February 26, 2016
Since I had been critical of elite economists for using their authority rather than evidence to trash Gerald Friedman’s analysis of Bernie Sanders’ program, I should acknowledge a serious effort to do exactly the sort of analysis I advocated. Christina Romer, one of the four former heads of the Council of Economic Advisers who signed the earlier letter criticizing Friedman’s analysis, along with David Romer (both of whom are now Berkeley economics professors), did a detailed critique of the Friedman analysis.
I could quibble with aspects of their critique, but I would say it is basically right. There clearly is still a large amount of slack in the economy which would allow for 2–4 years of exceptionally strong growth (e.g. 4–5 percent). However, it is very hard to envision a story where this sort of growth rate is maintained for a full eight years of a Sanders’ administration.
Furthermore, many aspects of Sanders’ agenda point to slower growth. For example, universal Medicare and expanded Social Security will make it easier for older people not to work, as will free college for young people. Also, mandated vacations will mean fewer hours per worker, on average. These may all be good things (I happen to think so), but they are likely to mean less GDP growth than would otherwise be the case.
Anyhow, I appreciate that Romer and Romer took the time to do the analysis. We should be having a discussion about how much better the economy can be doing than it is now. This analysis is a step in that direction.
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