Writing in today’s Wall Street Journal, WSJ op-ed board member Stephen Moore offers a variety of dubious–and at least one outrageous–opinion on the economy and economic policy.
(1) The economy would be in better shape today in the absence of the economic stimulus. No, it wouldn’t. Even fellow WSJ contributor Ed Lazear believes that the stimulus had some effect.
(2) Dismissing an Administration view, he writes: “Only someone with a PhD in economics from an elite university would believe this.” This is just one of those populist throw-away lines that makes no sense. John Taylor (PhD, Stanford), Michael Boskin (PhD, University of California, Berkeley), Glenn Hubbard (PhD, Harvard) all make regular appearances on the Journal’s op-ed page. I think what Mr. Moore (BA, University of Illinois; MA George Mason University, according to the Journal’s web site) really means, is that anyone he disagrees with is not to be trusted.
(3) “How did modern economics fly off the rails? The answer is that the “invisible hand” of the free enterprise system, first explained in 1776 by Adam Smith, got tossed aside for the new “macroeconomics,” a witchcraft that began to flourish in the 1930s during the rise of Keynes.” The invisible hand flourished during the boom-bust of the 1920s, which led to the worst economic downturn in our nation’s history. It also flourished during the Administrations of Ronald Reagan and George W. Bush. Taxes were lowered, spending–particularly military spending–was increased, and regulation–especially financial regulation–was gutted. And from this we reaped bloated deficits and financial crises–including the worst since the Great Depression.
Perhaps the nuttiest part of the op-ed is his policy recommendation on unemployment insurance:
“I have two teenage sons. One worked all summer and the other sat on his duff. To stimulate the economy, the White House wants to take more money from the son who works and give it to the one who doesn’t work. I can say with 100% certainty as a parent that in the Moore household this will lead to less work.”
Economists with PhD’s from elite universities take note! Painstaking construction of comprehensive databases on the employment situation are a waste of time. Sophisticated empirical techniques for making sense of the data are equally worthless. All we need to do to make sound economic policy is to observe the behavior of a couple of teenagers.
Moore’s conclusion that unemployed are lazy layabouts who are coddled by the unemployment insurance system is outrageous. To anyone who is struggling to find work so that they can feed and house their families in the worst labor market in more than 20 years, his op-ed is offensive.