Friday, May 21, 2010

Peter Wallison: Opinions without Data

He writes in his screed against financial regulation:

In the rapturous days after Barack Obama's victory and the Democratic congressional sweep that accompanied it, House Financial Services Committee Chairman Barney Frank declared that the new Congress would enact a "new New Deal." Few people really thought at the time that he or his party meant this seriously. After all, the original New Deal—as anyone who has read history knows—failed to revive the economy.

Indeed, the modern era of rapid economic growth commenced after both Democratic and Republican presidents undertook to lift costly and stultifying New Deal regulations.

Using the National Income and Products Account, I looked at real annual GDP growth between 1933 and 1980 (the stultifying years) and 1980 to 2009 (the "rapid economic growth" years). Between 1933 and 1980, GDP grew by about 8-fold, or more than 4 percent per year (actually 4.5 percent per year). Between 1980 and 2009, real GDP did slightly better than doubling, or 2.7 percent per year.

I try to respect people whose points-of-view differ from mine, but who decides to let this guy waste ink?

23 comments:

  1. I just did a quick Chow test to see if there is a structural break in per capita GDP growth between 1935 and 2009 and there is not.

    This is just a growth over time model (log GDP on time), and I also checked consumption and disposable income. If I did it right, there are no breaks - not even close. So you are right about Wallison, but one can't draw the opposite conclusion either.

    ReplyDelete
  2. "I try to respect people whose points-of-view differ from mine...."

    A question I have again and again is "How is that conservatives don't feel a similar need to respect the viewpoints of others?"

    Wallison must be aware of liberal responses his assertion that "the original New Deal—as anyone who has read history knows—failed to revive the economy."

    It must also be noted that Wallison joins the mad conservative crowd in tacitly assuming that economic benefits trump all other concerns, like justice, equality, fairness, etc. New Deal and other regulations weren't merely an attempt to support economic stability and growth.

    Sadly, this essential conservative tenet -- that economic benefit trumps all else -- has effectively been adopted in the mainstream discourse.

    ReplyDelete
  3. I would also add that the flattening of income growth also happened as more and more of these families became two earner families.

    So the addition of the 2nd earner also masked a very real drop in wages of ordinary people.

    ReplyDelete
  4. The same goes for the stock market. See:

    http://richardhserlin.blogspot.com/2010/03/wow-stock-market-likes-socialism.html

    ReplyDelete
  5. Anonymous9:17 AM

    I am left conflicted. Are opinions without data better than opinions backed by people lying with statistics?

    I could go either way on that one.

    ReplyDelete
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