More lying from PhD economists

Lauren Lyster of Yahoo!Finance posted an interesting article today.  It seems that the economy does better when a Democrat is president:

The U.S. economy grows notably faster and scores higher on a number of other marks when the president is a Democrat rather than Republican, according to new research from Princeton economists Alan Blinder and Mark Watson.

Rule #1: never listen to anyone who (1) has a PhD in Economics and/or (2) teaches at an Ivy League university.  They are all unrepentant leftists and/or do-gooders who think that they can change the world for the better if we just do what they say.

But I digress.  Getting back to the article:

According to the analysis, there was an average of 1.8% better annual GDP growth (a difference Blinder notes was “large and persistent”) when a Democrat was president . There were also fewer quarters of the economy in recession, more jobs added and hours worked, larger declines in unemployment and higher corporate profits.

First, you need to realize that what they are talking about is based on the Keynesian formula for determining GDP.  Here it is:  real GDP = C + I + G + (X-M) where C represents Personal Consumption, I represents the Investment of businesses in new capital goods, G represents Government spending, and (X-M) represents the difference in the dollar amount of goods made in the U.S. that are exported and sold in other countries (X) and the dollar amount spent on goods made in other countries and imported into the U.S. (M).  According to Keynes, an increase in government spending is good for the economy because it increases economic growth.  I have already debunked the Keynesian notion that increases in government spending and the corresponding increase in GDP are good for the economy here and here.

Back to the ‘experts’:

Blinder explains that their main work went back as far as quarterly data on the national economy goes, which is the Truman Administration in the 1940s (though they also had some “not as trustworthy data” going back to 1870s, which they didn’t put as much stock in).

How convenient.  The data from the 1870s to the Truman administration in the 1940s “isn’t trustworthy” so they ignored it.  Perhaps this is because the Great Depression (a prolonged period of negative GDP growth that averaged well above 1.8% per year) happened for the most part while the U.S. had a Democrat president whose New Deal policies made the Depression longer and more severe than it otherwise would have been?  Or maybe it was because from 1870 to 1914 we didn’t have a central bank in the U.S. or a major war to screw up the economy?  Or was it because the world was on the classical gold standard, which resulted in the greatest economic expansion that the world has ever seen?  Nah, that can’t be it.

Blinder is flat out lying about this.  The Statistical Abstract of the United States contains economic data from the founding of the united States in 1789 to the present.  This data just doesn’t confirm the results that Blinder wanted to show, so he ignored it as if it never happened.

That’s one thing I learned in graduate school: you can start off with the result that you want to show and then build your models and torture the data until it gives you the results that you want to show.

And here’ s the biggest lie of all:

Interestingly, Blinder and Watson found the better economic performance with a Democrat in the Oval Office was not due to fiscal policy (e.g. deficit spending) or expansionary monetary policy. In fact, “you just don’t get anywhere explaining the differences” with macroeconomic policy.

Oh, male bovine excrement!  First of all, if macroeconomic policy can’t explain anything, then why is it even being used?  And Blinder is being blinded by his graduate training in economics here.  He’s wrong anyway:

201004_blog_dehaven121That is the increase in Government spending during the New Deal.  How did it affect GNP (back then, national income was referred to as Gross National Product)?

GNP during the New DealJust in case you can’t see the pattern between the separate graphs:

2014-06-27-depressionThe big dip in between 1937 and 1938 is due to more of FDR’s economic policies, like increasing the minimum wage.  After a year, these policies were reversed and GDP growth increased once again.

And that is why ‘the economy’ does better when a Democrat is president.

As Artie Johnson would say,



Categories: Liars, Propaganda

Tags: , , , , ,

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