Why Economists Hate the Wall Street Journal
The Wall Street Journal is a fine paper that breaks a lot of stories, but its editorial page is frequently the subject of ridicule for people who find it to be, frankly, pretty hackish.
Today brings us a classic example: Stephen Moore’s column: Why Americans Hate Economics.
The gist is basically this: Bearded, wonky academic economists believe a whole bunch of nonsense that nobody with a modicum of common sense could possibly subscribe to. And unfortunately, because The White House listens to academics — rather than real people with common sense — nothing the White House has done economically has worked.
The problem, though, is that just because something seems intuitive or “common sense” doesn’t mean it’s correct, especially in economics, where many things are not intuitive.
For example, Stephen Moore writes:
Or consider the biggest whopper: Mr. Obama’s thoroughly discredited $830 billion stimulus bill. We were promised $1.50 or even up to $3 of economic benefit—the mythical “multiplier”—from every dollar the government spent. There was never any acknowledgment that for the government to spend a dollar, it has to take it from the private economy that is then supposed to create jobs. The multiplier theory only works if you believe there’s a fairy passing out free dollars.
This bit of folk wisdom is just totally wrong. For anyone to believe that government spending is taking money away from the private sector is to believe that there are individuals and businesses out there who would have made real-world investments with their cash, but instead were somehow forced into buying a Treasury bond yielding less than 4%. Perhaps if taxes had been raised to pay for the stimulus, then we could see why Moore might think something so wrong, but that didn’t happen.