Public opinion and Keynesian economics

When it comes to the fiscal debate in Washington, Republicans are struggling badly to persuade the American mainstream. Polls show most Americans siding with Dems on a debt-ceiling increase, new revenue, taxes on the wealthy, and the need for the GOP to be more open to compromise.

But on one key question, the Republican line is still the more popular one. The latest Washington Post/ABC News poll includes this important result:

21. Do you think large cuts in federal spending would do more to create jobs or do more to cut jobs in this country?

Spending cuts would create jobs: 47%
Spending cuts would cut jobs: 41%

The responses are actually slightly worse than they were in March, when a narrow plurality thought cuts in federal spending would cost jobs.

Noting the results, Dave Weigel said, “Keynes is dead.” Perhaps. But I’d note for context that this isn’t new — the public has never really liked Keynesian economics, regardless of merit.

Economists nearly always know better. (“If you ask economists what went wrong during the Great Depression, you’ll often hear: ‘We hadn’t read Keynes yet.'”) But the typical American doesn’t have a background in economic theory, and relies on media and supposition to conclude what seems to make sense. Regrettably, of course, on this the public is mistaken.

Now, this is ordinarily the time when President Obama’s critics blame him for the public’s confusion. He should have invested more time in explaining this to the country; he should have used his Bully Pulpit more effectively; he shouldn’t have echoed conservative rhetorical frames, etc.

But before we go too far down this road I’d note an interesting Gallup poll conducted way back in 1935 — three years after FDR was elected and roughly six years after the start of the Great Depression. The unemployment rate, at the time of the poll, was over 20%.

The poll asked respondents, “Do you think it necessary at this time to balance the budget and start reducing the national debt?” A 70% majority said yes.

A year later, in November 1936, Gallup asked if the Roosevelt administration should balance the budget. A 65% majority said yes.

It’s why FDR ran on a platform of balancing the budget (Obama isn’t the first Democrat to echo conservative arguments to appeal to voters). To voters then, as now, this made sense.

When it comes to public attitudes, Keynesian economics can’t die if it never really lived.

The point is, the public doesn’t much understand macroeconomics, and it never has. It’s up to policymakers to do the right thing anyway, though in the current climate, that’s apparently impossible.

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