Lauren Lyster gets this right!
Romer deserves props for arguing for a larger stimulus, but she backed up her arguments with economic projections which suggested the downturn would be short and one of the lightest recessions in the post-war period, despite this being the worst financial crisis. The moment that projection was made, we here at the Economists for Firing Larry Summers pointed out that her forecasts were nonsense.
Secondly, I suspect she supported the reconfirmation of Ben Bernanke, which was a horrendous mistake. If she disagreed with it, she should have resigned then.
Thirdly, the administration waited over a year to make a Fed Board appointment. I suspect that had she really been pushing this as a priority, it would have gotten done sooner. This was a clear administration mistake, and its importance is not to be understated. The more I think about it, the more foolish I think it was.
Fourthly, she didn't "work the refs" at all. I don't get the sense that she's been out there persuading reporters and economists to attack Bernanke's patently wrong policies like we have here at "Economists for Firing Larry Summers". I suspect the reason is she doesn't grasp what the Fed's been doing (or hasn't been doing), and that she actually believes Ben Bernanke is doing just fine.
But, alas, I suspect the voters this fall will send a message to the Democrats how well they think Ben Bernanke is doing.
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What is the value added of an economist? You sound as if there are good ones and bad ones.
ReplyDeleteI mean, seriously, how many of them correctly foresaw the crash and the recession that followed? These guys know about as much about what to do at this point as you or me.
Not true, exactly. Many economists saw that there was a housing bubble, and that the Fed should have deflated it sooner. Many economists called for a larger stimulus, many economists noticed that Romer's economic projections in the beginning of 2009 were overly optimistic, and the question of what to do now is really quite simple. The Fed should be doing more QE, and Congress should pass another stimulus.
ReplyDeleteNevertheless, I certainly share your sense of pessimism toward the Economics profession as a whole.
-TV
The larger stimulus call in complete and total Keynesian nonsense. It is an economics canard. The problem with the stimulus, and any stimulus that our horrible govt. would do is that it is not a stimulus at all but a handout to their buddies. The stimulus money and all future stimulus monies are just wasted on inefficient corporatist crap. How about a payroll tax cut for everyone? How about giving every mortgage holder a capital reduction. I have heard some good economists and pundits call for appropriate stimulus that will actually stimulate but instead what we get are bad policy that pull forward demand (cash for clunkers, home purchase subsidy, etc.). Garbage economics and Garbage politics go hand in hand over the cliff.
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