Hug an Economist: We Need It

I’m struck to find that we pointy-headed economists have become a symbol in the presidential campaign. No, not evil trickle-down, right-wing economists who manufacture an uncaring government, or lunatic left-wing, regulate-em-all central planners who want to destroy innovation — but all economists.

Last week I issued a challenge to find a coherent economist who would support the gas tax holiday proposed by candidates McCain and Clinton. And the great sin of economists is that no-one has stepped up. Here’s the latest episode.

N.B.C.’s Tim Russert questioned Terry McAuliffe (chairman of Clinton campaign):

The gas tax holiday is a really interesting issue … Where do you point, who can you point to, in economics, in environmental law, anywhere, people who think it is a good idea?

McAuliffe’s response?

Well first of all, I’m not going to sit here and quote economists, because I don’t think that’s what matters … This is personal to people, they either buy gasoline, or they buy groceries. This is temporary relief for people in this country who are desperate for help…

When Russert re-framed the question, here’s what he got:

Well first of all … Listen, Hillary Clinton is for temporary relief … it is the right thing to do. And maybe for Barack Obama and for many of your economists, Tim, who you may talk to — you know what, maybe an extra hundred bucks for them isn’t a big deal, but I can tell you this, it is a big deal for most Americans.

See the full video here. (HT: T.P.M.)

Lest we let facts invade the debate, here are some relevant numbers:

According to the latest B.L.S. data, the average annual earnings of full-time economists were $76,637, 85 percent higher than the national average of $41,231.

In a 2001 Brookings survey of economists, around 41 percent described themselves as Democrats, compared with 6 percent Republican. Including self-described independents with partisan “leanings,” the comparison is 63 percent vs. 17 percent. This is consistent with a 2003 survey of members of the A.E.A., and roughly similar to results from 1989 and 1997 National Surveys of Faculty.

A survey of 2,000 U.S.-based members of the A.E.A. showed that 77 made donations to Democrats, compared with 15 donating to Republicans.

Update: The same challenge was posed this morning to Senator Bob Menendez, who defended the gas tax holiday on M.S.N.B.C. (Morning Joe) (HT: T.P.M. via Mark Thoma)

QUESTION:

Senator we’ll end on a happy note: Just tell me one economist who supports this.

SENATOR MENENDEZ:

You know, thank god that we don’t have economists making, necessarily, public policy, because they don’t necessarily feel pains that average Americans [feel]. You know, in the abstract there’s a lot of things we could have economists do. A lot of us wouldn’t agree with it.

See the video here, or the full interview version here.


RobC

Maybe next "they" can recommend relief for working class americans by giving us a "Gas Theft Holiday" then we can just go steal gas from our better paid neighbors car at night, then when all the elitest law enforcement officials stand up and say that's a "bad idea" with long term problems, they can just call them "out of touch" as well and then remind everyone that it's only temporary.

You know? During times of crisis academics are the first to go. Just look at what happened in Germany in the 30s or Vietnam in the 60s or anywhere that problems have broke out. And from what i'm hearing from the candidates makes me think the time is near...when the educated class the problem or cause, they are to blame, then they are made to suffer be it public humiliation on TV (calling them names) or worse. (like "The Mist" in the grocery store)...Yes what they are saying sounds just that crazy!!! (I mean the part where they put down the economists/educated for the benefit of the "mob")

Had a teacher once say "its better to have others think you are dumb then to open your mouth and remove all dought" maybe someone should tell those two candidates.

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janya

"Listen, Hillary Clinton is for temporary relief ... it is the right thing to do. ... maybe an extra hundred bucks for them isn't a big deal, but I can tell you this, it is a big deal for most Americans."

There is so much wrong with this one phrase.
How's temporary relief 'the right thing to do'? Why not permanent relief?
If the politicians are so inclined to dole out a hundred bucks to most Americans, they could, without making people spend that money on gas.

Eric

does anyone see the current state of things to be frighteningly similar to Ayn Rand's "Atlas Shrugged" or at least headed in a similar direction? Those with bright minds punished for exactly that...

Arjun

It's shocking how this feels a lot like the movie "Idiocracy." (Hat tip: Contemporary Issues Roundtable). The only arguments that seem "made to stick" are those which are quick and easy to digest, even when they're downright untrue.

