Monday, November 8, 2010

Should Obama Have Taught Econ 101?

Excellent post over the weekend from Matt Yglesias, one that I hope doesn't get lost because it was over the weekend, and because there's a lot going on in just a few paragraphs.   You're most definitely going to want to Read The Whole Thing, but I want to talk a bit about the really startling point he makes at the end.

Yglesias starts by talking about two different models of the economy, one in which stimulus during a recession makes sense and one in which it doesn't.  He doesn't quite say it, but in fact the former is the one that is shared by virtually all economists, regardless of partisanship.  But then he notes that quite a few politicians of all persuasions, as well as many influential journalists and other opinion leaders, appear to believe in the latter, which he says corresponds with "common sense."  He concludes:
I think that progressives have tended to focus too much on “crazy person misinformation” (Obama is a secret Muslim, Obama spent nine trillion dollars on a trip to India, Obama is from Kenya) and not enough on “common sense misinformation” of the sort Bayh is expressing. The widespread nature of common sense misinformation about the nature of recessions—not just among low-information voters but even among political professionals and policy elites—has been a huge drag on macroeconomic performance and that in turn has dragged down the entire progressive agenda.
Interesting.  He's right that liberal outlets have spent quite a bit of time and effort on debunking the crazy -- not just the stuff he mentions, but death panels, and czars, and on and on and on.  The thing is that the target audience for that debunking has always been a little hazy.  I doubt that very many political elites of any stripe believe a lot of the any rate, few outside hard-core conservatives believe any of that.  Is there a single Member of Congress who honestly believes that Barack Obama was born in Kenya?  I suspect not.   I certainly don't think that anyone who writes editorials for major newspapers, or any White House correspondent, believes it.

And those who do believe the crazy...well, how are you going to get them to change their minds?  They listen to the (Republican) partisan press, and the partisan press have no reason to try to educate them.   Neither do GOP pols.  So uncovering the truth won't change the minds of political elites (who already don't believe the crazy), and it won't affect the rank and file.

Now, consider what Yglesias calls "common sense misinformation."  I do think it's probably true that a lot of Members of Congress, and a lot of people within the elite press, and a lot of top lobbyists, have very little training in basic economics.  What's more, many of them are probably willing to get educated.  It would take some work...there are an enormous number of people who just reject systematic analysis of this type when it goes against what they see as common sense (sabermetrically inclined baseball fans, or anyone who has read Moneyball, will agree).

Is it impossible?  I don't know.  I don't think it's very likely that Barack Obama could do much to educate mass audiences with even the most carefully crafted fireside chats.  I do think, however, that there was one group of people who had a strong incentive to understand the basic economics behind stimulus and recovery, and who, if Yglesias is correct (and again I think he is) didn't quite get it: Democrats in Congress holding marginal seats. 

One study I'd like to see would be a project to interview Blue Dogs who were involuntarily retired last Tuesday in order to find out what they really thought about the relationships between liberal reputation, deficits, stimulus, and elections.  One possibility, that is, would be that they overestimated the effect of liberal reputation, and underestimated the effect of economic growth; they would have been better off accepting the hit on their reputation for moderation if it had meant a much larger stimulus package and a more healthy economy. 

If Yglesias is correct, however, they weren't thinking in those terms at all.  Instead, the trade-off they perceived was liberal reputation vs. some idea of "fairness" that they saw as liberal; they saw the stimulus, unemployment benefits extensions, aid to states, and other countercyclical measures not as good for everyone, but as some sort of charity writ large: during bad times, they may have thought, it's good to help those who are worst off, but do too much of that and you wind up being labeled "liberal" and losing.  If that's what they're thinking, then every dollar spent on stimulus is essentially a good deed, and Blue Dogs can think themselves virtuous because they are more generous in hard times than Republicans -- and they perceive requests for more stimulus as do-gooder requests for more virtue, even at the cost of jeopardizing their careers.  What the president's economic team was asking (and, yes, I believe they likely would have asked for more if they thought it was politically viable) was something very different: they were asking Blue Dogs to act in self-interest by boosting the economy.

Of course, all it takes is a look at baseball's general managers in the 1990s (when they were rejecting out of hand fairly pedestrian and well-established sabermetric findings) to realize that people do not always act in their own self-interest when it requires accepting a way of thinking that goes against what appears to be common sense.  And I have no idea, really, what most Blue Dogs (or nonpartisan opinion leaders) really think about these things.  I would love to know, however, and I do think it would be worth the Dems' while to find out.


  1. I think Yglesias has it slightly wrong. It's not that Blue Dogs and Republicans actually believe that slashing government spending is going to improve the economy (what he calls the Bayh Model). Instead, they advocate for things like a spending freeze as an end in itself; that is, they believe that it is immoral for the government to spend beyond its means, regardless of what effect it has on the economy.

