I finally agree with (much of) a Krugman criticism of the Sanders campaign. (And why I’m glad he made the criticism in the way he did.) [Clarification added 2/20 at 11:05 a.m.; update added 2/21 at 9:40 a.m.]
Bernie Sanders hates the Supreme Court’s decision in Citizens United v. FEC, which held that corporations have a First Amendment right to spend unlimited sums advocating for their preferred candidate. Who doesn’t? Citizens United was a deeply misguided decision that vastly underestimated the state’s compelling interest in preventing the appearance of corruption that massive corporate electioneering inevitably creates. An overwhelming supermajority of Americans despise the decision and wish to see it overturned. That includes most Democrats—which is probably why Sanders recently tweeted a guarantee that his Supreme Court nominees “will make overturning Citizens United one of their first decisions.”
— Bernie Sanders Has No Idea How the Supreme Court Works, Mark Joseph Stern, Slate, Jan. 22
Okay. As an obsessive Bernie Sanders supporter, and as someone who knows that Supreme Court justices cannot make overturning Citizens United one of their first decisions simply because they want to, I cringed. To understate it. There are certain prerequisites to overturning Citizens United: specifically, an existing state or federal campaign-finance law that conflicts with the holding in Citizens United, and a legal challenge to the statute’s constitutionality that has been decided by a federal trial court and then by a federal appeals court, and then then a filed “cert.” petition asking the Supreme Court to agree to hear the case.
Granted, something not all that different than what that tweet proposed did happen in none other than Citizens United, but at least there was an actual statute in existence—McCain-Feingold—which they could, and most of which they did, pronounce unconstitutional.* (In a follow-up case, they pronounced most of the rest of it unconstitutional.)
But I also knew that Bernie Sanders himself knows this, and that he was not the one who published that tweet. Some 20-something member of his communications staff did. I gritted my teeth and said to myself something like: “Okay, Sanders’ campaign manager, Jeff Weaver, has a law degree from Georgetown. Sanders should order that no tweets or other communications on technical legal issues—or on legal-related things that involve legal technicalities, even his 20-something communications staff doesn’t recognize that it does–ever again be published without approval from Weaver. Or someone else who has some actual knowledge of actual legal procedure and such.
There are, in other words, certain subjects that plainly require expertise—sometimes extensive expertise—before a statement about them is made. Supreme Court jurisdiction is one of them. And obviously, macroeconomics is another.
Okay, well, by now y’all know about the controversy concerning a report by UMass-Amherst economist Gerald Friedman, commissioned by the Sanders campaign, that apparently is so of a mirror image of the macroeconomic claims of Arthur Laffer to Ronald Reagan, and Ronald Reagan, George W. Bush, Mitt Romney, Jeb! Bush, Marco Rubio, Ted Cruz, etc., to the public. In this case the claim is that Sanders’ economic-policy proposals will produce something along the lines of 5.3% annual GDP growth, an unemployment rate of less than 4%, and a significant increase in the labor-participation rate (notwithstanding the aging of this country’s population). You’ve read Krugman’s blog posts about it and you’ve read his column today. Or many one of the other excoriating commentaries about it as well. Or maybe Krugman’s and some others’.
The growth and unemployment rates apparently are theoretically possible, so it is not quite the mirror image of Laffer economics. But also apparently, historically it is extremely unlikely.
No one has ever accused me of being an economist, man, but I’ve read enough Paul Krugman blog posts and columns, and AB posts, over the years—including Krugman’s repeated mockery of Jeb!’s promise of 4% GDP growth annually within the last year—for Friedman’s conclusions to raise series questions of accuracy, even to this novice. Yet Sanders’ campaign began trumpeting the report.
This creates three huge problems, perhaps the most important of which Krugman flags: that if Democrats start pushing voodoo economic theories, they give away a fundamental part of their raison d’être. The Republicans push voodoo (or highly implausible) economic theories; the Democrats do not.
I’ve argued that a big, big reason why I think Sanders would be a stronger general-election candidate than Clinton is that there is so very much that the Dem candidate should argue against, say, Rubio or Bush or Cruz that would as a practical matter be unavailable to Hillary Clinton to actually argue, but that are at the very center of Sanders’ campaign and Sanders’ appeal. And now suddenly, there is this wrench that’s been thrown into this.
