I am not an economist. For good reason, I also don’t trust economists. Their record in prediction leaves much to be desired. And there is a sense I’ve been hearing about for a while now that their faith in capitalism, so-called “free trade,” and austerity is more ideological than scientific, even or perhaps especially when they are influential or powerful. It is pretty damned damning, for instance, that “Berkeley’s Brad DeLong defines [mathiness in economics] as ‘restricting your microfoundations in advance to guarantee a particular political result and hiding what you are doing in a blizzard of irrelevant and ungrounded algebra.’” And it’s pretty damned damning when economists cherry-pick their data to justify austerity and are somehow mostly excused from accusations of intellectual dishonesty.
The dire need for ethical behavior and honesty among economists, however, does not alter the need for their profession, although Robert Reich recognizes a need for interdisciplinarity in suggesting that we should tie this discipline to history and political science. Especially when, for example, Barack Obama campaigned for the presidency and defended his own economic policies by alleging that Republicans had “driven us into the ditch” with deregulation leading to the financial crisis.
Obama almost certainly owes his presidency, at least in part, to that financial crisis. And Democrats like to imagine that under Obama’s stewardship, the economy has recovered from the financial crisis. The employment to population ratio (figure 1) tells a different story. While there’s some argument that people have voluntarily left the labor force (figure 2), wages remain stagnant or in decline, suggesting that the labor market remains soft while jobs become more routine and are being exported and automated, and employees are afraid to demand higher pay.
It’s beginning to look like there may be another economic downturn just in time for the 2016 election. An article in the Wall Street Journal tries to argue that with what it alleges is strong job growth (but see above), declines in industrial production, corporate profits, and the stock market may not signal an impending recession. However, it looks like another high tech bubble is popping (if it hasn’t already) and that industry might be joined by the energy sector as oil prices fell below $27 per barrel last week and oil producers cut costs, including labor, any way they can and continue to produce in a war for market share. There are also worries about emerging market debt and a slowdown in China’s economic growth.
As I said, I’m not an economist. I can’t forecast recessions. And even if I were an economist, you should doubt any economic forecasts. What I can say is that as I monitor the news, I’m seeing a lot of smoke, which makes me think there’s a fire. And I think Obama’s already weak claims to have been a good steward of the country’s economy may be getting singed.
I also can’t really forecast how voters would react to yet another downturn. I would say that mainstream politicians of both parties have been doing a really lousy job of running the economy. To me, that’s yet another reason for not nominating an establishment candidate and yet another reason for believing that it will be President Donald Trump come next inauguration day if the Democrats do indeed nominate an establishment candidate like Hillary Clinton.