  2. As you alluded to, FDR did just that. He would even get newspapers around the country to print visual aids that he would refer to during his broadcasts.

    Obama's radio/YouTube addresses don't get much of an audience, but a prime-time address gets plenty of attention. If they coached it in terms of a "Stimulus Update", informing the people on what their tax dollars were up to, it might have been effective.

  3. Kal: It may have been effective at convincing Democrats and those inclined to support Obama and his policies in the first place (AKA hard and soft partisans) but doubtful that it would have persuaded many pure independents or Republicans, the latter of whom would only have to switch the channel to Fox to see it being ridiculed/spun by their ilk. In any case, it is doubtful that it would have had any sort of impact at all on the election.

  4. I agree with Kal. There was hay to be made with fireside chats -- not usually, maybe, but in winter 2009, when Obama was new in office and everyone knew it was a moment of crisis. People like the feeling that a trusted leader is clueing them in to what's going on (and Obama had 70% approval back then, remember). Also, even if his explanations didn't "convince" everyone immediately, they could change the discussion in other ways. For instance, if he explains what the "output gap" is -- a simple concept, essentially the economics term for the "needless waste of resources" that Yglesias correctly says defines a recession -- it could lead even numbskulls like David Gregory to start asking the Republican pols they interview, "But what do you plan to do about the output gap that the president was talking about?" This would have been a more helpful question than "What do you plan to do about the defict?", which just reinforces the Bayh / Tea Party model.

  5. Also, taking on a "teacherly" role would have played to Obama's strengths -- I think he was overwhelmingly viewed, especially back then, as a smart guy, and after all he's had some experience as a professor. But nooooooo, he'd rather let Glenn Beck do the chalkboard talks. Smart move.

  6. I think Obama and his administration did a terrible job of teaching economics.

    Simple economics: stimulus = increasing the deficit.

    For all the arguments about the stimulus bill, I never heard simple economics explained. Instead it was the number of jobs it would create, etc. Its pretty simple. Either you believe that pumping money into the economy during recession (increasing the deficit) is good economics or not. If you think yes, the specifics of how its best done is the next question. By treating the specifics as the first question, the issue was confused and the public (and politicians) grew to believe that you could have stimulus and belt tightening at the same time.

  7. Jeff/Cube: I'm with you 100 percent on the policy merits but again I would have to ask: is it really going to matter? It does not matter one iota what the "narrative" would have been; all of the journalists and Sunday talk show hosts could have framed the issue around Obama and Co.'s message but they still would have been relentlessly hounded by everyone on Fox for the deficit. The Republicans still would have made it an issue, and because they make that the issue, that's the question that Chris Wallace asks. Republicans in this scenario still oppose the stimulus and still don't understand economics. Those sympathetic to the Democrats, meanwhile, may be more inclined to support the stimulus and understand the basic econ, but for most real independents, they hear one thing about the stimulus for the administration but experience another in reality: an economy in the dumps but not nearly as bad as it could have been. I doubt most of them have the insight to think "well yeah, they were right about the underlying need for fiscal stimulus and thus clearly it was too small. Thanks Krugman for your wonderful insights." No, they're just not that involved intellectually into the policy merits; they might have heard or seen one of Obama's "lessons" but they're not that invested in it, and by god, "common sense" and reality seems to indicate that they were wrong.

  8. Imagine if both Krugman and Mankiw went on TV to "teach" economics. Both are Ivy League educated economists, heck, both are even Keynesians, both have written top selling textbooks. Would they come to the same conclusion? On many issues, no, they would not. There isn't enough agreement to "educate" people towards the "right" answer when even the experts can't agree. Theories contradict each other, findings are inconclusive, etc. etc. Throw in the fact that one side might not even argue in good faith (ie, an oil industry paid "scientist" presenting the case against Global Warming), and you can see why "teaching" economics isn't going to work very well.

    So sure, maybe Obama should have taught econ 101, but then the GOP would have just taught another version of Econ 101 (honestly, or dishonestly) that led to their desired result. No matter what, it will always remain he said/she said and people will believe what they want to believe, and most likely, it will agree with what they already believed.

  9. Anonymous, I'm assuming that the teacherly Obama would also have been pushing for a right-sized stimulus, explaining why those amounts were needed (again: "output gap"), and trying to turn the public against those who were standing in its way. I agree that the teaching itself wouldn't be enough; it's getting the policy right AND explaining it simply and clearly. I think enough people would have listened to that to change the political dynamics. Anyway, Obama made sure that we'll never know now.

  10. This generation of political professionals mostly came of age in the Reagan era. Even Democrats were enveloped in GOP economic orthodoxy, and absorbed some of it. The New Deal has passed beyond living memory.

