What Is “Solid Economic Reasoning”?

Writing in The Nation, Robert Pollin asserts:

All of [Bernie Sanders’s] major proposals are grounded in solid economic reasoning and evidence.

Reading this statement, I was quite surprised. Despite the fact that many of the proposed policies would, in my opinion, likely prove beneficial — greater infrastructure spending for instance — the key question surrounds the impact of the Sanders plan on growth. Without a sufficiently large and persistent boost to growth, it is not possible to square the circle.

Liberal critics of Sanders, led by Krugman as well as four former Chairs of the Council of Economic Advisers under both Clinton and Obama, became especially incensed over a paper by my colleague Gerald Friedman that estimated the impact of Sanders’s overall program on jobs and economic growth. Friedman concluded that it could raise the average annual US growth rate to 5.3 percent over a 10-year period after Sanders assumed office. This contrasts dramatically with the average growth rate of 3.3 percent between 1950 and 2015, and the much weaker recent average growth performances of 1.4 percent under Obama and 2.1 percent under George W. Bush. In fact, these critics were correct that Friedman’s specific growth estimate was overly optimistic. But here again, the critics have missed the forest for the trees.

Overall, the Sanders program is capable of raising living standards and reducing insecurity for working people and the poor, expanding higher educational opportunities, and reversing the decades-long trend toward rising inequality. It could bring Wall Street’s dominance under control and help prevent a repeat of the financial crisis. It will also strongly support investments in education, clean energy, and public infrastructure, generating millions of good jobs in the process.

None of Sanders’s liberal critics have shown how, overall, these developments would be harmful to economic growth. In fact, there are several channels through which they support growth. A single-payer healthcare system would relieve businesses of having to cover health insurance costs for their employees. Higher average wages and greater overall equality will put more money in the pockets of most US consumers, enabling them to buy more from US businesses. Investments in education and infrastructure will raise US productivity and global competitiveness over the long term, as well as expand job opportunities in the short term. …