Candidates for president have to have a lot of policies they endorse. As a result it can be pretty difficult to know what these policies will do to the economy. One person who everybody has been interested in is Bernie Sanders. How would a democratic socialist getting everything he wants impact the economy? Gerald Friedman tried to answer this question in a report using economic models (
here's the link if you want, but I would not recommend reading it. It's 53 pages of dull). Since releasing this report though it has received some
criticism. Actually quite a bit of
criticism. Some would say a lot of
criticism. And this isn't just from conservative writers either, this is coming from progressive policy wonks like
Paul Krugman. They highlight three main findings of the paper to be unrealistic:
1. It claims his policies will result in 5.3% growth in GDP
2. It claims unemployment will fall to 3.8%
3. At the same time unemployment is falling so low, it claims that the labor force participation will return to levels from 1999-2000.
What do you think? Are these results too optimistic? Or are these the extreme results we should expect from an extremely different policy?
I think these predicted results are outrageous. There no way that a president can do all of those things that Bernie has in his plans and estimations. Like the article said, the Fed, whose job it is to predict the financial stability of the U.S. and world economies, estimate GDP growth at around 2%. Also, with the recent legislation making it more difficult for companies to manufacture and be the most profitable they can be (see Lucas' article) companies will move their manufacturing out of the country. The only way that unemployment could get that low is if there was a drastic change in the current policies.
ReplyDeleteI agree with Brian that Dr. Friedman seems to be too optimistic about a Sanders Presidency. The President is only as powerful as Congress allows them to be and right now, gridlock is the way Washington works. I believe most of Sanders' policies are feasable and despite what the media says, he's clear and explains how to go about them. One thing Sanders doesn't include, however, is that while his policies may improve social welfare and standard of living they may slow the U.S. economy as well. A quick look at Germany and the Scandinavian countries, which are his prime examples for policy effectiveness, show low GDP growth rates across the board. Although the U.S. is very different from those countries mentioned, it's hard to assume a 5.3% growth in GDP when comparing the data to countries with policies similar to Sanders'.
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