57 responses

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  2. Wonderful. I will have to watch this again, but wouldn't it make sense to incorporate information about the Obama stimulus actually getting out into the economy. Passing it is one thing, having it flow to the economy is another.

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  4. The middle class being squeezed has nothing to do with jobs being created; pretending you've somehow rebutted Goolsbee's claim is make believe. Showing that jobs were created during the Bush administration says nothing about who benefited from productivity gains, and nothing about how median real wages were stagnant while real costs to the middle class – health care, housing, food, have gone up a lot.

    What a joke.

    • I'm not an economist, but I have worked and paid bills for the last 30 years. What I do know is that during that period in the Bush administration my healthcare, housing and food were a lot more reasonable than they are now. I do agree with you Dan… these things have gone up a lot. Once the white elephant that is Obamacare was signed into law the level of care that my family and I enjoyed has gone down while my co-pays have gone up quite a bit. Everything else is more expensive as well and the stimulus fiasco is only serving to devalue the dollar and extend the recession. A joke? The joke's on you if you swallow everything that this administration's Ministry of Propoganda is dishing out.

  5. Interesting but quite weak and unconvincing. I agree with Dan that pointing to unemployment statistics says nothing about Goolsbee's claim about the middle class being squeezed. Criticizing Goolsbee for citing only one potential causal factor among many (and listing a few of these potential additional factors) is okay, but Hennessey lives in a very fragile glass house because he makes the exact same types of claims throughout the video. Ditto for the observation that Goolsbee can't say what would have happened without the stimulus–we could say the same about every claim that Hennessey makes, too. Criticizing Goolsbee's focus on private sector employment is fair only if there's a methodological (not political) reason to expand the focus to include government employment–Hennessey does not provide such a reason (and the revisions to conclusions are underwhelming). Criticizing Goolsbee's arrows is unfair–when a ball is rolling rapidly downhill, first you must slow it down and stop it; an instantaneous reversal of direction is unlikely.

  6. Your post raised a question about the role of the CEA. I assume CEA is academic economists with leanings to Rs or Ds and advise the President and explain the economics behind Presidential initiatives. However, it seems CEA has become a "Shill" for Presential policies. I wonder if it has always been the case? I know Martin Feldstein broke with Reagan and I realize it is natural for POTUS to select economists broadly in synch; nevertheless, isn't the CEA supposed to rise slightly above politics? Instead, it seems as if Goolsbee, Romer, Hubbard, etc.. have become like RObert Gibbs but with a sophisticated understanding of economics (all have amazing credentials so question is not about them but about whether this position is another flack for the Administration). Is this the way it should be?

    • This is a good point, and one that I intended to raise as well. It would be very naive to think that the CEA, who is appointed by the sitting president to advise him on economic matters, is politically neutral. Ostensibly, though, the CEA is there to serve the president and the country by objectively advising
      the POTUS on economic policy. And, I think this video demonstrates that Goolsbee is assuming a very public political role to an extent that seems unprecedented, at least in my memory. I suspect that his ability and willingness to assume this role is one of the reasons he was chosen for the job. I also suspect that this will be looked back on as an unfortunate turn in history of that office, much like the politicization of the Supreme Court nomination process. I can't imagine Lawrence Summers giving this type of video demonstration. You can easily disagree with Summers' economics, but I think he is an economist foremost and takes his economics far too seriously to compromise his economic message with political rhetoric as much as Goolsbee does here. Alas, as Thomas Mann correctly observed, "everyhing is politics".

      I agree that Mr. Hennessey, even though he's made some good points, has not completely debunked Goolsbee's presentation. But, if Goolsbee is going to deliver his economic message with political spin, then this cries for some counter balance and Hennessey has done a great job in providing that counter. I like to think of it as direct examination and cross examination. Neither is completely objective, but if you take the effort and give a fair and careful listen to both, you might come up with something resembling the truth or at least feel good that you've tried.

      For me, the truth is that Goolsbee has used a few graphing tricks and selectively presented information to his rhetorical advantage and Hennessey is correct to point that out. On the other hand, Goolsbee (and other commenters here) have a point that slowing down a trend is in itself an accomplishment even though I think the administration is taking too much credit for that. In particular, Hennessey fails to point out that the job losses were slowing before that shot of economic stimulus enacted by the new administration had even entered the economic bloodstream.

      By the way, I like the video format which was used very effectively here. You might want to turn up the volume on the mike a bit next time.

      • You said, "Hennessey fails to point out that the job losses were slowing before that shot of economic stimulus enacted by the new administration had even entered the economic bloodstream." I actually thought he did make that point in the beginning when he showed who controlled the House and Senate by placing a shaded transparent bar over the graph ….

    • > However, it seems CEA has become a "Shill" for Presential
      > policies. I wonder if it has always been the case?

      Each President has a different set of strengths, so the power and influence of these roles changes regularly.

