Wizards of Finance

Brian Riedl, the Remnant’s “unofficial budget guy,” returns to discuss our economic woes. After kvetching ...

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Brian Riedl, the Remnant’s “unofficial budget guy,” returns to discuss our economic woes. After kvetching about inflation, the deficit, and supply chains, he and Jonah dig into the mistaken idea that the president can control every needle of the economy. Brian has noticed an interesting trend: Since Reagan, we’ve consistently elected Republican presidents during booms and Democratic presidents during recessions. But what are the implications of that for the economy? Furthermore, did the New Deal make the Great Depression worse? Is Build Back Better dead? And should anyone take Rick Scott seriously?

Show Notes:

– Brian’s webpage

– Brian: “Presidents as Economic Managers”

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  1. Scott Smart

    "It's a small sample, but it's a pattern. There is a pattern here that is actually economically predictable." Really bad response to Jonah's comment that the sample of presidents/business cycles is small no matter what argument you're trying to use that sample to buttress. Jonah is also right that presidents have much less affect on the economy than they get credit/blame for.

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    Mkapnick

    Just catching up on Remnants after kids Spring Break. My take:

    1) This may sound like fanboy flattery (and perhaps it is), but my Jonah's ad reads are only second to Conan O'Brien. I mean they are so campy, they are funny.

    2) An obvious supply side policy advocated by Scott Lincicome and not mentioned by Brian Riedl is an increase in immigration. This could help us address the current labor shortage which is the result of misguided policies on immigration (meaning we don't have enough). See Lincicome's appearence on "conversations with Bill Kristol" for more on that.

    https://conversationswithbillkristol.org/video/scott-lincicome-iii/

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  3. DocHeartless

    I really appreciate Brian's perspective and his good humor. And I am always happy to see a podcast with him featured. And yet, I always end the experience with substantial distaste and a renewed understanding of why conservative economists turn so many people off politically. This feeling I have stems from the perceived disregard for the suffering of individuals, and I realize that this is an unfair charge to make against economists in general -- they're called 'macro'economists for a reason, after all. But I wish that we could develop better ways to talk about these issues that wouldn't make the conservative position, with which I generally agree, sound so elitist and callous.

    I am particularly attuned to hear these discussions this way, I am sure, because of personal experience. I hope everyone will forgive me the memory lane, but perhaps this is worth explaining just a bit. In the summer of 2016, I was fired from my teaching position. I am by no means a perfect person, but I was caught up in a political struggle of an outgoing head of school and was replaced along with about 1/3rd of the faculty at the school. Private school job seeking is a pretty crazy process, and even with a glowing resume and a PhD in history, I knew I would be applying for hundreds of job applications to get even a couple of interviews (it's insane - no one go into the humanities, lol). What was worse, I and my friends had lived and taught in a backwoods rural area in Utah, so there were no jobs to be had nearby. It was a veritable diaspora after the destruction of the lives we had built over the last ten years. The emotional and social trauma of this moment still stings and was, doubtless, one of the worst times of my and my family members' lives. My wife and I decided that we would stay put in Utah for a year so that we could make a fuller search of positions the following winter.

    I went on unemployment ($1200 per month for a maximum of 6 months - hardly a windfall), but that was the only governmental assistance I received. I explored private health insurance and the cheapest plans available were almost $2000 per month. Needless to say, that was untenable. Fortunately, the ACA was still available and I was able to get a government program for about $350 a month. This program was a lifeline in this circumstance and I will always be profoundly grateful to the Obama administration for creating it.

    Now fast forward to November of 2016 and the victory of Trump and the republican party. Their first legislative achievement was the tax cuts, and I don't mean to bash those. I am generally in favor of tax cuts, and there were many closing or limiting of loopholes in that legislation that were praiseworthy and disproportionally hit the wealthy. But I think it is fair to say that the majority of the results of that legislation weren't to help people in my situation.