Moreover, it's something beyond "elitist" to tell people that you're going to do something which you know you can't do. What does Senator Clinton plan to do for everyone once we starting seeing massive shortages? Her proposed interest rate freeze is another disaster waiting to happen.

KA

Everybody wants a solution, so allow me to propose one:
In an ideal america we would shift our energy hungry ways from over consumption of a non-renewable resource to one one that is renewable (while at the same time, we would stop helping finance terrorism..but thats another discussion). However, shifting from oil to renewable resources is going to be a long process. So what can we do immediately? We play hardball with the oil companies. Sure, we can't take them all on, but if America bands together to boycott Exxon for example, we will undoubtedly have a major affect on that one company. Sucks to be the whipping boy, but some needs to play the part. Anybody have a bright idea of implementation?

Nick

I'd like to know the comparison of the average wages of Democrat and Republican policymakers compared to the national averages. You know, the people who are supposed to KNOW what's good for us better than we do ourselves since they're so in tune with the man-on-the-street?

I'll bet you they make a good deal more than your average economist.

The problem with this country is that politicians make far too many decisions and they're probably the people we should least want to make decisions for us.

Brian

@41
it's not "elite" that's bad, but elitist.

frankenduf

so let me get this straight- liberals are unhappy, economists are liberal, therefore economists are unhappy- sorry, freakonomists- maybe we should elect conservative shrinks to drive public policy

DJH

This reminds me of when I was a kid and something came on TV that my father didn't like. He'd say, "Change the channel!" We'd ask, "To what?" He'd say, "I don't care, just change it!" Usually, what we changed it to was also not to his liking either.

This is what's happening with economists. They're all saying that the Clinton and McCain schemes won't work. But ask them for a practical alternative, which WILL reduce gasoline prices, and what do you get? Nothing but the sound of chirping crickets.

While I certainly am no anti-intellectual or anti-academic, and definitely am interested in what economists have to say, I must point out that most of the people in the US do not understand economics and very likely never will ... so expecting them to fawn all over the every word of an economist, as if they were part of some "social-science priesthood," is simply not reasonable.

There is something to be said for the position that people are really interested mostly in their wallets. They're paying through the nose at the pump, they don't like it, and they want/hope that officials will try to do something about it. The typical economist's response, which is that there is nothing to be done, live with it you ignorant plebeians, is just not going to wash. Economists would -- I expect -- be smart enough to know this. Telling the public what WON'T work, just like my father telling me what he DIDN'T want to see on TV, accomplishes nothing useful.

The fact is that the supply and demand factors that have caused prices to skyrocket, do not exist in a vacuum; there are other factors at play causing them. The two largest of these are the speculative petroleum market, which makes crude oil brutally expensive (over $120/barrel), and a lack of sufficient refinery capacity in the US.

Instead of telling the public that the tax-rollback schemes won't work, and complaining about politicians pandering to the public (something of which I also do not approve), perhaps there's an economist out there who dares come up with a viable solution other than "Prices are high, will remain high, it's good for you, so live with it, you ignorant plebes"? Is the field of economics up to the task of coming up with a practical solution to a real problem, or not?

(Personally, I suspect there ARE possible solutions that economists could come up with, if they wished to.)

Just wondering.

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Grant

#41: It's not that people are labeling Obama an "elite." They're calling him an "elitist," which implies that he only cares about other "elites," be they intellectual, financial, or whatever (but mostly intellectuals. America hates intellectuals. Always has, probably always will).

Joel

http://www.thedailyshow.com/video/index.jhtml?videoId=167642&title=panderers-box

Go to 4:30 into the video. It's worth it.

Stephanopolis: "Nearly every editorial board and economist in the country has come out against it. Can you name me an economist who thinks this makes sense"

Hillary: "I'm not going to put my lot in with economists"

John Steweart: "Really, even on economic issues? ..."

There is an old adage that if you ask two economists opinion you'll get 4 answers. So to see complete and utter agreement of all economists is amazing. To see it ignored is just unfathomable.

AaronS

Economics 101 tells us that even the slightest of changes in price allow (or prohibit) the purchase of a good or service for a range of people.

