Wednesday, March 20, 2013

Proof Positive that Conservatives Like WSJ Columnist Daniel Henninger Are Simply Wrong

Basing Conclusions on The Failed Economist Alberto Alesina

One of the more polemic writers in the opinion pages of the Wall Street Journal is Daniel Henninger.  To write for the Journal means there is no requirement for honesty in a discussion.  The conclusions are what are important, regardless of their validity, or in the case of Mr. Henninger and his most recent screed, the lack of validity.

Mr. Henninger takes the position of most right wing fanatics, that government spending must be cut or else the entire country will collapse.  He starts out with a totally erroneous statement. 

There is general agreement on at least two things about the current U.S. economy. It is emerging from the deepest recession since the Great Depression, and its debt level is unsustainable.

No, there is not general agreement that the current debt level is unsustainable.  In fact other than ideologically driven economists no one else is all that concerned about the current debt level of the United States.  Willing lenders have driven the interest rates on U. S. debt to their lowest levels ever.

But Mr. Henninger appeals to expertise, in this case economist Alberto Alesina.

The path back to stronger growth, argues Mr. Alesina, is a combination of significant, permanent cuts in public spending and relatively small tax increases, if any.

Gosh, that doesn’t sound right, and it is not, as real world data shows.  Here is what Mr.
Alesina (speaking in the third person) said in 2010 response to criticism of his so-called research into the issue.

A recent paper by Jayadem and Konzcal [sic] (2010) argues that Alesina and Ardagna’s results do not apply to the current situation because fiscal adjustments on the spending side are expansionary only when they occur when the economy is already expanding. The criticisms of that paper are at best overstated... In addition, what is unfolding currently in Europe directly contradicts Jayadev and Konczal. Several European countries have started drastic plans of fiscal adjustment in the middle of a fragile recovery. At the time of this writing, it appears that European speed of recovery is sustained, faster than that of  the U.S., and the ECB has recently significantly raised growth forecasts for the Euro area.

Well, 3 years later there is the empirical test of the above words.  They turned out to be totally, completely, utterly fallacious.  Wrong.  Incorrect.  In error. 

But why then would a writer of opinion for the Wall Street Journal choose Mr. Alesina as his authority?  The obvious answer, there is no real, legitimate authority that supports his view, so a bogus expert is the only alternative.

No comments:

Post a Comment