Another huge problem is how extremely easy it is to conflate this issue with the incessant claims—by Clinton, by Krugman, by the Washington Post editorial board, by the Washington Post centrist-left and centrist-right columnists, etc., etc.—that Sanders’ high-profile substantive policy proposals (e.g., Medicare-for-all; tuition-free public colleges and universities) are financially unworkable. These are entirely distinct issues. Yet just the headlines on some of these stories, which is all that many people will read, makes this conflation very easy. Some mainstream-media political journalists (inexplicably) are doing it in their articles or blog posts about it.
But counterintuitively, I think Krugman’s column, which identifies and explains the actual issue, will help make clear the distinction.
And then there is this: If Sanders does, as I dearly hope, become the next president, his administration’s economic success will be judged against this. A 3.5% annual growth in GDP, for example, will be called a broken promise.
But I disagree with Krugman’s political assessment that this indicates that the Sanders campaign and maybe the candidate himself are not ready for primetime.
If not nipped in the bud—repudiated very soon by Sanders himself—his campaign success could begin unraveling; that is true enough. But every modern presidential campaign makes mistakes, some of them major ones, and the Sanders campaign, unlike the Clinton campaign, is not well stocked with presidential-campaign veterans. Weaver himself is a novice.
And Sanders and Weaver are navigating a 20-ring circus right now, with several campaign appearances of one sort or another every single day. They both must be exhausted.
What Sanders needs to do—seriously needs to do—is to determine the types of published things ostensibly by Sanders himself (tweets, for example) and by his communications staff are fine for them to publish on their own, and the types of things that are not. Law things, not. Macroeconomics things, not.
For law things, there needs to be a designated person with actual knowledge of law things. For macroeconomic things, there needs to more than one. Nothing—nothing—should be published about macroeconomics without prior review by more than one macroeconomist.
I absolutely get the Sanders campaign’s frustration with the incessant torrent of uses of the word “SOCIALIST” to misrepresent Sanders’ actual policy positions. I share the frustration. But the way to handle it is to do what Sanders had been doing: Pointing out the capitalist, entrepreneurial success of countries such a Canada, Denmark, Sweden, Germany and … Australia (which has universal healthcare coverage!).
And pointing out that this country’s most entrepreneurial period was the post-WWII period, with tax rates higher than anything Sanders is proposing. A period of organized-labor strength. Of Glass-Steagall separation of traditional banking and investment banking. And of aggressive enforcement of antitrust laws and securities laws. And, in 1967, the start of Medicare.
An addition to this torrent came earlier this week from another high-profile Friedman, New York Times columnist and aggressive-centrist Thomas Friedman, who wrote:
Bernie Sanders shows zero interest in entrepreneurship and says the Wall Street banks that provide capital to risk-takers are involved in “fraud.” …
I’d take Sanders more seriously if he would stop bleating about breaking up the big banks and instead breathed life into what really matters for jobs: nurturing more entrepreneurs and starter-uppers. I never hear Sanders talk about where employees come from. They come from employers — risk-takers, people ready to take a second mortgage to start a business. If you want more employees, you need more employers, not just government stimulus.
Apparently he’s been reading too many Washington Post centrist-right and centrist-left columnist columns. Or else he concluded on his own that such things as breaking up the big banks, or for that matter government stimulus, has nothing at all to do with what really matters for jobs: nurturing more entrepreneurs and starter-uppers.
He is, though, certainly right that these days, if you want more employees, you need more employers. The large, current employers plow most of their profits into stock dividends and stock buybacks, not into hiring more employees and not into upgrades of such things as manufacturing plants. The ones here in the States, anyway.
But about the risk-takers whom I’m betting he really has in mind—his wife’s father and uncle, who during the postwar period began one of the first shopping-mall development companies and grew it into the very largest, turning their relatively small family collectively into multibillionaires before the collapse of the shopping-mall real estate business because of online shopping (the family still is extremely wealthy, but not nearly to the extent that it was).
Sanders is in fact the most pro-entrepreneurial of the presidential candidates in either party. He combines Theodore Roosevelt’s antitrust vigor with Franklin Roosevelt’s New Deal regulation of the financial services and securities industries, and FDR’s and Dwight Eisenhower’s massive building programs, mainly in major infrastructure projects.
