We at the Big Picture have never been fans of economist Michael Boskin. The infamous Boskin commission was an intellectually dishonest exercise in clever ways to understate inflation, thus lowering Social Security obligations. (I found that approach cowardly, and instead offered up some SS truths).
His commission helped the BLS to habitually understate inflation, the net result of which was to encourage Greenspan’s rate recklessness, setting the table for the 2007-09 crisis. How about Boskin’s “discovery” of a 12 trillion dollar cash horde that the government had somehow "overlooked?” That was used to justify unfunded tax cuts. Afterwards, he issued an Oops, declaring “My Bad.”
Perhaps most unforgivable to investors, those who followed Boskin’s investment advice in March 2009 missed one of the best market rallies in decades. Indeed, Boskin’s partisan screeds costs any investor foolish enough to listen to him big money.
So when earlier this month, he published yet another partisan rant (Summer of Economic Discontent), I loathed having to fisk the intellectual dishonesty likely to be its main theme. Fortunately, Northern Trust’s Paul Kasriel has spared me the labor. His commentary eloquently disembowels Boskin, and reveals him to be a hypocrite to boot.
Boskin’s OpEd compared the anemic current economic recovery with more vibrant ones such as Q1 1983, when Martin Feldstein was chairman of President Reagan's Council of Economic Advisers. He blames the lackluster recovery not on the prior crisis, but on Obama’s overly aggressive responses. Other’s, such as FT’s Martin Wolf, have called the Obama response “too feeble.”
Kasriel points out one notable omission from Boskin’s history: Q2 1991, when “Mr. Boskin himself was the chairman of the President's Council of Economic Advisers at the time of the 1991 economic recovery.” Kasriel finds it “curious that he makes no reference to that recovery when critiquing the current recovery.”
To rectify that notable omission, Paul shows 2 charts (top right, below) – comparing various recoveries, including the 1991 Bush I that Boskin somehow overlooked. These include the year-over-year percent changes in real GDP and real bank credit one year after the final quarter. The current recovery compares favorably with the one Mr Boskin oversaw in 1991 — when the terms "double-dip" and "jobless recovery" entered the economic lexicon.
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charts courtesy of Northern Trust
Perhaps Boskin’s omission is due to other factors:
Perhaps Mr. Boskin is not suffering so much from amnesia, as I have suggested, but rather is experiencing an episode of déjà vu. He intimates that if current economic trends continue, President Obama will have a difficult time being elected to second term in 2012. Yes, just as President George Herbert Walker Bush was unable to win a second term in 1992, which terminated Mr. Boskin's tenure as chairman of the President's Council of Economic Advisers.
I still think its intellectual dishonesty, which has been a hallmark of Boskin’s career. I will defer to Mr. Kasriel, and simply call it a case of déjà vu all over again.
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Previously: The Danger of Dogma (July 27th, 2003)
Michael Boskin on "The Obama Crash" (December 7th, 2009)
Why Michael Boskin Deserves Our Contempt (January 19th, 2010)
Sheehan on Michael Boskin (January 19th, 2010)
Sources: Michael Boskin’s Summer of Economic History Amnesia Paul L. Kasriel Northern Trust Global Economic Research, September 07, 2010 http://bit.ly/bXWN2k
Summer of Economic Discontent MICHAEL BOSKIN WSJ, September2, 2010 http://online.wsj.com/article/SB10001424052748703882304575465462926649950.html
That was awesome. PK is like a fine wine.
Reminds me of the time Reagan wanted to cut funding for the disabled and clean out the psyche wards…
http://en.wikipedia.org/wiki/Domestic_policy_of_the_Ronald_Reagan_administration
No data, appealing to people’s emotions about goldbricking lazy bums… like these guys…
“…Would you rather play tennis or make an extra $80? …”
http://online.wsj.com/article/SB10001424052748704392104575475781704072278.html
…who obviously need tax cuts.
Your critique that Boskin is a politician not an economist is well taken, but the chart you close with is misleading. A look at the more famous DShort charts comparing unemployment and stock indices across recessions shows how selective the graphic you chose is. Relative to history this is a slow sh*tty recovery, and would be regardless of the last presidential election outcome.
