I don’t think a day goes by where the “mainstream” press reminds us that New York Times columnist and far-Left hack, Paul Krugman, once won a Nobel Prize in Economics. He won his Nobel for his work in “New Trade Theory” and “new economic geography.” With this award, Krugman was suddenly the go-to guy for the far Left when it came to everything about economics. Specifically, his opinions on economic stimulus. When there’s a question about whether the federal government should be spending a trillion dollars to temporarily prop up a lagging economy, you can bet Paul Krugman will be there to say it should. This is why Media Matters loves Paul Krugman.
But, as we all know, the Nobel for Economics is awarded every year. This year, the award went to two men who won based on their work in an area that is literally at the top of the list when it comes to the debate over economic policy.
Smack dab in the middle of Obama’s push to have his “jobs bill” (aka Stimulus 2.0) passed by Congress, the Nobel was awarded to Thomas Sargent and Christopher Sims for their “empirical research on cause and effect in the macroeconomy.” In other words, unlike Paul Krugman, the two men who won did so because of their research into things like – wait for it – economic stimulus. Now, considering that the President of the United States had literally been on a campaign to have a second stimulus package passed by Congress, you would think the press would be citing the work of the two men who had just won a Nobel on the subject, right? Wrong. I’d gather most people reading this right now have never heard of Thomas Sargent or Christopher Sims until a few sentences ago. Here’s why.
Democrats and the President have been claiming there is very little disagreement among economists when it comes to the effects of economic stimulus policy. It’s the old “the science is settled” rhetoric where whoever disagrees with what Democrats / Progressives / Leftists want to hoist on the American public is cast as “fringe” and not to be taken seriously. Again, if the Democrats’ narrative is accurate, who better to bolster it than the most recent Nobel Laureates in Economics? Here’s the problem: Thomas Sargent demolished that narrative in an interview back in 2010. (via Mercatus)
In early 2009, President Obama’s economic advisers seem to have understated the substantial professional uncertainty and disagreement about the wisdom of implementing a large fiscal stimulus. In early 2009, I recall President Obama as having said that while there was ample disagreement among economists about the appropriate monetary policy and regulatory responses to the financial crisis, there was widespread agreement in favor of a big fiscal stimulus among the vast majority of informed economists. His advisers surely knew that was not an accurate description of the full range of professional opinion. President Obama should have been told that there are respectable reasons for doubting that fiscal stimulus packages promote prosperity, and that there are serious economic researchers who remain unconvinced.
Sargent gives the President the benefit of the doubt and suggests his economic advisors mislead him. I don’t. Obama knows full well that there is major – as in now Nobel Prize Winning major – disagreement on whether big fiscal stimulus promotes the kind of economic growth / prosperity Keynesian central planners have been claiming it does for decades.
We know Obama’s first stimulus failed. The second one, which was thankfully defeated in the Democrat-led Senate, was more of the same failed policy. The press once again failed to do its job. They failed to cite the work of serious economists like Sargent in 2010 when it was obvious the first stimulus wasn’t working and they failed to do it while Obama was pushing for a second stimulus. They failed in 2008 when they became a de facto arm of the Obama ’08 campaign and they’re doing it again in the lead up to 2012.
If Thomas Sargent had said “the science is settled” on economic stimulus like the “jobs bill”, he would have been given a ticker-tape parade down the Canyon of Heroes (lower Broadway in New York City). Instead, you’ll get a healthy dose of Paul Krugman saying the jobs bill isn’t big enough. Paul Krugman, the hack who stands in solidarity with the anti-Capitalist “Occupy Wall Street” protesters but won’t join them because he’s not an activist. (Don’t laugh too hard. He really said that.)