But I can't resist lifting this quote:
And, of course, left out of Hennessey's "analysius" is the explanation that the weakness of the economy is also the reason that the debt-to-GDP ratio is projected to climb over the next five years: the debt-to-GDP ratio ought to climb during periods of national emergency--resisting an invasion, fighting a major war, suffering a depression, et cetera. Hennessey and his peers in the George W. Bush administration share with the Reagan and George H.W. Bush administrations the singular distinction of having run the only administration to raise the debt-to-GDP ratio without resisting an invasion, without fighting a major war, without suffering a depression.
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4 comments:
OK, but do you agree with Mssr DeLong's description (implicit at least) of IWE as not a "major war"? Perhaps not 'Nam or WWII, but fairly f-ing major, nonetheless--.
And the US economy predictably boomed as BushCo sent the supercarriers out to Persian gulf (with of course the vote of all GOP house/senate, and approx. 70% of Demos as well). Including the crude oil market.
Not that I agree with Lazear but 2002 to '05 seems to support his hypothesis--ie, the GDP rate grows, as taxes were cut--which is to say GDP might look quite impressive during a war, and that was the case with FDR at beginning of WWII and 'Nam as well. It's not really reliable as a SOL index, whether spun by right or liberals (not to be mistaken for the authentic "La Gauche")
Well, was the country placed on a war footing? This is a war fought with lots and lots of money and devastating multiple redeployments of a small number of troops. We've all been harmed by the oil price shock, etc. but very few Americans have been directly touched by this war.
And GDP under Shrub was at best MEH! His BEST year for GDP ('04) ws only half a tad over St. Ronnie's average.
Our ability to grow GDP is declining since 1980, after 180 years of relatively steady growth (except for the depression and WW's.) Avg GDP under Ronnie is below the long average, under Shrub, quite a bit worse.
JzB
Actually real GDP has been increasing at a fairly even rate, like, for the last 60 years, if not 200 years (your charts look a bit odd in that they suggest great volatility, but real and nominal GDP in US quite stable--until BushCo crisis starting in 2008, and a great (even scary) dump).
Quite a few econ. people have data up which supports Lazear's claim. Some may seem to be...libertarian quacks, but my view is that GDP can be used by capitalists to justify laissez-faire, low taxes--but that's hardly the end of the story (ie GDP is not a SOL index, and only relates to private sector, and has other shortcomings).
But apart from politics, the charts show that at times, GDP growth coincides with tax cuts. This person uses the nat.log of real GDP rather than raw data but does seem to support Lazear...
http://jim.com/econ_growth/index.html
"""Average growth during high tax periods was 1.08%, average growth during normal times was 2.45%. Every high tax period was a long period of economic stagnation, malaise, or decline or else contained a long period of decline. Such events were rare during normal tax periods.""
J -
My GDP graph shows the over time same thing. I highlighted it with arrows. Apparent negative correlation before 1980. strong positive correlation after 1980.
Big Whoop!
I have to get to rehearsal, so I don't have time to read it now.
Meanwhile repeat after me:
Data artifacts.
Weak correlation.
Post hoc ergo Propter hoc.
Cherry picking.
Cheers!
JzB
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