The Wall Street Journal is a fine paper that breaks a lot of stories, but its editorial page is frequently the subject of ridicule for people who find it to be, frankly, pretty hackish.
Today brings us a classic example: Stephen Moore’s column: Why Americans Hate Economics.
The gist is basically this: Bearded, wonky academic economists believe a whole bunch of nonsense that nobody with a modicum of common sense could possibly subscribe to. And unfortunately, because The White House listens to academics — rather than real people with common sense — nothing the White House has done economically has worked.
The problem, though, is that just because something seems intuitive or “common sense” doesn’t mean it’s correct, especially in economics, where many things are not intuitive.
For example, Stephen Moore writes:
Or consider the biggest whopper: Mr. Obama’s thoroughly discredited $830 billion stimulus bill. We were promised $1.50 or even up to $3 of economic benefit—the mythical “multiplier”—from every dollar the government spent. There was never any acknowledgment that for the government to spend a dollar, it has to take it from the private economy that is then supposed to create jobs. The multiplier theory only works if you believe there’s a fairy passing out free dollars.
This bit of folk wisdom is just totally wrong. For anyone to believe that government spending is taking money away from the private sector is to believe that there are individuals and businesses out there who would have made real-world investments with their cash, but instead were somehow forced into buying a Treasury bond yielding less than 4%. Perhaps if taxes had been raised to pay for the stimulus, then we could see why Moore might think something so wrong, but that didn’t happen.
In reality, a crisis hit, people saved like crazy, stuffing the banks with cash, and those banks — who saw zero loan demand from the private sector — parked their money in the Treasuries that the government issued at the same time as the stimulus. At no point in the process was there private sector money that was somehow siphoned away to pay for stimulus.
The funny thing is, the government, which issues and creates currency, is more like a fairy that passes out free dollars. Moore just writes in such a mocking way, though, that he misses the one correct possibility in his column.
Here’s Moore explaining why unemployment insurance isn’t stimulative:
I have two teenage sons. One worked all summer and the other sat on his duff. To stimulate the economy, the White House wants to take more money from the son who works and give it to the one who doesn’t work. I can say with 100% certainty as a parent that in the Moore household this will lead to less work.
Again, we can see the folksy logic here, but this idea that the difference between the jobbed and the jobless is like a lazy son and an industrious one is downright absurd.
To start, perhaps it’s the lack of job openings — not laziness — that explains why 20 million Americans are unemployed?
Perhaps this chart has something to do with it?
But even beyond Moore’s bad examples, what we see in his piece (and really, across the entire editorial page) is a disdain for arguments backed by data. Most of the arguments basically start with a premise (confidence = good for jobs, tax cuts = good for jobs, Obama = bad for jobs) and work from there, without actually seeing if the data supports the thesis.
This isn’t an accident: Austrian Economics — a key pillar of WSJ-school style economics — is not keen on empirics or data. It’s mostly about principles — contravening evidence and ideas don’t matter too much.
So you end up with the kind of logic that appeals to Bill O’Reilly viewers. Heavy on horse-sense and long-held biases, but pretty light on economic substance. There’s nothing wrong with it as media, but for the same reason that Americans supposedly don’t like economics (do people even really think about economics?) economists aren’t going to have much use for it.