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Home Publications Blogs Beat the Press George Will Is Badly Confused on Economic Issues, Again

George Will Is Badly Confused on Economic Issues, Again

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Sunday, 16 March 2014 08:31

Fortunately for Mr. Will, he works for Jeff Bezos, a man who accumulated $32 billion (more than 40 percent of the annual food stamp budget) by assisting people in evading state and local sales taxes. (Under most state laws, people are obligated to pay sales tax on items they buy over the Internet, however enforcement is essentially zero. The amount of tax that Amazon customers have avoided as a result of purchasing over the web is at least an order of magnitude greater than Amazon's profits since it inception.) Given his background, Bezos would probably not be concerned that Will misrepresents facts to readers.

Will starts by complaining that President Obama's proposal to raise the minimum wage would "do very little for very few." Since the Congressional Budget Office just calculated that the proposed wage hike would directly or indirectly raise the wages of 25 million workers, Will must be giving new meaning to "very few."  He then goes on to complain about the farm subsidies in the new agriculture bill, referring to the "geyser of subsidies" in  "the $956 billion farm legislation." Whatever the merits of the subsidies, they come to less than 10 percent of the total cost of the $956 billion figure highlighted by Will.

Will next complains about the increase in spending on food stamps, telling readers:

"Between 2000, when 17 million received food stamps, and 2006, food stamp spending doubled, even though unemployment averaged just 5.1 percent ." While some of this rise was attributable to increased outreach to eligible families, the employment picture had deteriorated sharply from 2000 to 2006, with the employment to population ratio dropping by 1.5 percentage points. This corresponds to 3.4 million fewer people working. (It's not clear what information Will thinks he is providing by giving the average unemployment rate for the period. If we are looking at changes, it is the endpoints that matter.) Also, food prices rose by 16 percent over this period, which explains a substantial portion of the increase in spending. (Will's source shows that the 2000 level of beneficiaries was a low-point driven by the strong economy of the late 1990s. The number of beneficiaries in 2006 was still below the number in 1995.)

We then get this great invention from Will:

"We spend $1 trillion annually on federal welfare programs, decades after Daniel Patrick Moynihan said that if one-third of the money for poverty programs was given directly to the poor, there would be no poor."

There is no source for this $1 trillion figure, which presumably Will just made up. (Spending on the programs ordinarily thought of as poverty programs, such as food stamps, EITC, and TANF, would not come to one fifth of this amount.) 

Will's next shot is:

"Young people just starting up the earnings ladder and families in the child-rearing, tuition-paying years subsidize the elderly, who have had lifetimes of accumulation. Households headed by people age 75 and older have the highest median net worth of any age group."

Of course households have paid for their Social Security and Medicare benefits with the taxes they paid in over their working lifetimes. By Will's logic we can say that the young are subsidizing the rich because the rich receive tens of billions of dollars every year in interest payments on the government bonds they hold. If we can ignore the contributions that seniors made for what are effectively insurance programs run by the government then it also makes sense to ignore the fact that the rich paid to buy the government bonds they hold. Welcome to George Will's world.

Also wealth is an especially bad measure of well-being of different age groups. People typically borrow early in life and then accumulate wealth over their working years in order to support themselves in retiirement. In George Will's world a widow with a paid off mortgage but no income other her $1,300 a month Social Security check is doing better than a recent Harvard MBA working at Goldman Sachs who has not yet paid off their student loan debt. Most people probably would not see it this way.

As a practical matter there is no remotely plausible story in which young people will not on average be much better off than their parents and grandparents. If most young people do not see substantial improvements in living standards relative to earlier generations it will be because so much money has been redistributed upward to people like Will's boss, Jeff Bezos, not because of the Social Security and Medicare benefits received by the elderly.

Will then complains about the zero interest policy of the Fed, even though this hurts to some extent the wealthy elderly on their savings accounts. These are the same folks in the prior paragraph he complained were getting subsidies from the young through Social Security and Medicare. So Will thinks it's awful that we are giving them so much and so little money.

