
Many people believe that Hoover was conservative and reacted to the crash in conservative fashion. This is untrue.
I’m embarrassed to admit that until not too long ago I too assumed Herbert Hoover had earned his dubious honor — and negative reputation — as presiding over the country during the earlier years of the Great Depression because he had been a laisezz faire, or generally libertarian, conservative. That he had been a steely-eyed, tough, cold-hearted “survival of the fittest” politician during the 1930s.
Oops. Hardly.
In fact, Hoover initiated some of the do-gooder government programs and huge tax increases on upper-income Americans (from a taxable rate of around 24% up to 70%!!) that Roosevelt then took to the next level (he raised the upper limit of income taxes on the affluent to almost 80!). And yet FDR got hugged and patted on the head by a majority of Americans right up until the day he died in office.
I’ve never heard anyone — liberal, centrist or conservative — ever point out the ironies and contradictions of both Hoover and FDR. I’ve also never seen it publicized that Roosevelt raised taxes on the wealthy in particular, Americans in general, yet had the gall to tell the IRS those higher taxes didn’t apply to his own considerable income.
Speaking of the disingenuous, phony, BS nature of such folks on the left….
LIMOUSINE LIBERAL ALERT, LIMOUSINE LIBERAL ALERT!!!
Mark (411533) — 9/3/2011 @ 7:15 amSo basically, they’re saying that a previous estimation was validated by another estimation?
Blacque Jacques Shellacque (5a9ff0) — 9/3/2011 @ 10:00 amActually, I think it is the same estimation. If I understand it correctly they estimated that X number of jobs would be “created or saved” for each million of stimulus spending. Now they are saying we spent Y amount of dollars so by our previous estimate we created Y/1 million times X jobs. There is no real look at actual results to verify the assumptions. That might get messy or confusing.
It is the same kind of manipulation the Gorecle types use.
Machinist (b6f7da) — 9/3/2011 @ 10:09 amBuffett is a hypocrite.
DohBiden (d54602) — 9/3/2011 @ 10:28 am