Your Daily Dose of Mythbusting

by Pejman Yousefzadeh on December 12, 2011

Let’s take on some talking points that are as untrue as they are popular.

Myth Number 1: Millionaires don’t create jobs. As Stephen Bainbridge points out, entrepreneurs who create jobs when their firms are start-ups become millionaires as a consequence. I guess it ought to come as no surprise whatsoever that Harry Reid is wrong about something, but missing huge data points that patently contradict his class-warfare-driven statements is really impressive.

Myth Number 2: We have a “big government consensus” in response to all of the deregulating that went on under Republican presidents. Via InstaPundit, Matt Welch pretty much demolishes this one:

. . . it was with keen interest that I received an invitation to attend an October 27 Aspen Institute confab in D.C. on “The Role of Government in the Economy.” Libertarians, after all, tend to hold the view that the greater the role of government, the worse the economy. Of even keener interest was the lineup: on the left, recently departed chief economist for Vice President Joe Biden Jared Bernstein; on the right, former Bush administration Pension Benefit Guaranty Corporation executive director Bradley Belt, and moderating between them the New York Times’ Pulitzer Prize-winning Washington bureau chief and former economics columnist David Leonhardt. Surely there would be some wide-ranging disagreement on the federal government’s role in precipitating and exacerbating the economic malaise of the past four years.

No such luck. In his introductory remarks, moderator Leonhardt laid out as a factual starting point the government’s “extraordinary and largely successful moves to spare us from another Great Depression.” Bernstein went on to decry the “irrational fear of budget deficits at a time when the budget deficit really should be very large.” And Belt repeatedly declined to enumerate a specific appropriate size and scope of government. So much for the debate.

Even more interesting than the soft consensus in favor of government intervention was a strong undercurrent that those who disagreed with it were guilty of denying basic truths. One of the questions from an audience full of Senate staffers, policy wonks, and journalists was how can we even have a rational policy discussion with all these denialist Republicans who disregarded Daniel Patrick Moynihan’s famous maxim that “Everyone is entitled to his own opinion, but not his own facts”? Jared Bernstein couldn’t have been more pleased.

“I feel like we’re in a climate in which facts just aren’t welcome,” he said. “I think the facts of the case are that we know what we can do to nudge the unemployment rate down.…I think the consensus among economists is that this is a good time to implement fiscal stimulus that would help create jobs and make the unemployment rate go down. I consider that a fact.”

In science, you insist most loudly on a fact based on how much it has withstood independent peer review. In politics, it’s closer to the opposite—the more debatable a point is, the more it becomes necessary to insist (often in the face of contrary evidence) that the conclusion is backed by scientific consensus.

[. . .]

Not a day goes by when George W. Bush’s deregulation is not blamed for the financial crisis, and yet he hired 90,000 net new regulators, passed the largest Wall Street reform since the Depression, and increased fiscally significant regulations by more than any president since Richard Nixon. We are told by New York Times columnist Paul Krugman and his friends in The Nation that the country is being ruled by a ruthless “austerity class,” yet federal spending has continued to increase even after the summer’s debt-ceiling agreement. The Occupy Wall Street movement and the (mostly Democratic) politicians who support it have shifted the national conversation to the “fact” that the middle class is worse off than it was three decades ago, yet as University of Chicago economist Bruce Meyer and Notre Dame economist James Sullivan found in a recent paper, “median income and consumption both rose by more than 50 percent in real terms between 1980 and 2009.”

We are entitled to facts, yes. Just not theirs.

Read the whole thing, for Heaven’s sake.

Myth Number 3: Barack Obama wants to help out the middle class. Oh, my sides are splitting. Let’s turn over the microphone to Richard Epstein, who analyzes the president’s recent remarks in Osawatomie, Kansas:

To anyone schooled in economics, these statements reveal a breathtaking ignorance about the sources of national prosperity. It is a good thing when plants can achieve the same output with less labor. Do we really want an America in which thousands of people work in dangerous occupations to turn molten lava into steel bars? Far better it is that fewer workers are doing those jobs. The jobs lost in that industry will be in part replaced by newer jobs created in the firms that build the equipment that make it possible to run steel mills at a lower cost and far lower risk of personal injury. The former workers can seek jobs in newer industries that will only expand by competing for labor.

And what about those ATM machines? Does the president really want people to have to queue up in banks to make deposits or withdraw cash in order to make a boom market for human tellers? Perhaps we should return to the days before automation, when phone calls were all connected by human operators. And why blast the Internet, which has created far more useful jobs than it has ever destroyed?

The painful ignorance that is revealed in these remarks augurs ill for the long-term recovery of America. With the president firmly determined to set himself against the tides of progress, innovation will be harder to come by. The levels of unemployment will continue to be high as the president works overtime to impose additional restrictions on the labor markets and more taxes at the top of the income distribution—both backhanded ways to reward innovation and growth.

The problem, therefore, with the president’s speech is not that it is demagogic in tone. The problem is that it is intellectually incoherent. As a matter of high principle, the president announces his fealty to markets. As a matter of practical politics, he denigrates and undermines them at every step. It is a frightening prospect to have a president who lives in a time warp that lets him believe that the failed policies of 1935 can lead this nation back from the brink. His chosen constituency, the middle class, should tremble at the prospect that his agenda might well set the course for the United States for the next four years.

Having discussed myths, let me make mention of a non-myth: More people will pay attention to the silly kerfuffle over Mitt Romney’s faux $10,000 bet, than they will over getting the facts right when it comes to tax policy, job creation, the supposed consensus in favor of big government, and the president’s ability to make the lives of middle class Americans better.

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