  7. I don't think Hennessey's reference to the average unemployment during the Bush years was intellectually honest. Much of the growth during that time period came from excessively lax lending and a massive property bubble . . . in other words, the growth was artificially created and pretty much evaporated when the bubble burst.

  8. Regarding the causes of the crisis: Republicans controlled the WH and Congress in the period from 2001-2006, and the most generous observation is that they did nothing to prevent the crisis and were relying on the housing bubble to prop up the economy. More generally, this recession can be seen as the product of 30 years of "conservative" policy to deregulate finance (with no measurable gain to society at large) and skew the income distribution so that typical (median) real incomes have stagnated for decades since ~1980 while the top 1% have benefited from privatized gains and socialized risks.

    • The problem is not that government does not regulate enough, the problem lies in that there is too much government. The economy should be left to do what it will naturally do which is go up and down. When GM fell into trouble they should have been let to fail. I know that they were, and yes I mean were, part of American heritage, but for every business that goes under another will come up and replace it. Let companies fail if they are going to fail and thrive if they are gonna thrive. The fed has no business in private industry AT ALL!

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  11. Yes but those same policies cost more than a trillion dollars. The real issue isn't whether intervention helped versus the unknowable counterfactual but whether it helped enough given what it cost. Goolsbee's chart comes nowhere near making that case, nor does he try because the data is not on his side.

    For example, using the Zandi/Blinder model for the counterfactual shows the stimulus was a very bad deal for job creation, costing more than 3x the median wage per job saved or created. If you can't show things got better at all by spending a trillion dollars, you have a real problem on your hands.

    • “We have tried spending money. We are spending more than we have ever spent before and it does not work.” … “I say after eight years of this Administration we have just as much unemployment as when we started. … And an enormous debt to boot!” — Henry Morgenthau, Jr. (1939)

      And, as much as I hate to quote Marx: "History repeats itself first as tragedy, second as farce." We are stepping in the fiscal policy footprints of the 1930s. God help us if we need another world war to counterbalance these policy mistakes.

  12. I wrote an article on my blog that will kinda shows the outcome of our financial crisis on the small town level. The people in this union went on strike because their health insurance went up. They fail to realize that that small business owner is feeling the same pinch as everyone else and they are lucky to still have their jobs so deep in this mess we are in. You can read my article at http://pctradepost.net/leanliving/?p=113

  13. The private sector is "puckered up" because they see what Obama has done TO them, and the private sector doesn't trust him and his regime.

    We MAY see some improvement when the Republicans take back control of at least the house, BUT Obama has a track record of circumventing the legislative branch altogether. He has appointed 39 czars and created a new "consumer protection bureaucracy" which he has placed within the Federal Reserve for "oversight".

    Obama is the most cunning, unconstitutional President we have ever had. He will go down in history as the most destructive President we've ever had.

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  17. Found the YouTube video via RealClearPolitics, and had to come over to your site just to say that this was remarkably well-done and well-organized in particular. You script your responses very well (which is really key when explaining something as potentially dry as economics to the average bloggin' schmoe) and you explain yourself pithily. Could use a bit more 'energy' in your voice, though that's a showbiz critique, not a substantive one.

    I really hope to see sequels.

  18. Excellent video. Like Mr. Goolsbee, I'm also MIT trained, although apparently Mr. Goolsbee never attended undergraduate engineering classes where we learned that basic tenant of science and statistics that correlation does not imply causation. Just because one action follows another, does not prove that the first action caused the second.

    I wrote a similar but much earlier and inferior piece on the subject shortly after the first Obama Jobs Graph first appeared. I thought that the chart was deceptive, because it shows the rate of job losses (or gains), not the overall jobs picture. I tested the jobs chart on various colleagues, most with engineering or accounting degrees, and they also scratched their heads. Too bad that many Americans will blindly accept the Administrations account as Gospel.

    What Does the Obama Job Chart Really Mean?
    http://soquelbythecreek.blogspot.com/2010/02/what

    You could also discuss some of the root causes for the subprime mortgage crisis that sparked the downturn, but perhaps in another video.

    Fannie, Freddie, and You as the Secret Santa http://soquelbythecreek.blogspot.com/2010/02/fann

    Although I think the Stimulus plan was bad policy and I would have recommended differently, I think that it did have a certain "shock and awe" affect on Wall Street and among investors. It was the "group think" at the time. It likely temporarily saved a number of public-sector jobs, especially here in California where the state cannot print money, nor could it borrow at the ridiculously-low rates that the federal government presently enjoys. The single biggest "Stimulus" plan in my local community was some $15+ million dollars to the Pajaro Valley Unified School District, primarily to cover salaries (not to mention salaries for members of the California Teachers Association union, the single largest political spender in California politics).

    See California Fair Political Practices Commission (FPPC) report "Big Money Talks: California's Billion Dollar Club", page 10.
    http://www.fppc.ca.gov/reports/Report31110.pdf

  19. Loved this! You were able to deconstruct Dr. Goolsbee's argument and respectfully offer a different perspective in an enlightening manner. Please do more videos!

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