- Hites Ahir and Prakash Loungani, “‘There will be growth in the spring’: How well do economists predict turning points?” Vox, April 14, 2014, http://www.voxeu.org/article/predicting-economic-turning-points; Richard Alford, “Why Economists Have No Shame – Undue Confidence, False Precision, Risk and Monetary Policy,” Naked Capitalism, July 19, 2012, http://www.nakedcapitalism.com/2012/07/richard-alford-why-economists-have-no-shame-undue-confidence-false-precision-risk-and-monetary-policy.html; Robert Atkinson and Michael Lind, “Econ 101 is killing America,” Salon, July 8, 2013, http://www.salon.com/2013/07/08/how_%e2%80%9cecon_101%e2%80%9d_is_killing_america/; Ha-Joon Chang and Jonathan Aldred, “After the crash, we need a revolution in the way we teach economics,” Guardian, May 10, 2014, http://www.theguardian.com/business/2014/may/11/after-crash-need-revolution-in-economics-teaching-chang-aldred; Barry Eichengreen, “Economists, Remove Your Blinders,” Chronicle of Higher Education, January 12, 2015, http://chronicle.com/article/Economists-Remove-Your/151057/; Alan Greenspan, “Why I Didn’t See The Financial Crisis Coming,” Foreign Policy, November, 2013, http://www.foreignaffairs.com/articles/140161/alan-greenspan/never-saw-it-coming; Paul Krugman, “How Did Economists Get It So Wrong?” New York Times, September 2, 2009, https://www.nytimes.com/2009/09/06/magazine/06Economic-t.html; Paul Krugman, “When Economics Gets Political,” January 3, 2012, http://truth-out.org/opinion/item/5864:when-economics-gets-political; Paul Krugman, “The Austerity Debacle,” New York Times, January 29, 2012, http://www.nytimes.com/2012/01/30/opinion/krugman-the-austerity-debacle.html; Paul Krugman, “Economics in the Crisis,” New York Times, March 5, 2012, http://krugman.blogs.nytimes.com/2012/03/05/economics-in-the-crisis/; Paul Krugman, “How the Case for Austerity Has Crumbled,” review of The Alchemists: Three Central Bankers and a World on Fire, by Neil Irwin, Austerity: The History of a Dangerous Idea, by Mark Blyth, and The Great Deformation: The Corruption of Capitalism in America, by David A. Stockman, New York Review of Books, June 6, 2013, http://www.nybooks.com/articles/archives/2013/jun/06/how-case-austerity-has-crumbled/; Paul Krugman, “Economics, Good and Bad,” New York Times, June 26, 2012, http://krugman.blogs.nytimes.com/2012/06/26/economics-good-and-bad/; Paul Krugman, “Triumph of the Wrong?” New York Times, October 11, 2012, https://www.nytimes.com/2012/10/12/opinion/krugman-triumph-of-the-wrong.html; Paul Krugman, “When Prophecy Fails,” New York Times, December 23, 2012, http://www.nytimes.com/2012/12/24/opinion/krugman-when-prophecy-fails.html; Robert Kuttner, “Austerity never works: Deficit hawks are amoral — and wrong,” Salon, May 5, 2013, http://www.salon.com/2013/05/05/austerity_never_works_deficit_hawks_are_amoral_and_wrong/; John Quiggin, “Austerity Has Been Tested, and It Failed,” Chronicle of Higher Education, May 20, 2013, http://chronicle.com/article/Austerity-Has-Been-Tested-and/139255/; Dani Rodrik, “Free-Trade Blinders,” Project Syndicate, March 9, 2012, http://www.project-syndicate.org/commentary/free-trade-blinders; John Paul Rollert, “Greed Is Good: A 300-Year History of a Dangerous Idea,” Atlantic, April 7, 2014, http://www.theatlantic.com/business/archive/2014/04/greed-is-good-a-300-year-history-of-a-dangerous-idea/360265/; Paul Romer, “My Paper ‘Mathiness in the Theory of Economic Growth’,” May 15, 2015, http://paulromer.net/mathiness/; Noah Smith, “Most of What You Learned in Econ 101 Is Wrong,” Bloomberg, November 24, 2015, http://www.bloombergview.com/articles/2015-11-24/most-of-what-you-learned-in-econ-101-is-wrong; Cass R. Sunstein, “Why Free Markets Make Fools of Us,” review of Phishing for Phools: The Economics of Manipulation and Deception, by George A. Akerlof and Robert J. Shiller, New York Review of Books, October 22, 2015, http://www.nybooks.com/articles/archives/2015/oct/22/why-free-markets-make-fools-us/; Mark Thoma, “Are Economists Driven by Ideology or Evidence?” Fiscal Times, November 3, 2015, http://www.thefiscaltimes.com/Columns/2015/11/03/Are-Economists-Driven-Ideology-or-Evidence↩
