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Should President 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, while many of them are probably in principle willing to get educated, it would take some work. 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.