If you are going to compare this recovery with Boskin’s, you should also include some data about how much stimulus was thrown at the economy in each period. While Boskin’s job growth isn’t anything to write home about, my recollection is that he didn’t spew hundreds of billions of taxpayer money to achieve those results either. So far, not a very nuanced discussion.
The point is thatoskin omitted his own anemic recovery when critquing Obama’s.
I am critiquing his omission, and not discussing the overall recovery, which I called “anemic.”
Please remove your selective perception goggles.
Sorry, just unhappy with the chart. Sometimes I look at something and think: why would someone choose to present it that way?
Why private payroll employment instead of UE or total employment or something else? Why line up the series by matching downward slope through index=100? …and then label that trough when it continues lower? What is the usual range of this metric, are we looking at Everest or a mosquito bite?
In this case I guess decisions were inherited from the reference, Boskin. Sorry, I’ll stop complaining so much about this excellent, free content.
No shortage of politicians, and politician surrogates, who are intellectually dishonest.
Certainly most of Obama’s defenders fall into this category.
the near flatline of the last 3 recessions demonstrates just how bad things have been for the labor market. This past decade it took 11% growth of constant dollar GDP to generate 1% increase in NFP. In the prior four decades, on average it only took 1.5% GDP growth to increase NFP 1%. As a result U-6 rose from 7% to 16.7% this decade. Total NFP increased only 1.65% (thru 2009). To add to the challenge, the labor pool is expected to increase 10% in the next 10 years. Another decade like the past one will push U-6 to over 25%. Meanwhile, income and wealth becomes more concentrated at the top. All of this argues for the govt to do what it can to stimulate employment (either govt or private) and to increase the take home pay of the middle class. Hopefully the additional jobs will be productive ones.
There is another unstated problem here when comparing recovery numbers now with the recover numbers from Reagan. The numbers quoted for the Reagan recovery are the numbers from the revisions made in 2009 — they are not the numbers reported at the same point in time relative to the recession. James Grant reported on this recently in his Grant’s Interest Rate observer.
Over time the Reagan numbers were continually revised upwards. The numbers that came out in 1984 were considerably weaker than the most recent set of data. When comparing the current recovery to the same point in time numbers Obama fares much better. Surely Boskin knows this.
I remember the 1992 election period when the economy was obviously getting better. The tv folks would conduct man-in-the-street interviews that went like this: Reporter: “This economic stat is getting better, do you detect an improvement in your well being” MITS: “No.” Reporter: “There you have it, no economic recovery (vote for the Democrat)”
We’ll see the same thing in October with the ‘recovery’ being pumped up in order to pump up the Democrats to say nothing of what the media will come up with in 2012 to get Obama reelected.
On the subject of “intellectual honesty”, I think that a substantial portion of economic debates boil down to the question of the level of Federal spending that a given pundit or politician actually advocates. Is the preferred level of spending equal to 15% of GDP"¦? Is it 25% of GDP"¦? In Krugman's case, it's probably 40%. In Obama's case, it's at least 50%, if not 70%.
If I had to take a wild guess, I'd put Mr. Ritholtz in the 30% category.
In his January 2010 critique, "Why Michael Boskin Deserves Our Contempt", Mr. Ritholtz tells us that rather than distorting CPI to suppress entitlement COLA's, Boskin should, "man up and say "fix this, its broken, we can't afford it".
Fair enough"¦. I can't disagree with that"¦.
But since today's piece is an apology for Obama, would it not also be fair to ask what has generally been the democratic response to republicans who have indeed, "manned up and said "fix this, its broken, we can't afford it"?
I seem to recall that when Newt Gingrich tried to "man up" on Medicare in 1995 and restrict its growth to that of inflation, he was demonized as wanting to throw Grandma in the gutter without her arthritis medicine and his career spiraled downward from there.
I also seem to recall the response Bush 43 got when he tried to "man up" on Social Security reform in 2005"¦. You can debate the merits of his plan, but the democratic response (including Obama) was not to "man up" but rather to demonize the attempt and bury their collective heads in the sand at the sight of demographic and economic reality.
Even as I write this, democrats are attacking Rep. Paul Ryan’s attempt to “man up” on government debt and entitlements as dishonest and racist to boot….
Seems to me that with a few rare exceptions, our entire political and media elite on BOTH sides deserve our contempt, not just Mr. Boskin.
VRWC:
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