    The next major legislative push was to overturn the ACA. Now, on this score, I nearly lost my mind. I have never been so adamantly opposed to the republican party in my life (in this election I voted for Clinton, Mia Love for congress, and Mike Lee for senate iirc). Not only was the party abandoning all morals in electing this dumpster fire of a human, but they were about to destroy a program that ten million Americans were depending on. And, despite the assurances of "something even better" in the wings, I think we would all agree that there was never anything serious to replace it. Yes, the effort to overturn it failed (thank you John McCain, you, glorious superhero, you). And, yes, there probably were more senators in the wings that were prepared to shoot it down. But I don't think it is unreasonable to say that the majority of republican politicians out there were itching to destroy the program--it's very hard for me to forgive them that.

    This is all just to say that the republican party and conservative economists have a "concern for the unfortunate" perception issue that they should confront. I have learned a tremendous amount from Brian and Jonah on this podcast, and I am grateful for it. I agree with the vast majority of economic advice he gives (destroy the Jones act and its ilk, freer trade, lower government interference, allow creative destruction, etc...). But is there really nothing that can be done at the macro level to help individuals at the bottom? Yes, I get that steel tariffs are awful, but what can the Republican party say to a 50 year old steelworker that is suddenly unemployed? Imagine seeing this tortured soul asking Brian what can be done to help him -- what is the answer? The steel man response, I suppose, that Brian would give is that "my job isn't to help individuals, but rather to create the most fertile economic ground by which you can pick yourself up and move on. I advocate further lowering the cost of goods and services and creating more jobs overall in the economy. So I say we further lower corporate taxes and create more offshoring opportunities in other industries." Yeah, how do you think that sounds to that individual? Is that the best response we can create as a movement without moving into the new monetary policy nonsense?

    Speaking of steel man versus straw man arguments, could we please, please stop with the "if you take every penny of all the billionaires" line or the "the wealth of the 1% isn't enough to fund x" nonsense. Of course, Sanders and AOC love to talk about the 1%, but I think we all agree that they are morons. How much money would be generated if all Americans making $100,000 or more paid another $5000 in taxes, and those $150,000 and higher paid another $10,000, etc... You know, a progressive tax system like the one we presently have. Or how much would a small VAT of 1% or 2% bring in? How about more steel man arguments of what we could actually do to help individuals that are getting wrecked from globalization or just unfortunate life events, that could then pull more people on board conservative policies that would juice the economy and help the nation as a whole?

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    Man-Eating Cow

    Well. Your birthday is within just a couple weeks of mine.

    Plus or minus a decade or two.

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    Andreas Wolf

    I think whenever a survey asks the people to use percentage numbers, all the results will show is that a lot of them are not numerate. This would be true at any time and in any country, but it seems to be very obvious at this point in time.

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    BWG

    Happy birthday Jonah!
    My, that is some fine nerdist blow.

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    GE

    For God's sake? Wisconsin is the 'Land of 10,000 Lakes'? Please.

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    GE

    For God's sake? Wisconsin is the 'Land of 10,000 Lakes'? Please.

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    Ben Connelly

    At one point, I believe I heard Brian say something like that to balance the budget and eliminate the national debt in 10 years, we’d have to “cut 40% of the federal government.” To paraphrase Ron Swanson, “Let’s make it an even 50!” In all seriousness, 40%? That’s all? A country that can put a man on the moon…

    If you haven’t done this at some point in the past (if so I’d like the episode number), you should definitely have Amity Shlaes on to discuss how FDR made the Great Depression worse!

    And finally, Happy 30th (jk) Birthday, Jonah!

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      BWG

      Ms. Shlaes is a stellar example of what you can do with a bachelor's degree in English.
      Then again Jonah is a stellar example of what you can do with a bachelor's degree in poli-sci.

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        Ben Connelly

        My sister has a bachelors in English

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  10. Sean

    I'm picking nits here, but from my understanding the causes of the 1920 recession were nothing like the causes of the Great Depression or the 2008-09 recession. After WWI, demand for goods and services dropped off a cliff but the supply of goods and services was still really high, which was exacerbated by all the men coming home from Europe looking for work. To prevent run-away inflation, the Fed basically had to force the economy into a severe recession in order to cause a market correction and then be able to pull it up again. In this way it is more similar to what happened in the early 1980s. Supply-related recessions are easier for the Fed to handle than demand-related recessions, which require more fiscal work than the monetary work that the Fed handles.

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