What the centrist crowd doesn’t understand, or pretends not to, is that just as in Teddy Roosevelt’s day, there are critical conflicts between the interests of entrepreneurs (current and would-be) and ongoing small-businesses, on the one hand, and large corporations (especially certain types of large corporations), on the other. One of my favorite examples is what is known as the Durbin Amendment, which pitted the interests of Visa and Mastercard against small retail businesses. The Democratic Congress pushed it through. The nature of the charges at issue made it especially difficult for small retailers to compete with large ones. Walmart lost on that one; Mom and Pop won.
As for business loans and home mortgages, Friedman, who neither has a home mortgage nor a small business, may not be aware that the very size of the megabanks makes it ever harder for small local banks of the type that surely funded his in-laws’ startup in Marshall, Iowa back in the ‘50s, to remain in business. The megabanks, like Walmart, set market prices. And pretty much everything else.
And the collapse of antitrust enforcement has had an enormous effect not merely on direct competition but also on small manufactures in the supply chain of large ones. The fewer the buyers of the type of part manufactured by the small manufacturer, the less bargaining power the small manufacturer has in order simply to stay in business.
Sanders and his campaign need to bring the conversation back to where it was before this Gerald Friedman debacle.
And I need to end this very long post.
*Sentence edited slightly for clarity and precision. 2/19 at 8:57 p.m.
CLARIFICATION: Reader EMichael and I exchanged these comments this morning in the Comments thread:
February 20, 2016 9:25 am
It is the unforced errors of the Sanders’ campaign that scares me. Perhaps it is simply, as you state, that there are not enough knowledgeable people working for the campaign and that those who are capable are simply exhausted. Kind of scary when there are still nine months before the election. If Sanders wins the nomination, how can the campaign pick up capable people to stop these kind of errors?
February 20, 2016 10:08 am
EMichael, every major presidential campaign makes unforced errors, and the Sanders campaign is chock full of competent people. Clinton’s campaign has made a slew of them.
It’s just that there are some policy areas that require some real expertise in before a statement that has the potential to get a key thing wrong (e.g., the Citizens United tweet) or that requires expertise to evaluate (e.g., macroeconomics projections).
I plan to post a follow-up to this post clarifying some things and making the point that it now appears that Krugman way overblew what the Sanders campaign actually did, which was that its policy director mentioned the Friedman study and praised it as outstanding work. That was all.
But this key point I was trying to make is still valid: that while it is necessary for the Sanders campaign to refute the Sanders-will-kill-entrepreneurship-in-this-country-and-destroy-the-banking-system-and-kill-all-the-apple-trees-in-order-to-keep-Americans-from-making-apple-pie slurs, he should keep the focus of his campaign on his policy proposals and their benefits for their own sake. This macroeconomics controversy has been a big distraction, and–as I said in the post–is one that is far too easy for my comfort to conflate with the issue of the cost of his policy proposals.
The link I included in my comment is to an article on Salon by Elias Isquith, detailing what prompted the controversy and rebutting Krugman’s political argument.
Several other readers in the Comments thread supplied important links, among them: to James Galbraith’s two-page letter to Krueger, Goolsbee, Romer and Tyson deconstructing their high-profile letter that has played such a large role in the controversy; and to an article by David Dayen in the New Republic rebutting Krugman’s political argument.
On second thought I think I’ll just let this Clarification suffice rather than post a separate follow-up post. I’m tired of this subject.
Added 2/10 at 11:05 a.m.
UPDATE: An exchange between reader Urban Legend and me in the Comments thread this morning:
February 21, 2016 2:49 am
I am strongly pro-Clinton in the primaries, but Galbraith’s letter seems absolutely unassailable. Nothing justified this assault by Krugman and the others except their feeling that their credibility is undermined because of their giggling at the Bush et al projections. Somehow, the difference between massive stimulus and increasing regressive tax policies — differences they themselves have emphasized for years — escaped them.
February 21, 2016 9:29 am
Urban, that struck me, too, when I read the Galbraith article: Somehow, the difference between massive stimulus and increasing regressive tax policies — differences they themselves have emphasized for years — escaped them.
There is still the (I would think) obvious problem that apparently Friedman didn’t take into account: the ageing of this country’s population in considering projected increase in labor participation. And there probably are other things that he didn’t consider that should have been considered.
And the main point of my point–or at least the intended main point–holds and is important: on subjects that require some technical expertise or special knowledge, it is really important that Sanders have someone with the expertise or special knowledge screen what his campaign is about to say about it.
But Krugman and the others themselves mislead in this.
This is it for me on this subject.
Added 2/21 at 9:40 a.m.