David Leonhardt asked a couple of questions in a column a while back that stuck with me. Noting how badly the economy has gotten off track, after having been the “envy of the world” in the 1990s, Leonhardt wrote, “We are too often occupied with distractions, rather than trying to answer a simple question: What works? What economic policies have succeeded before?”
I’m a big fan of this kind of thinking. Especially when evaluating economic policies, my broad-brush approach is pretty straightforward: let’s do more of what works and less of what doesn’t.
I thought about this after seeing these charts Jared Bernstein posted this week, showing the impact of the Recovery Act. Here, for example, is an image that shows what happened to the overall economy after it was subjected to stimulus (admittedly, the stimulus wasn’t ambitious enough for the task at hand, but let’s put that aside for now). The dotted vertical line shows the start of the Obama administration’s efforts.
And here’s another image, showing what happened to the job market.
Put away the spin, the polls, the talking points, and the ideological axes to grind, and we’re left with a pretty simple truth: things were getting worse, then the stimulus started, then they got better. This isn’t even controversial; it’s as plain as day.
Bernstein added, “I know — this ain’t about the evidence. But I will never accept that condition and neither should anyone else. That’s the way societies decline and I’d kind of like to avoid that.”
Agreed. If, as Leonhardt put it, the only meaningful question is, “What works?” then the answer matters for those who care about the consequences — and everyone should care about the consequences.
Now, under the Republican worldview, the results highlighted in Bernstein’s charts should be impossible. Democrats spent a lot of money, imposed their preferred regulations, prevented public-sector layoffs at the state and local level, and added a lot of money to the federal budget deficit.
And yet, almost immediately, the economy grew and the job market got significantly better.
I imagine some conservatives will look at this and say, “Well, yeah, but it didn’t last and now we’re slipping backwards.” That’s true, but it only reinforces the left’s argument — the stimulus made things better, but as the funding faded, so too did the economy. Common sense, again, should tell us do more of what worked, and in this case, fairly aggressive public investments expanded the economy and created jobs.
Ergo, if we now want to expand the economy and create jobs, we know what to do because we already know what works.
It’s not theoretical or some abstract idea — we know what we tried and saw what made a difference. Likewise, here we are in 2011 trying conservative austerity ideas, and we see that they’re not working.
So here’s a radical idea: why not go with the most effective policies again?