- Mark Thoma, “Restoring the Public’s Trust in Economists,” Fiscal Times, May 19, 2015, http://www.thefiscaltimes.com/Columns/2015/05/19/Restoring-Public-s-Trust-Economists↩
- Dean Baker, “Discredited Harvard Austerity-Pushers Reinhart and Rogoff Keep Lying to Protect Themselves,” Alternet, April 26, 2013, http://www.alternet.org/economy/discredited-harvard-austerity-pushers-reinhart-and-rogoff-keep-lying-protect-themselves; Eugenio Facci, “EU austerity hawks shrug off criticism of flawed academic paper,” Christian Science Monitor, May 17, 2013, http://www.csmonitor.com/World/Europe/2013/0517/EU-austerity-hawks-shrug-off-criticism-of-flawed-academic-paper; Mike Konczal, “Reinhart/Rogoff-gate isn’t the first time austerians have used bad data,” Washington Post, April 20, 2013, http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/20/reinhartrogoff-gate-isnt-the-first-time-austerians-have-used-bad-data/; Paul Krugman, “The Excel Depression,” New York Times, April 18, 2013, http://www.nytimes.com/2013/04/19/opinion/krugman-the-excel-depression.html; Paul Krugman, “Academic Non-Obscurity,” New York Times, April 25, 2013, http://krugman.blogs.nytimes.com/2013/04/25/academic-non-obscurity/; Lynn Stuart Parramore, “Meet the 28-year-old Student Who Exposed Two Harvard Professors Whose Shoddy Research Drove Global Austerity,” Alternet, April 18, 2013, http://www.alternet.org/economy/meet-28-year-old-student-who-exposed-two-harvard-professors-whose-shoddy-research-drove↩
- Robert B. Reich, “Economics Is Too Important to Be Left to Economists,” Chronicle of Higher Education, September 23, 2015, http://chronicle.com/article/Economics-Is-Too-Important-to/233335/↩
- Ross Douthat, “Leaving Work Behind,” New York Times, February 8, 2014, http://www.nytimes.com/2014/02/09/opinion/sunday/douthat-leaving-work-behind.html; Tim Fernholz, “It’s not just Obamacare. In the future, we’ll all work less,” Quartz, February 6, 2014, http://qz.com/174561/its-not-just-obamacare-in-the-future-well-all-work-less/; Lynn Stuart Parramore, “America Has Forgotten That We Don’t Have Freedom If We Don’t Have Free Time,” Alternet, February 10, 2014, http://www.alternet.org/economy/america-has-forgotten-we-dont-have-freedom-if-we-dont-have-free-time; ↩
- Mark Z. Barabak, “Despite an improving economy, Obama’s approval rating stays low,” McClatchy, January 20, 2014, http://www.mcclatchydc.com/2014/01/20/215131/despite-an-improving-economy-obamas.html; Aaron Blake, “President Obama just asked the ‘Are you better off’ question. He might not like the answer,” Washington Post, September 29, 2014, http://www.washingtonpost.com/blogs/the-fix/wp/2014/09/29/obama-just-asked-the-are-you-better-off-question-he-might-not-like-the-answer/; Michael Boehm, “Job Polarisation and The Decline of Middle-Class Workers’ Wages,” Naked Capitalism, February 9, 2014, http://www.nakedcapitalism.com/2014/02/job-polarisation-decline-middle-class-workers-wages.html; Patricia Cohen, “Jobs Data Show Steady Gains, but Stagnant Wages Temper Optimism,” New York