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David Leonhardt asked a couple of questions in a column a while back that stuck with me. Noting how badly the economy has gotten off track, after having been the “envy of the world” in the 1990s, Leonhardt wrote, “We are too often occupied with distractions, rather than trying to answer a simple question: What works? What economic policies have succeeded before?”
I’m a big fan of this kind of thinking. Especially when evaluating economic policies, my broad-brush approach is pretty straightforward: let’s do more of what works and less of what doesn’t.
I thought about this after seeing these charts Jared Bernstein posted this week, showing the impact of the Recovery Act. Here, for example, is an image that shows what happened to the overall economy after it was subjected to stimulus (admittedly, the stimulus wasn’t ambitious enough for the task at hand, but let’s put that aside for now). The dotted vertical line shows the start of the Obama administration’s efforts.
And here’s another image, showing what happened to the job market.
Put away the spin, the polls, the talking points, and the ideological axes to grind, and we’re left with a pretty simple truth: things were getting worse, then the stimulus started, then they got better. This isn’t even controversial; it’s as plain as day.
Bernstein added, “I know — this ain’t about the evidence. But I will never accept that condition and neither should anyone else. That’s the way societies decline and I’d kind of like to avoid that.”
Agreed. If, as Leonhardt put it, the only meaningful question is, “What works?” then the answer matters for those who care about the consequences — and everyone should care about the consequences.
Now, under the Republican worldview, the results highlighted in Bernstein’s charts should be impossible. Democrats spent a lot of money, imposed their preferred regulations, prevented public-sector layoffs at the state and local level, and added a lot of money to the federal budget deficit.
And yet, almost immediately, the economy grew and the job market got significantly better.
I imagine some conservatives will look at this and say, “Well, yeah, but it didn’t last and now we’re slipping backwards.” That’s true, but it only reinforces the left’s argument — the stimulus made things better, but as the funding faded, so too did the economy. Common sense, again, should tell us do more of what worked, and in this case, fairly aggressive public investments expanded the economy and created jobs.
Ergo, if we now want to expand the economy and create jobs, we know what to do because we already know what works.
It’s not theoretical or some abstract idea — we know what we tried and saw what made a difference. Likewise, here we are in 2011 trying conservative austerity ideas, and we see that they’re not working.
So here’s a radical idea: why not go with the most effective policies again?
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Live Free or Die on September 02, 2011 2:22 PM:
I agree with you Steve. But when Obama going to push for the most effective economic plan? Now he is gutting regulations, as if that is going to work. He keeps on reinforcing Republican solution, and then he bets the blame when they do not work. And the he expects his supporters to get his back and not complain.
DAY on September 02, 2011 2:38 PM:
As I learned at my mother's knee, or some other low joint,
"It is hard to drain the swamp, when you are up to your ass in Republican alligators."
Live Free or Die on September 02, 2011 2:43 PM:
I am really into the environment. I was telling a Republican the other day that we need to regulate emissions more. Today he tells me that even Obama does not agree with me. What am I supposed to tell him? I already know how shitty most Republicans are. Can't Obama make it easier for us to make our arguments, instead of making it more difficult? If he is just going to adopt the GOP philosophy, how are Americans supposed to know that the GOP philosophy sux? The debt ceiling fiasco was designed to consolidate the middle and take the issue "off the table". Not only did it not attract independents, but the issue is STILL on the table.
Josef K on September 02, 2011 2:46 PM:
So here’s a radical idea: why not go with the most effective policies again?
I know its rhetorical, but feel obligated to answer anyway.
For the Republicans, its likely because they don't want things to get better (and don't fully comprehend how bad things already are, else they'd be in active fear for their lives).
For the Democrats, its likely because they're too wedded to the Beltway's outlook on the world and think tinkering at the margins will be enough (and, again, don't fully comprehend how bad things already are, else they'd likewise be in active fear for their lives).
For the White House, they're stuck with a President whose career is based on organization and compromise, working within established systems rather than reforming them. They may have a better grasp of how pressed people are these days, but probably think the upcoming speech will rally enough support to keep things stable awhile longer and their current policies will suffice.
In all three cases, they're entirely too well 'insulated' from average citizens to appreciate the pressures the electorate is feeling. I question whether any of them even comprehend what its like to make under $150,000 a year or go without full and subsidized medical benefits. Lacking that empathy is every bit as dangerous as outright malice against the electorate, and no less alienating to the same.
JK beat me to it on September 02, 2011 2:55 PM:
Josef nails it, totally. Worth repeating in the main blog.
Live Free or Die on September 02, 2011 2:55 PM:
Joseph K:
I agree with your assessment. I might add that the only way this Obama environmental move makes sense, is if he then uses his Executive Authority to make economic policy and he is using this to he is balanced.
Live Free or Die on September 02, 2011 3:02 PM:
Look, I'm not just trying to dump on Obama. I am rooting for him to succeed. I am willing to forgive and forget, if he makes a great speech with a HUGE jobs program and hammer the GOP for the next 14 months. But it seems as if everyday he does something to reinforce the GOP narrative. Today it was his environmental action. His admin said it was not "legally defensible" before, but now they caved once again. Now elected Republicans are saying Obama's action proves their point about regulations being "job killing", and they say all the regs should be gone.
jjm on September 02, 2011 3:03 PM:
I'm looking for what things the president can do without Congress, and apart from the promising idea on the mortage refinancing for federally backed loans, I haven't heard of any.
