After yesterday's post I assumed someone would come up with a link showing which candidate has the most support from independent economists. Unless I missed it, no one came up with such a link.

But I am fascinated by the comments to yesterday's post that got the most up votes. The authors of those comments came up with what appear to be the best and simplest common sense answers to who would be the better president for growing the economy.

The most popular answer was that Obama would reduce the national debt by raising taxes while McCain would increase the debt by lowering them. No one wants debt, therefore Obama is better for the economy. Common sense, right?

First, if it were that easy, all the independent economists would be supporting Obama. It really would be that simple. But there is no evidence that independent economists are lining up with Obama. What do those experts know that the people with common sense don't?

For starters, the economy has grown for decades without a clear link to debt levels. The deficit went down during Clinton's term largely because the economy was hot by coincidence, thanks to the dot-com era.

Second, debt isn't bad per se. The best indicator of a healthy economy is that everyone who can repay a loan gets one. The whole point of debt, either personal or government, is that it stimulates the economy more than it puts a drag on it. Obviously there is a point where debt can be too much, but would McCain reach that point where Obama would not? I don't see the experts lining up behind that prediction.

And how much do you think the deficit will be reduced under Obama's plan of increasing taxes on the rich while reducing taxes on the poor? Isn't that largely shuffling things from one pocket to another? I don't know the answer to my own question, and the bigger point is that you don't either. But we both know Obama plans to increase spending in a number of social areas whereas McCain might be stingier. Or would McCain just spend more on the military so both candidates spend about the same in the end? I don't know. Neither do you.

Can Obama convince a bunch of rich law makers to increase taxes on themselves and their major donors? I doubt it. Can McCain convince a bunch of law makers who depend on pork to cut the pork out of the budget? I doubt it. So assume both candidates haven't made the math work and are over-promising on the debt. Common sense tells me I can't tell the difference between the candidates.

A comment from Real Live Girl was interesting. She noted that the economy is fueled by optimism, and Obama brings more of that. Those are two true statements. But is all optimism the same? Wall Street veterans believe the market would go up if McCain gets elected. Lower taxes make the titans of business the most optimistic. Raising their taxes and transferring the money to worthy social services might make lots of people feel optimistic, but that isn't the optimism that fuels economies. An unemployed guy can't get too optimistic until a rich guy gets optimistic first and builds a factory he can work in. McCain makes rich guys optimistic. Obama makes students optimistic. Which approach stimulates the economy more? Beats me. You don't know either.

Another comment noted that McCain's support of the gas tax holiday was criticized by almost all economists.  Therefore McCain is both clueless about economics and likely to ignore expert advice on the subject. That seems like a common sense way to look at it, until you consider that politicians do things in campaigns that are intended to be symbolic. McCain was sending a message that he's a tax cutter. The gas tax holiday was always intended to be temporary. Message received.

McCain's actual economic ideas - the ones that would matter - involve free trade, taxes, and keeping the homeland safe. Those are either good for the economy or bad, and overwhelm the importance of something like a campaign promise involving gas taxes for a few months. So if you make a decision based on the gas tax holiday, you are basing your decision on trivia.

So which candidate would be better for the economy? I don't know. But I do know that common sense doesn't tell me anything useful, and neither do the experts.

Rank Up Rank Down Votes:  +16
  • Print
  • Share


Sort By:
Jun 18, 2008
If i weren't such an optimist I'd be very fearful for the future of our combined well being, based on everything i see around me. Most of us seem to run around like chickens with our heads cut off, while trying to convince ourselves and those around us that we are high functioning members of society, while many of the rest of us sit back smug in our confidence that we know better than the rest about what is really going on in the world. Geez, its enough to make one want to just sit back in that comfy recliner-lounger and just watch endless reruns of prime time television. Oops!! I guess i'm already to that point. Ok,,,so maybe I'm not such an optimist after all.
My best hope is that all this chaos in the world is forcing us to take time to reexamine and rethink everything that we've been led to believe our entire lives. Maybe all those people we've looked up to for guidance really didn't know what the heck they were talking about? If we want to go in a new direction maybe that requires an entirely new paradigm in our thinking. We seem to continue to use the same techniques over and over again in hopes of better results. Is it finally time to try a new approach to our problems? It may require an entirely new generation of folks to set us on a new course. Stay tuned, I'm guessin its gonna be a very interesting ride from here on out.
Jun 18, 2008
Quote: "Second, debt isn't bad per se. The best indicator of a healthy economy is that everyone who can repay a loan gets one. The whole point of debt, either personal or government, is that it stimulates the economy more than it puts a drag on it."