Me? Yeah, I'll do some travel regardless. But I won't be spending as much on amusements and so forth, in order to make up for the gas.

Others will not be able to travel at all, most of their discretionary income taken up just going back and forth to work.

To #31 Steve...you offer no evidence, just question marks. Wait, you're not Steve Levitt are you?????????? In that case, I stand corrected!

Further, I have NOT argued that Hillary is right. I am arguing that it is a VALID position to take. Depending on your viewpoint, it may make sense, or it may not. To me, if too much of our money is consumed by gas, we have less to spend on other drivers of the economic engine of our nation. I know that getting it to the government is not the solution!

Listen, economists are the ones that have let us know that it isn't worth our time to vote. So why do they even CARE what Hillary has to say?

Further, their is a "value" to voting that cannot be measured by whether your candidate wins or loses. That is, there is as much reason TO vote as the economists might argue against it. Depends on what's valuable, what matters, and your viewpoint, etc.

Just as a businessman can make a great case for subdivisions in the Everglades, so can an environmentalist make a good one for not doing so.

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Joel

I don't think Hillary has ever touted this plan as sustainable or even practical for the long term.

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It isn't even sustainable for the short term. Sales taxes are levied on merchants. Oil companies (refiners and station owners) are intelligent people. They set their prices according to demand, and recognize that people will be contented with say 70% of the gas-tax rebate being passed down to them. If and when the rebate is lifted, they'll happily charge the 100% of the tax value again. Basically this means that during the course of the "tax holiday", oil companies are getting a 30% profit on the 18 cents per gallon that would have been taxed under normal conditions (or 5.4 cents/gallon extra profit!)

Alex

When did elite become such a bad word? Doesn't elite mean 'the best'? What kind of message does this rhetoric send: "don't succeed or else you'll be labeled as elite, god forbid."

RR

A hug? You economists are finally getting your voices heard in the mainstream! You're affecting a presidential election! I'm envious!

I never thought I'd see the day when politicians are punished for their populist pandering and sound economics is held in such high regard by the public. There is hope for America after all. Keep up the good work, economists!

Side note: I find it troubling that even some readers of this blog aren't able to understand why a gas tax holiday is a bad idea.

MS

Hillary is campaigning for 2012, not for 2008. She is remaking her image. Now she's a "working class" gal. And Obama is just an elitist. Really, you have to admire the Clintons. Who else could make a black guy, born in Kansas to a single mother, who worked hard to get to where he is, an elitist?

The gas tax relief is another great move. Hillary is for immediate relief, for doing something. Obama is for talking like an "economist," for doing nothing. Where is the change, now? The educated elites can keep arguing whether the tax relief helps or not. It doesn't matter.

Remember? She is also against NAFTA. But Bill is for NAFTA, so there you go, all bases covered.

Hillary 2012-2020.

Matthew R.

The individual has precious little influence over the price of gasoline, but has far greater influence on the amount of gasoline he buys. If I live close to work, take the carpool/bus/train, have a high MPG vehicle, and take other steps, I can dramatically reduce the amount of money I spend on gasoline, even if the price per gallon rises.

caveat bettor

Cultural Revolution redux? Hillary will look nice in Chairman Mao's duds ...

Fiore Mastroianni

This policy makes no sense because the own-price elasticty of gasoline is almost totally inelastic. This means that the suppliers of the gas can pass the cost of the tax on to the consumer even though technically the tax is being charged to the supplier because quantity demanded for gas will not change at a higher price.
You wouldn't go to Hillary or McCain to get your appendix removed just as you shouldn't go to them for economics advice.

Fiore

dan p

I think the average American is getting slighted by politicians and people on this board alike. Sure, they may not fully 'understand' certain economic concepts and keywords, but they get the general idea.

Saving a little money now is more easily articulated than we're going to build alternative energy projects throughout the United States (because where is *that* money coming from?), creating thousands of jobs (people do understand how the TVA and other Great Depression era public works projects effected the country), and we're going to reduce our dependency on fossil fuels.

People hear how we 'save' money (even if we don't really save much or anything at all) and it makes more sense than how we 'spend to save' ... not because they're too dumb to get it - but because no feels like making the necessary explanations.