The next point of complaint is the:

"boom in equity markets — up 30 percent last year alone — has primarily benefited the 10 percent who own 80 percent of all directly owned stocks."

In fact, the recent rally has just brought stock prices roughly back to their pre-recession level, adjusted for inflation. If stock prices had risen in step with potential economic growth over this period, they would be more than 10 percent higher today.

Will then cites Dallas Federal Reserve Board president Richard Fisher telling readers:

"the federal government’s fiscal and regulatory policies discourage businesses from growing the economy with the mountain of money the Fed has created"

Is that so? Can Will at least give us a fairy tale that would fill out the details. In the real world, business investment is almost back to its pre-recession share of GDP, coming in at 12.3 percent in the last quarter compared with an average of 12.8 percent in the years 2005-2007. Given the huge amounts of excess capacity that still exists in many sectors of the economy, this is actually a pretty strong rate of investment. Perhaps Will could give us a tip on where we would see more investment if there was less government regulation. It would take unprecedented investment shares to fill the gap between potential and actual GDP that Will notes.

Will concludes by telling readers:

"This is why 'the most vital organ of our nation’s economy — the middle-income worker — is being eviscerated.' And why the loudest complaints about inequality are coming from those whose policies worsen it."

There you have it, another chapter in George Will's world. It doesn't make much sense, but hey, it's the Washington Post.

 

 

Comments (14)Add Comment
Great Post/Typo Patrol
written by JimV, March 16, 2014 11:10
Great post, per usual!

I think this is a typo: "There is source for this $1 trillion figure" - should be "There is no source ...".

I used to think George Will made sense - compared to Sam Donaldson - on the old ABC Sunday show with Brinkley et al. Don't know what I was thinking, now.
...
written by skeptonomist, March 16, 2014 11:31
No, investment is not back to where it should be. Saying that it is back to pre-recession levels as a fraction of GDP is saying that it is stagnating at a level that is not likely to cause recovery. GDP is currently running disctinctly below long-term trend level, which is why the economy is generally viewed as poor. Investment should be at least at the long-term trend level if the economy is to return to that level.

The real issue is why investment remains low; is it taxes and regulation as Will and other conservatives keep claiming, or is it low demand? Since taxes are at historically low levels and regulations are also lax compared to more properous eras, the conservative claim is simply false. Also, as Dean often points out, housing and general construction remain low because of the bubble.
Non-residential investment is pretty much back to pre-recession levels
written by Dean, March 16, 2014 12:24
Skeptonomist,

i was referring to non-residential investment, which should have been apparent from the numbers in the post. In fact, the investment share tends to peak at or near the cyclical peak, so you're looking to explain an anomaly that does not exist.

the low residential investment share is easily explained by unusually high vacancy rates, which are a leftover from the overbuilding of the bubble years.
George Will Admits Ultra Rich Could Eliminate the Poor with Chump Change
written by Last Mover, March 16, 2014 12:36
"We spend $1 trillion annually on federal welfare programs, decades after Daniel Patrick Moynihan said that if one-third of the money for poverty programs was given directly to the poor, there would be no poor."


Amusing, all the more so coming from one whose arrogance is regularly succeeded by his stupidity of economics.

For example, the ultra wealthy in America have accumulated far beyond $40T in wealth, much of which by any reasonable measure was not earned, but taken from the rest in the form of monopoly rent with no value added to the economy in return.

If George Will had the slightest idea of what economic universe he lived in, surely for the love of self sufficient moral values which he wears proudly on his chest as a badge of honor, he would condemn the ultra rich at least a much as he condemns government "waste", ranting that even if the rich gave back only 1/40 of their wealth directly to the poor, that would be three times as much as the poor would get if the government gave the money directly to the poor.

Have you no shame George Will, fingering the poor for dragging the economy down compared to the ultra rich? It's like claiming the fire was caused by all those people living in wooden houses instead of the arsonist who started it.