Anyone? What can he do with this hostile, hostage taking Congress blocking him.
The only thing he might do is start naming them by name as THE problem. But apart from that what can Obama do directly about jobs?
I really, really, really want to know. Since so much blame is being placed at his feet, I want to know how much of it is deserved, and how much is just going along with the GOP's having the full attention and the ear of the people via Fox and others?
Live Free or Die on September 02, 2011 3:17 PM:
jjm:
If he blamed Republicans (by name) for their antics and he would fight them, even if he lost, I would not complain. But really, what was the point of this environmental cave. Now the GOP is saying that this proves that they were right, and want all regs gone. Also, why cant he utter the word Republicans? Is he like a vampire, and that is a vampire word where he will melt if he utters it? i can imagine what Dems on capitol hill were feeling during the debt ceiling crisis, when he told Americans to call "Congress", and they were getting all these angry calls telling them to pass the debt ceiling.
Lance on September 02, 2011 3:21 PM:
Wow Steve, you are on a roll today.
Now, let's remember what the Republicans say about the Stimulus. Somebody not even yet in the government said once that with a stimulus the unemployment rate won't top 8%. We had a stimulus and still the unemployment rate topped 8%.
Simple. The Republicans constantly lie by saying Obama said it, and they ignore the larger picture, like if we followed their ideas we'd have 30% unemployment, but that's not the point. They have their talking point and reality does not figure into it.
Captain Haddock on September 02, 2011 3:22 PM:
Forgive my ignorance, but can the economy of the 90's be credited to government policies (other than Gore inventing the internet of course :) )?
I think people get the perception that downturns, like the one we are mired in, are direct results of poor policies. But upturns tend to be seen as driven by private industry and/or technological innovations. That is just what I hear from people I've been talking to - and for the most part people see the 90's as the last good economic times - the housing boom is seen as an illusion at best.
Rich on September 02, 2011 3:57 PM:
Leonahardt does what his colleagues have been too lazy and conflict averse to do. Sadly, the pols won't do it either.
neil b on September 02, 2011 3:59 PM:
BTW, should Drudge and Republicans be getting away with that claim that the zero percent new jobs is the worst since 1945? We had months of net job losses for a couple years running around 2007-2008 (see "bikini graph" - BTW Steve you need to put the time graph back under there in posts below), which is "negative." So zero is clearly not the worst, it's still better than a couple years ago. What standard are they at least pretending to use?
bubba on September 02, 2011 4:09 PM:
Steve, you might want to stick a line in there for when the 2010 elections occured and see what happend to growth and jobs since that date (or the date the House flipped parties)...
Daryl P Cobranchi on September 02, 2011 4:42 PM:
Post hoc ergo propter hoc
Aside: Captcha is totally ridiculous now. In addition to the almost illegible non-words, we now have to deal with them being displayed upside down.
GG on September 02, 2011 4:47 PM:
The act passed in February, but the money didn't even START to get spent for 6 months (some of the cash took even longer to get put out)! Shift your lines by six months and the analysis is *slightly* different.
exlibra on September 02, 2011 5:59 PM:
Abstinence works! It... it... works. Just like spending and tax cuts do, for economy. I'm surprised you even have to ask.
"dingsoi Hecht." He dinged himself? And I should care... why?
Lance on September 02, 2011 7:32 PM:
Captain Haddock on September 02, 2011 3:22 PM:
"Forgive my ignorance, but can the economy of the 90's be credited to government policies?"
If not, then we can neither credit nor blame any administration for the economy during their tenure. But the fact remains that 22 Million jobs were created during the Clinton administration, while only 9 million during the W. Bush administration, of which 8 million private sector jobs were lost in 2008, leaving only the 1 million public sector jobs Bush created behind. And considering the fact that Bush's lax enforcement of on the laws against employing illegals basically caused the doubling of undocumented workers in this country during the first six of his eight years, it is entirely possible that NO Americans got private sector jobs during his administration.
If government polices have anything to do with economic growth, we certainly do NOT want to continue or return to those of W. Bush: lax enforcement, reduced tax rates, anti-regulation and blind, willful ignorance.
Ted Frier on September 02, 2011 9:38 PM:
The idea of the state using its taxing power to keep an economy moving and in healthy equalibrium by taking money where it's collected in stagnate pools at the top and giving to people at the bottom who will spend it and therefore drive economic growth, is not really all that controversial -- except among right wing conservatives who insist there is only one way to keep an economy going: Give all money to the rich and let them use their superior intellect and economic skills to create jobs where they think is the most effective. This really is their two dimensional, linear view of the economy. The rich are society's job creators and need to be coddled at all costs. The fact that this is also a delightful theory from the point of view of the self interest of the rich is not something you are supposed to notice. But if you do you are guilty of "CLASS WARFARE!"
Skip on September 02, 2011 11:33 PM:
Oh, so that is why the Republicans suddenly wanted to fiddle with the deficit rather than focus on jobs. Makes sense, if you have a group of people who want Obama to fail, TAKE AWAY WHAT WORKS, the stimulus, by decrying how deeeeep in deeept the US is...[insert lots of tears and fear mongering]
Hold Republican actions up to facts, and the answer declares itself.
hahaha...is that ad serious, you can RENT tires now???