Wednesday, June 8, 2011

Did they believe it?

With the announcement that Austan Goolsbee will be returning to the Univ. of Chicago, and the bad economic numbers, there has been a great deal of criticism of the statement made by Christina Romer that the stimulus would keep unemployment below 8%.  Of course, the stimulus plan was passed and current unemployment is 9.1% (at best).  What's missing from the discussions I've seen is whether these economic advisors truly believed the 8% figure.

a)  Anyone who has run numbers knows that you're going to be required to give a level of specificity to your analysis/projections which is simply not there.  I seriously doubt that this pressure is absent from our democratic process.
b)  I think it is undeniable that the economy is something of a confidence game and that comments made by the President's economic advisors have to be constructed with this in mind.  It seems quite possible to me that a more intellectually accurate statement that the stimulus would make things better but that there was no telling how high unemployment would go, would be a political non-starter.
c)  a) and b) could be off the mark and Romer et al really did believe in the 8% figure.  That anyone of such high rank could have such confidence, given the unprecedented situation that we faced, is astonishing.  If they really made such a claim with confidence and conviction then they really need to start over from scratch.

No comments:

Post a Comment