Actually, that's not it. The point of having debt is to get capital to the people who can make best use of it. Instead of having your money sitting around in a mattress, you loan it to a guy who can earn money with it. But just because someone can afford to pay the loan back, doesn't mean we giving it to him will help the economy.

The problem with the government borrowing lots of money is that it generally isn't invested in infrastructure or other things that will earn that money back. There is no way that subsidizing sugar or ethanol production is producing a long-term return. In fact, it may well be doing just the opposite, along with abetting global political instability as an added bonus. So in many cases we may be borrowing money AND doing long-term economic and political damage at the same time; it's a lose-lose! Not that government doesn't provide many worthwhile services that it could easily justify borrowing to provide, just that there are a lot it can't.

Also, the dot-com boom really took off *after* the budget-balancing of the Clinton years. So I don't think the cause and effect is so clear.

The problem is, the candidates have both studiously avoided talking about the economy. We just don't have a lot of data to go on. Obama took the right stand on the gas-tax thing, while McCain didn't. That's about all we've got. Too many "swing states" like Ohio and Pennsylvania have ailing economies that will require some pain and adjustment to fix. Mitt Romney showed it's easier to win those states by telling transparent economic lies that everything is going to be OK instead of suggesting actual reform. Perhaps we should be more heartened by the fact that McCain and Obama aren't doing more blatant economic pandering.
Jun 18, 2008
Both yesterday's post and today's made me immediately ask two questions: 1) Who qualifies as an independent economist? and 2) Why do you assume that economists will judge candidates based on which candidate will be better for "the economy"? In yesterday's post, you dismissed the list of Obama supporters as (presumably) Democrat economists and McCain supporters as (presumably) Republican economists - so by independent economists, I assume you mean economists who are registered Independents? I'm pretty sure that group is amorphous enough that you won't find a list anywhere of who they are, let alone who they support. Or do you mean any economist who hasn't already stated support for one candidate or the other (in which case, you've negated your own question since by definition, it would then be impossible to find a list of independent economists who support one candidate or the other)?

As for economists and the economy - the majority of Ph.D. economists are not macro economists (although it's certainly hard to tell that from the blogosphere!) and while "the economy" certainly gets all the press, my guess is that the majority of economists (regardless of political persuasion) probably focus on other policy issues (health care and environmental issues come particularly to mind) when evaluating political candidates. So asking which candidates economists believe will be better for "the economy" and which candidate economists support are really two different questions.
(for the record, I have a Ph.D. in economics from Wisconsin and am a professor at a small research university)
Jun 18, 2008
"Lower taxes make the titans of business the most optimistic. Raising their taxes and transferring the money to worthy social services might make lots of people feel optimistic, but that isn't the optimism that fuels economies. An unemployed guy can't get too optimistic until a rich guy gets optimistic first and builds a factory he can work in."

A factory isn't worth much without customers to buy the product. Whether we put money in the pocket of the industry or the customers, the other party can potentially borrow. An industry with customers willing and able to buy will have an easier time borrowing money than consumers, it will be at a lower rate, and more of the money will go to productive ends.
-1 Rank Up Rank Down
Jun 18, 2008

economists who support obama.
0 Rank Up Rank Down
Jun 18, 2008
Long term deployment of operational troops in an unstable and hostile environment = lots of cash = (where other definitive factors are unknown) Obama a better choice than McCain
Jun 18, 2008

I think you are overestimating Obama's global popularity. What is it about Obama that would make America more well liked? Probably will be because he will try to suppress America's arrogant self-image. How does one go about doing that? He will have to make America appear weaker in the sight of friend and foe to accomplish this. To appear weaker would be to give other nations the upper hand in negotiations. Thus not only will America appear weak, but it will become weak by a self-fulfilling prophecy which will endure one bad deal after another. I don't see how that helps anyone.
Sure America should not be strong arming the world to its liking (or should it?). But as the world's superpower and default arbiter of justice (as the superpower will always be regardless of which nation or nations it happens to be) the US cannot appear weak and easily overtaken. As we all agree, the President defines how many global citizens view the US. Will Obama be able to smooth talk the world as he has most of his US audiences? Or will he cause the US to appear weak and humble?
Jun 18, 2008
2 points:

1. The economy won't be effected by either McCain or Obama - it will be effected (to the extent it can be) by the economic team they assemble. So maybe the question is "who will likely assemble the best team of key advisors?" I don't care for either candidate, but I would have to guess McCain having more experience and connections would tend to suggest he would pick a better team.

