Unheeded Advice

Tuesday 27 July 2010 - Filed under Dumbassery + Economy + POTUS

For those who might argue that President Obama isn’t a progressive ideologue. The Wall Street Journal:

Economists who say Mr. Obama should have relied more on tax cuts cite research of an unlikely source: Ms. Romer, his adviser. In a study she and her husband, David Romer, conducted before she joined the administration, Ms. Romer found large multipliers from tax cuts, which she concluded “have very large and persistent positive output effects.” Tax increases, she also found, hurt growth.

His advisor finds that tax cuts are highly beneficial and that tax hikes hurt growth, yet he continues with the discredited theory of throwing money around like he’s at a strip club while raising taxes. What’s the fucking point of having advisors if you’re not going to heed their advice? Even a Harvard man, surely of high enough pedigree for Mr. Obama’s academic taste, agrees that tax cuts are the best way to go.

A study of 91 fiscal stimulus programs in 21 developed economies between 1970 and 2007 by Harvard’s Alberto Alesina found tax cuts were more stimulative than government spending. “I would have done more on the tax side than on the spending side,” he says.

[. . .]

Mr. Alesina says it is [time to cut deficits rather than use government stimulus]: In 107 periods since 1980 when governments cut deficits, doing so tended to quicken economic growth, not slow it.

But the progressive in him found that advice too erudite for one reason.

Keynesians say that episode isn’t relevant today because the U.S. can’t cut interest rates, as the British did. Another difference: The British pound lost half of its value in the 1980s, spurring exports. The dollar, by contrast, strengthened after the financial crisis hit because global investors saw it as a safe haven.

Or another.

Keynesians say other things were happening at the same time as military build-ups that muddy the results. During World War II, for instance, consumer goods were rationed and Americans were exhorted not to spend.

Perhaps, Mr. President, you should go with what is shown to work rather than your progressive ideological preferences which have been shown not to work.

2010-07-27  »  madlibertarianguy