Why liberals like numbers
David Brooks wonders why liberals have adopted "an economic philosophy that excludes psychology, emotion and morality." The answer, of course, is that they haven't. Brooks chides his ideological opponents for dismissing business leaders who say they are holding off because they're worried about the future, but I don't actually know anyone who doubts that viewpoint. The question, rather, is how to help.
The GOP has said the problem is "policy uncertainty." The government, Republicans say, is doing too much. But there's no evidence of that, and the argument isn't consistent. Consider the formulation by Sen. Jim DeMint (R-S.C.):
"I hope we can get a permanent extension [of the Bush tax cuts]," he said, "but if the president wants to compromise on a two- or three-year extension," that's acceptable, too. "What's important here is that businesses know to plan growth and plan to add people. If we keep things in a state of flux, I'm afraid we're going to continue to have a jobs problem."
Unpack that: He's saying that what's important for businesses is certainty about tax rates. But he'd prefer a two- or three-year extension to President Obama's proposal, which is a permanent extension of the tax cuts for income under $250,000 and a permanent end to the tax cuts for income of more than $250,000. In other words, DeMint doesn't really care about certainty, and he doesn't think businesses do, either. He cares about his favored policy proposal. If asked to choose between long-term certainty on tax rates and more tax cuts, he chooses the latter.
Another common variant of this argument is that businesses are worried about the debt. As the story goes, office parks in Ohio aren't hiring because they're concerned that the federal government won't be able to meet its obligations in 20 or 30 years. I find that a bit peculiar, but even if I didn't, the same people making this argument want to spend $4 trillion on further tax cuts -- and do it without offsets. You're either worried about the debt or you aren't.
Liberals, by contrast, think businesses are worried about the future, but they think the problem is that there's no demand and too much tail risk in the economy. Why invest in more capacity before the employment levels necessary to support that capacity come back? Why stop hoarding cash when Ireland could default and force another panic in the credit markets?
The preference for numbers that Brooks identifies comes because, well, these arguments have numbers and evidence behind them. That's a strength, not a weakness. The preference for unfalsifiable concepts such as policy uncertainty comes because the arguments are not really on the level, and attaching numbers to them would expose the flaws. Brooks takes this a step further and attacks the practice of attaching numbers and using historical models to make arguments, but by the end of his op-ed, he's back to citing economic estimates that favor his position, so it's hard to believe he's really so skeptical of empirical rigor.
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