2. That being said, here are some troubling quotes from McCain:

Wall Street Journal, Nov. 26, 2005: "I'm going to be honest: I know a lot less about economics than I do about military and foreign policy issues. I still need to be educated."

The Chicago Tribune, Dec. 18, 2007: "The issue of economics is something that I've really never understood as well as I should. I understand the basics, the fundamentals, the vision, all that kind of stuff."

You could argue that a man who knows his shortcomings is less dangerous than a man who doesn't. I think the real question is who will do the LEAST damage to the economy.

Jun 18, 2008

Here's the link you missed on the opinion of economists:

+2 Rank Up Rank Down
Jun 18, 2008
Hi Scott,

It is true that very few people accurately predict what will happen with the economy. Take the current crisis, the credit crunch caused by failed housing loans. No one was predicting this, even as close as one year before the housing market crashed. Most people were saying that a real estate bubble burst will just regulate the market, lots of people missed that one. Now we are in a credit crunch, it has happened before, after the dot.com bust and after the commercial real estate collapse of the eighties. You’d think we would be ready for these things, but we weren’t. Now everyone is debating if we are in a speculative commodities bubble. Lots of good theories, but no one knows for sure. We know about a huge crisis that is coming, the future cost of providing social security benefits. Everyone knows it is a problem, but all anyone is willing to do about it is predict when it might be a problem.

In short, even if you see or think you see an economic disaster looming, nobody ever gets the right answer. We can blame the economists and politicians down the road. So don’t vote based on economic policy. Take up whatever trivial or social causes you believe in and vote based on those and realize that the economy will trudge along no matter what the politicians do.

Two economists are walking down the street and see a $20 bill on the sidewalk. The first one says we should pick that up. The second one responds, why bother by the time we do, everyone else will have also.

-1 Rank Up Rank Down
Jun 18, 2008
Scott Sez : >>> An unemployed guy can't get too optimistic until a rich guy gets optimistic first and builds a factory he can work in. <<<

It hasn't really worked that way in some years. Now days, the rich guy gets optimistic, and builds a factory in China. So the real question is do you gain more by making 2,000,000 people optimistic (Rich guys) or 200,000,000 optimistic (the Unrich). As a wise philosopher once said "Beats me. You don't know either."

+5 Rank Up Rank Down
Jun 18, 2008
Voters are not rational in their logic, they want what is better for them as an individual.
The conservatives will continue to vote for a rep no matter what his economic strategies are, and they definitely won't vote for an inexperienced black guy.
The young and "cool" voters do not pay attention to the economy issue, they want new hope, even though it is only hope.
Common sense is different for everyone depending on their experience, education, knowledge, wisdom, ...
-6 Rank Up Rank Down
Jun 18, 2008
Scott, interesting points but I don't know if you can notice it, but from reading your yesterday's and today's posts, I can feel it that you are pro McCain. For some reasons you are masking it out at the end by concluding with an "I don't know". Is it for professional reasons that you need to appear politically neutral?

As for who will be better for the economy, I believe that both candidates will manage to reinstate confidence. But definitely McCain will have a tougher time on the global side of the economy since the whole world will give up on USA if you guys choose to elect another macho Republican. Domestically also, McCain will be distracted by increasing insecurity and the war against terror will go on.

Obama on the other hands will experience a more welcoming world globally, allowing him to focus more on domestic issues while striking peace deals and trade deals all over the world.

While no one can predict Obama's performance in the white house, he will truly get 'the chance to try'. As for McCain, it will simply be a dead-on-arrival scenario.
Jun 18, 2008
I keep trying to introduce them to each other too, but common sense and politics don't seem to meet very often. But I'll be keeping a closer eye on signs of optimistic math for the economy from the candidates and experts, and see who shows their work. Hopefully they can get their homework done and turned in before we have to choose the Homecoming King. :P
Get the new Dilbert app!
Old Dilbert Blog