Monday, April 25, 2011

Conservatives Think We Are Stupid

The Heritage Foundation Attacks . . .

One of the most bizarre aspects of the Ryan Proposal was the analysis performed by the Heritage Foundation, a conservative think tank funded, we suppose by conservatives, who found that the Plan cured every economic ill.  It immediately reduced the unemployment rate, brought federal spending under control, providing huge tax relief, primarily for high income individuals and large corporations, and it even found a way for the Chicago Cubs to win the World Series (ok, we are making that last one up).

As near as we can tell no serious independent economic analysis supported the conclusions, and some like Paul Krugman provided a strong, principled and logical attack on the results of the Heritage Foundation analysis.  As a result, the Heritage Foundation has now attacked Mr. Krugman in a very personal way.

Now Mr. Krugman is very capable of defending himself, if indeed he even feels the need to do so.  It should be pointed out, however, that one key element of the Heritage analysis was an eventual unemployment rate that is almost impossible for the U. S. economy to attain.  When this was pointed out, the Heritage study immediately replaced the rate with a higher rate, and stated nothing else changed.

Now this is impossible.  Macroeconomic structure is such that if one key variable changes, all others change.  If the unemployment rate goes up, income goes down, investment goes down, tax revenues go down, unemployment insurance spending goes up etc.  To asset otherwise, as the Heritage Foundation has done, is to invite the very ridicule that they are railing against.

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