Saturday, February 14, 2009

Consensus

President Barack Obama spoke of a consensus among economists over the need for massive government intervention to stimulate the economy. Setting aside whether that is correct or not, Greg Mankiw notes that economists do agree on a number of economic issues and provides a list with the amount of consensus:

Here is the list, together with the percentage of economists who agree:
  1. A ceiling on rents reduces the quantity and quality of housing available. (93%)
  2. Tariffs and import quotas usually reduce general economic welfare. (93%)
  3. Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)
  4. Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)
  5. The United States should not restrict employers from outsourcing work to foreign countries. (90%)
  6. The United States should eliminate agricultural subsidies. (85%)
  7. Local and state governments should eliminate subsidies to professional sports franchises. (85%)
  8. If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)
  9. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)
  10. Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)
  11. A large federal budget deficit has an adverse effect on the economy. (83%)
  12. A minimum wage increases unemployment among young and unskilled workers. (79%)
  13. The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
  14. Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)
What's interesting is on how many of these items that Democrats tend to fall on the opposite side of economists. Just this week it emerged that New York Democrats are trying to strengthen rent control in violation of #1. Democrats, including President Obama, are regular opponents of free trade agreements that increase economic welfare (#2). Democrats regulary rail against outsourcing (#5) and actually removed language inserted by Sen. Tom Coburn in the stimulus package that would have prohibited spending money on stadiums (#7). Democrats kicked and screamed when President Bush proposed reform of social security but have not offered up any reform ideas of their own (#9). Democrats are also consistent backers of a higher minimum wage in violation of #12.

Why so many people continue to believe that Republicans are a bunch of rubes while Democrats have some monopoly on intelligence is an enduring mystery.