Times, November 7, 2014, http://www.nytimes.com/2014/11/08/business/jobs-numbers-for-october-2014-reported-by-labor-department.html; Juan Cole, “Protest Planet: How a Neoliberal Shell Game Created an Age of Activism,” TomDispatch, November 10, 2011, http://www.tomdispatch.com/post/175466/tomgram%3A_juan_cole%2C_protesting_a_pasha-the-tiger_world/; Murray Dobbin, “The Crisis of Extreme Capitalism,” Tyee, July 15, 2013, http://thetyee.ca/Opinion/2013/07/15/Extreme-Capitalism-Crisis/; Economic Policy Institute, “The Top 10 Charts of 2014,” December 18, 2014, http://www.epi.org/publication/the-top-10-charts-of-2014/; Charles A. Kupchan, “The Democratic Malaise: Globalization and the Threat to the West,” Foreign Affairs, January, 2012, https://www.foreignaffairs.com/articles/united-states/2011-01-01/democratic-malaise; Annie Lowrey, “The Rich Get Richer Through the Recovery,” New York Times, September 10, 2013, http://economix.blogs.nytimes.com/2013/09/10/the-rich-get-richer-through-the-recovery/; Lawrence Mishel, Heidi Shierholz, and John Schmitt, “Don’t Blame the Robots: Assessing the Job Polarization Explanation of Growing Wage Inequality,” Economic Policy Institute, November 19, 2013, http://www.epi.org/publication/technology-inequality-dont-blame-the-robots/; Michael A. Peters, “Why Equality Matters,” Truthout, May 13, 2012, http://truth-out.org/news/item/8985-why-equality-matters; Robert Reich, “Why Wages Won’t Rise,” January 13, 2015, http://robertreich.org/post/107998491550; Jennifer Rubin, “Getting the voters who reject Obama economics,” Washington Post, October 7, 2014, http://www.washingtonpost.com/blogs/right-turn/wp/2014/10/07/getting-the-voters-who-reject-obama-economics/; Alejandro Reuss, “America Has a Triple-Decker Jobs Crisis,” Alternet, September 10, 2013, http://www.alternet.org/economy/america-has-triple-decker-jobs-crisis; Justin Sink, “Poll: Most see Obama as a failure,” Hill, October 7, 2014, http://thehill.com/homenews/administration/220008-poll-most-americans-see-obama-as-a-failure; Yves Smith, “America’s Broken Jobs Engine,” Naked Capitalism, July 10, 2012, http://www.nakedcapitalism.com/2012/07/americas-broken-jobs-engine.html; Danny Vinik, “How the Fed Learned to Stop Worrying About the Unemployment Rate …and start loving these other key economic indicators,” New Republic, December 23, 2014, http://www.newrepublic.com/article/120611/janet-yellens-fed-inflation-unemployment-rates-not-only-key-stats↩
- Josh Zumbrun, “Recession Warnings May Not Come to Pass,” Wall Street Journal, January 24, 2016, http://www.wsj.com/articles/recession-signs-are-flashing-red-1453661989↩
- Sam Altman, “The Tech Bust of 2015,” November 2, 2015, http://blog.samaltman.com/the-tech-bust-of-2015; David R. Baker, “7 reasons the tech sector should be scared,” San Francisco Chronicle, January 22, 2016, http://www.sfchronicle.com/business/article/Has-the-tech-bubble-popped-and-we-just-haven-t-6775865.php; Nick Bilton, “Disruptions: If It Looks Like a Bubble and Floats Like a Bubble …” New York Times, November 24, 2013, http://bits.blogs.nytimes.com/2013/11/24/disruptions-if-it-looks-like-a-bubble-and-floats-like-a-bubble/; Nellie Bowles, “Silicon Valley braces itself for a fall: ‘There’ll be a lot of blood,'” Guardian, January 22, 2016, http://www.theguardian.com/technology/2016/jan/22/silicon-valley-500-startups-tech-companies; Joe Kukura, “The next tech bubble is about to burst,” Daily Dot, April 19, 2015, http://kernelmag.dailydot.com/issue-sections/staff-editorials/12637/tech-bubble-venture-capital/; Joseph