Rather than "very little for very few", such chump change from the rich would be very little for very many, also known as a very high benefit to cost ratio. However, George Will can be excused for having no idea what this means, since he doesn't even know what added value means either.
The Willting Post
written by Larry Signor, March 16, 2014 12:51
George Will is just a lapdog for whoever pays the best. But he is fun to beat up on.
George Will - Time Traveler from 19th Century
written by Paul Mathis, March 16, 2014 12:52
Perhaps Will could give us a tip on where we would see more investment if there was less government regulation.


Ok, how about completely deregulating coal mining and burning? Just like the 19th century, King Coal would rule the land spewing pollution into our lungs with abandon.

Presumably, we would see a lot more investment in the coal industry and coal for power generation.
George has really flipped his wig with this column
written by jumpinjezebel, March 16, 2014 1:41
I think this one is a new low for strawmen arguements and mischaracterization of events. I must also point out that his lament about the Farm bill is totally misplaced as the largess was included at the Republicans' insistance. "Obama's policies only worsen econimic inequality" was the title here locally in "Rapin' Akin" territory. Good thing for him he's at Faux Noise - if he had brought this line of BS up Katrina vanden heuvel would have handed him his ass - again.
Important to note
written by ifthethunderdontgetya™³²®©, March 16, 2014 2:28
The WaPo is no better under Bezos.

But it got to these craven depths under Donald Graham, another Richie Rich.

Our corporate media: completely corrupt.
~
He should have kept Ezra and booted WIll
written by Dave, March 16, 2014 3:14
If Bezos had kept Ezra and booted Will the paper could have been salvaged. It is hopeless now. I'm talking about informing the public, of course. As a profit machine, it might turn out well for Bezos.

Likely Source for Trillion Dollar Welfare Estimate
written by Robert Salzberg, March 16, 2014 3:35
Here's a link for an article from The Heritage Foundation that gets to the trillion dollar welfare number by including programs like unemployment insurance and disability payments. I don't see how employment insurance funded by employers and employees should count as welfare. By that logic Social Security and Medicare should also be counted as welfare.

http://www.heritage.org/resear...and-rising
...
written by howard, March 16, 2014 3:59
people have covered a number of other points already, so i'll just add that when richard fisher is your source of insight, you have no insight.

...
written by watermelonpunch, March 16, 2014 9:55
Likely Source for Trillion Dollar Welfare Estimate
written by Robert Salzberg, March 16, 2014 3:35
Here's a link for an article from The Heritage Foundation that gets to the trillion dollar welfare number by including programs like unemployment insurance and disability payments. I don't see how employment insurance funded by employers and employees should count as welfare. By that logic Social Security and Medicare should also be counted as welfare.


I suspected right away he was using that stupid Heritage number.

There has of course been a propaganda push in recent years to get people to view unemployment insurance as the same as welfare... and that Heritage number proves that.

By their reasoning, highways, bridges, sewage systems, police & fire departments are all welfare hand-outs.

I'm becoming convinced that if the Heritage foundation had been in charge of all humans throughout history we'd still be hunter gatherers, if our species survived at all.
The $trillion per year welfare number ...
written by John Puma, March 17, 2014 2:28
... correctly describes the peak levels of the corporate welfare program known as QE (now, allegedly, "tapered" to a mere $750 billion/yr) sent dutifully to bailout the pathological corporate gamblers who came quite close to crashing the global economy.

Re Mr Baker's quote: "It's not clear what information Will thinks he is providing by giving the average unemployment rate for the period." The use of averages is an apparent, wide-spread tactic of the methodical media misinformers. For example, the neo-fascist editor of my local newspaper
used the "average" tax rate argument to gleefully justify the Bush tax cuts.

Neither Will nor Brooks are the bumbling fools that they are often mistakenly characterized to be. Rather they are the highest level of vast, pro-0.01% propaganda machine.
...
written by Jim, March 17, 2014 11:33
George Will is the perfect conservative intellectual. He can quote Menken, and puts on a great show of erudition, yet proves himself the living embodiment of an oxymoron. In the end his arguments are weighted invariably toward the rhetorical, and show a paucity of substance.

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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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