    So the arguments for a stimulus were all theoretical and historical, never easy arguments to make. And in the context of American politics in the last 30 years, passing a $784 billion stimulus was an astonishing break from precedent. I think the remarkable thing is that he got that much, especially coming on top of TARP, not that he was unable to get even more.

  11. There were a few press conferences where he did explain the economics fairly well but nothing to the scale I'm sure you would envision to be appropriate; there was also his appearance at the House Republicans' retreat where he ran laps around them intellectually. You and I paid attention but I doubt enough people would have paid attention to really change the political dynamics. Yes, I agree that passing a $1.2 Trillion dollar stimulus would have made the political environment better, but that's only because the policy was better. That is to say that his teaching would have marginally to getting the policy exactly right. If the economy recovers well in the next few years and Obama gets re-elected, and should the economy continue to grow afterward, people's perceptions about the efficacy of the stimulus will certainly change.

  12. *His teaching would have mattered marginally, that is.

  13. Interesting discussion. I think the potentially teachable crowd here isn't so much mass audiences (maybe, maybe, it makes a tiny bit of difference on the margins with a few subgroups), but with (1) Blue Dogs, who have a major interest in learning, and (2) neutral opinion leaders. I'm also not sure what kind of teaching works best with these folks...rope 'em in to a meeting with WH economists? Use fireside chats "aimed" at mass publics in order to reach elites? Personal seminar with Prof. Obama?

    Anyway, *if* such teaching was needed (and as I said, I'm not sure about that), and *if* it would work, then the way it matters is through a lot more stimulus passing through Congress, at first and then as needed over time.

  14. Maybe that guy who does the Khan Academy could work something up?

  15. Look, the President is doing these things of boards and talks and such. Here's the latest incarnation, the 'White Board':

    That you're talking as though he hasn't tried these things, and it's not true. The President just doesn't have the power to make the news actually be honest, you know?

  16. I think the problem might be rooted in Jon's perpetual question: where are the liberal hack economists?

    Not that we needed some to make the actual point: we've got Nobel Laurates with the NYT making the actual point.

    Rather, I think your typical media coverage of such a thing is the same way they cover everything: he said, she said. "White House says stimulus helps; GOP says stimulus doesn't help." The story then goes on to give quotes about it helping and not helping. But, the newspaper or anchor saying this NEVER says "oh, and the White House is right, whereas the GOP is full of shit on this one."

    The problem is the media, where objectivity is considered letting both sides say something, not evaluating truth. In such an environment, EVERYTHING is an opinion.

  17. Jon: The two groups you mention would either have immense pressure *not* to learn or substantial incentives to reject it or take a contrarian stance. Think about it: the Blue Dogs, in moderate or heavy GOP districts, are under heavy pressure by their constituents and the media to take the opposing stance, they go on Fox News and have to reiterate Obama's position, which by definition is wrong. In the case of "neutral" opinion-makers, the David Broders of the world have the incentive to retain their status as a Very Serious Persons, which in the DC conventional wisdom is in the very center of where the two parties are, which is by definition where Obama is not. Anything he says is political and therefore not taken as factual prima facie. That's how something as generally agreed upon as counter-cyclical deficit spending winds up as a socialist takeover of the economy by the right and shrugged at by the "center." Matt Jarvis is right: it's "bias by balance," to quote Brendan Nyhan.

  18. >But, the newspaper or anchor saying this NEVER says "oh, and the White House is right, whereas the GOP is full of shit on this one."

    The reporters shouldn't have to. All they need to do is point out that most economists agree with the White House on this point.

  19. And why did baseball managers reject the most basic and well-founded points of Sabermatics in the nineties? Because 'common' people hate it when some realm of knowledge is wrested from the realm of 'common sense' and becomes a point of expertise. Reagonomics serves the twin goals of assuring people that they live in an innately just society and allowing them to feel folkwise, morally superior, and harder working. I'm afraid that nothing short of a complete Great-Depression level breakdown (which the stimulus prevented) will break it's grip on orthodox thinking.

  20. Anon 10:31,

    More information is always good. I'm not saying that Blue Dogs would have supported Obama economic policies had they understood them. I'm saying that the choice between better economic growth vs. looking less liberal is a very different one than the choice between being charitable vs. looking less liberal.


    You're right about baseball people -- but it was also true that baseball people wanted to win, and eventually they've pretty much adopted sabermetric approaches. Basically, I think the Blue Dogs have good incentives to have accurate ideas about the economy, but I also recognize they might not act on those incentives.

  21. I doubt the merits of Obama doing fireside chats for one reason, most people wouldn't pay attention to them. When FDR did his fireside chats, people had fewer entertainment options available and radio stations felt compelled to broadcast him. Today, Obama would be regulated to MSNBC or C-Span and the other news networks and people have more entertainment options available.


Note: Only a member of this blog may post a comment.

Who links to my website?