Ten (or Twenty) Worst Economic Ideas of 2011
This is quite good. You should read it it full, but here are the worst ideas (my commentary in parantheses):
1. Taxes should be more regressive (as all Republican candidates plans imply, at a time of record inequality).
2. Austerity works (the confidence fairy is a myth).
3. Export growth models are sustainable (one country’s exports are another countries imports).
4. Fannie and Freddie did it (the private sector was caught red handed, but let go).
5. Cutting social security benefits is a priority (still stuck in the 1980s, pundits?)
6. Inflation is just around the corner (living in a liquidity trap).
7. The Medicare eligibility age should be raised (government costs fall a little, overall costs rise a lot).
8. Competition between Medicare and private health insurance will reform the health care system and reduce costs (sorry, doesn’t work that way) .
9. Federal spending should be capped at 21 percent of GDP (this is just weird).
10. Balancing the budget should involve equal parts tax hikes and government spending cuts (people don’t understand multipliers) – actually I would rephrase this as people think it should be more spending cuts and less tax hikes.
Anything missing from this list? I can think of a few:
11. Large profitable banks are necessary for a strong economy.
12. Stronger regulation of the financial sector kills jobs.
13. Inequality is a natural market outcome and we shouldn’t worry about it.
14. Cutting taxes boosts growth; cutting spending boosts growth.
15. What’s holding back job creation is regulatory uncertainty.
16. A balanced budget amendment is a good idea.
17. Cutting unemployment benefits will force people to find a job.
18. Putting a price on carbon will kill the economy.
19. Cutting discretionary spending while leaving military spending untouched is good policy.
20. And to end on a weird note – we need to restore the gold standard!
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I always laugh at 15. That might be the single most absurd economic argument I have ever heard.
I agree Dan, and when it comes to #17 Barry Ritholtz had a good post picking this “zombie” meme apart a few years ago. http://www.ritholtz.com/blog/2010/03/an-epidemic-of-laziness/
Just recently Noah Smith wrote about this notion that UI benefits are too high and are keeping people from looking for employment.
http://noahpinionblog.blogspot.com/2011/12/i-shall-now-debunk-great-vacation-in.html
If number 15 were mere stupidity and absurdity it wouldn’t be so infuriating. But what it actually is, is extortion. Corporate America is demanding the right to trash the environment and to commit all the other sins against decency in commerce that regulation prohibits, in exchange for which it will *think about* releasing its hoarded wealth into the economy and putting people back to work.
We ABSOLUTELY DO NEED to restore the gold standard (or a silver standard, or platinum standard, or zinc standard, or wood standard, or pork-belly standard, or “concentrated frozen orange juice standard”). Our currency must be based on SOMETHING of tangible, exchangeable, material VALUE! Our American currency is not based on anything but the whims of bureaucrats in Washington. I am amazed at how many people, otherwise informed about basic economics, don’t grasp this concept, nor grasp what a dangerous “house of cards” is any economy operating on such a basis.