Mayton, “That Bubble Bursting Feeling,” SF Weekly, January 13, 2016, http://www.sfweekly.com/sanfrancisco/news-tech-silicon-valley-tech-boom-tech-bubble-uber-pinterest-airbnb-square-twitter-jack-dorsey-ipo-mid-market-san-francisco/Content?oid=4404805; Christopher Mims, “The Dangers Ahead if Tech Unicorns Get Gored,” Wall Street Journal, October 26, 2015, http://www.wsj.com/articles/the-dangers-ahead-if-tech-unicorns-get-gored-1445832492; Rolfe Winkler et al., “Tech Startups Feel an IPO Chill,” Wall Street Journal, October 19, 2015, http://www.wsj.com/articles/tech-startups-feel-an-ipo-chill-1445309822↩
- Rob Copeland, “For Hedge Funds, a Can’t-Miss Trade Goes Bust,” Wall Street Journal, October 19, 2015, http://www.wsj.com/articles/funds-hot-money-gets-burned-in-energy-trade-1445279458; William FitzGerald, “How Crisis In The Energy Sector Could Spark A Repeat Of The Subprime Bust,” Forbes, April 22, 2015, http://www.forbes.com/sites/christopherhelman/2015/04/22/how-crisis-in-the-energy-sector-could-spark-a-repeat-of-the-subprime-bust/↩
- Erin Ailworth and Bradley Olson, “As Oil Keeps Falling, Nobody Is Blinking,” Wall Street Journal, December 6, 2015, http://www.wsj.com/articles/as-oil-keeps-falling-nobody-is-blinking-1449446203; Benoît Faucon, Summer Said and Selina Williams, “OPEC Meeting Ends With No Production Cuts,” Wall Street Journal, December 4, 2015, http://www.wsj.com/articles/opec-meeting-ends-with-no-production-cuts-1449248892; Nicole Friedman, “Resilient U.S. Oil Output Poses Challenge for OPEC,” Wall Street Journal, November 30, 2015, http://blogs.wsj.com/moneybeat/2015/11/30/resilient-u-s-oil-output-poses-challenge-for-opec/; Nicole Friedman, “U.S. Oil Falls Below $40 Amid New Signs of Glut,” Wall Street Journal, December 2, 2015, http://www.wsj.com/articles/u-s-oil-falls-below-40-amid-new-signs-of-glut-1449102417; Nicole Friedman, “Oil Prices Slide, as Persistent Oversupply Trumps Other Concerns,” Wall Street Journal, January 4, 2016, http://www.wsj.com/articles/oil-rises-in-asia-due-to-iran-saudi-arabia-tensions-1451875967; Nicole Friedman, “U.S. Oil Falls Below $27 a Barrel,” Wall Street Journal, January 20, 2016, http://www.wsj.com/articles/oil-sinks-below-28-a-barrel-to-12-year-low-1453267718; Dan Murtaugh, “Shale’s Running Out of Survival Tricks as OPEC Ramps Up Pressure,” Bloomberg, December 27, 2015, http://www.bloomberg.com/news/articles/2015-12-28/shale-s-running-out-of-survival-tricks-as-opec-ramps-up-pressure; Catherine Ngai, “Oil prices hit eleven-year low as global supply balloons,” Reuters, December 21, 2015, http://www.reuters.com/article/us-global-oil-idUSKBN0U400T20151221; Bradley Olson and Erin Ailworth, “Oil Plunge Sparks Bankruptcy Concerns,” Wall Street Journal, January 11, 2016, http://www.wsj.com/articles/oil-plunge-sparks-bankruptcy-concerns-1452560335; Rebecca Penty and Jeremy Van Loon, “The Oil Price Crash Is Taking a Heavy Toll On Canada. And the Worst Is Yet to Come,” Bloomberg, December 23, 2015, http://www.bloomberg.com/news/articles/2015-12-23/calgary-woes-spread-as-oil-patch-spending-cuts-deepen-in-2016; Timothy Puko, “U.S. Oil Prices Dip Below $40 on Growing Stockpiles,” Wall Street Journal, December 2, 2015, http://www.wsj.com/articles/oil-prices-fall-on-fears-of-increased-u-s-stockpiles-1449050223↩
- Allison Jackson, “Time to freak out: 4 reasons the global economy is screwed,” Global Post, January 20, 2016, http://www.globalpost.com/article/6722481/2016/01/20/4-things-should-have-you-freaking-out-about-state-global-economy↩