Must-Read: And my loyal readers inform me that the only even half-economist half-clown they have seen carrying water for Jeb Bush’s 4%/Year Growth Plan is… John Cochrane.
I do not know why back in 2008 John Cochrane decided to start turning himself into a clown. But he did. And now he is three-quarters of the way there.
Matthew Yglesias: Jeb Bush’s 4% Growth Promise Is 104% Nonsense: “Asked by Reuters to describe his thought process…
…Jeb said: “It’s a nice round number. It’s double the growth that we are growing at. It’s not just an aspiration. It’s doable….”
According to James Glassman, Bush originally selected this goal at random, backed by zero substantive analysis of any kind…. In that conference call, “we were looking for a niche and Jeb in that very laconic way said, ‘four percent growth.’ It was obvious to everybody that this was a very good idea.” Wait, there’s a George W. Bush Institute? Yes. Having presided over the only presidency since Herbert Hoover in which the country lost jobs, the worst terrorist attack in American history, and a costly invasion of Iraq whose purpose was to destroy a nuclear weapons program that didn’t exist, George W. Bush decided he could not deprive the world of his policy insights upon retirement. Among other programs, the institute runs a 4% Growth Project, which is led by Amity Shlaes, a former Wall Street Journal editorial writer. Shlaes is a believer in the absurd inflation conspiracy theories of John Williams’s website, Shadowstats, according to which, among other things, the American economy has been consistently shrinking since 2004….
Has anyone actually read the Bush Institute’s book The 4% Solution? There is no clear and convincing evidence that anyone has read this book. But the introduction can be read for free on Amazon, and it contains the surprising admission that the goal is bullshit:
The United States is much more likely to achieve the average growth rate it maintained from the end of World War II to the most recent economic downturn — a rate of about 3% — than it is to accelerate to a new long-term economic growth rate of 4%…. The Bush Institute has set an intentionally provocative target in part because one way to find out what is actually attainable is to stretch for a goal that is seemingly just beyond one’s reach….
Why would Jeb propose it?… One, if you help yourself to an unrealistic presumption that the economy will grow at 4 percent per year…. Budget problems… melt away…. Suddenly gigantic tax cuts are affordable…. The other is that if you’re up on a debate stage, you’d much rather be the guy offering upbeat assessments of America’s potential to grow than the guy droning on about shifting demographics and Total Factor Productivity trends…
John Lippert: Friedman Would Be Roiled as Chicago Disciples Rue Repudiation: “Dec. 23 (Bloomberg) — John Cochrane was steaming as word of U.S. Treasury Secretary Henry Paulson’s plan…
…to buy $700 billion in troubled mortgage assets rippled across the University of Chicago in September. Cochrane had been teaching at the bastion of free-market economics for 14 years and this struck at everything that he — and the school — stood for. ‘We all wandered the hallway thinking, How could this possibly make sense?’ says Cochrane, 51, recalling his incredulity at Paulson’s attempt to prop up the mortgage industry and the banks that had precipitated the housing market’s boom and bust.
During a lunch held on a balcony with a view of Rockefeller Memorial Chapel, Cochrane, son-in-law of Chicago efficient-market theorist Eugene Fama, and some colleagues made their stand. They wrote a petition attacking Paulson’s proposal, sent it to economists nationwide and collected 230 signatures. Republican Senator Richard Shelby of Alabama waved the document as he scorned the rescue. When Congress rejected it on Sept. 29, Cochrane fired off congratulatory e-mails. The victory was short-lived. Lawmakers approved the plan four days later, swayed by what Cochrane calls a pinata of pork-barrel amendments.
‘We should have a recession,’ Cochrane said in November, speaking to students and investors in a conference room that looks out on Lake Michigan. ‘People who spend their lives pounding nails in Nevada need something else to do…’
Originally published at www.bradford-delong.com.