JW Mason — Can Sanders Do It?

This is a model post for the logical structure of argument.

My old professor Jerry Friedman wrote a piece several weeks ago, arguing that a combination of increased public spending and income redistribution (higher minimum wages and other employment regulation favorable to labor) proposed by the Sanders campaign could substantially boost growth and employment during his presidency. As readers of this blog know, this piece has gotten a lot of attention in the past couple of days. Most notably, it inspired a letter from four former CEA chairs strongly rejecting the claim that Sanders proposals could “have huge beneficial impacts on growth rates, income and employment that exceed even the most grandiose predictions by Republicans about the impact of their tax cut proposals.” A number of prominent liberal economists have endorsed the CEA letter or expressed similar doubts.

I want to try to clarify the stakes in this debate. There are three questions, each logically prior to the other.

1. Is it reasonable to think that better macroeconomic policy could deliver substantially higher output and employment?

2. Are the kinds of things proposed by Sanders capable in principle of getting us there?

3. Are the specific numbers in Sanders’ proposals the right ones for such a really-full employment plan?

The second question doesn’t matter until we’ve answered yes to the first one. And the third doesn’t matter until we’ve answered yes to the first two.

The first question is not only logically prior, it also seems to be what the public debate is actually about. The CEA letter, and almost all the other criticism of the Friedman paper I have seen, focuses on whether the outcomes described are plausible at all, not the specific ways they are derived from the Sanders proposals. Almost all the pushback I have seen has been to the effect that 5 percent real GDP growth and 275,000 new jobs per month are not possible results of any conceivable macro policies.

As I’m sure Jerry Friedman would agree, there are plenty of ways his estimates could be improved. But it’s pointless, even disingenuous, to debate the specific numbers before agreeing on the larger questions. I want to focus on the first question here, both because it is the premise of the others and because it is where the debate is currently located.
So: Is it plausible that there could be 5 percent-plus real GDP growth and 300,000 new jobs per month over the eight years of a Sanders presidency? I think it is — or at least, I don’t think there is a good economic argument that it’s not.

I want to make five related points here.…

J. W. Mason's Blog
Can Sanders Do It?
JW Mason | Assistant Professor of Economics, John Jay College, City University of New York

Backgrounder:

Grasping Reality
We Need to Hold the Line on Analytical Standards Here: Bernie Sanders Blogging
Brad DeLong | Professor of Economics, UCAL Berkeley

Economist's View
Paul Krugman: Varieties of Voodoo

Mark Thoma | Professor of Economics, University of Oregon

Hopefully, Bernie will be forced into unleashing Stephanie.