The old saying has it that if all the economists in the world were laid end to end they wouldn't reach a conclusion. Economists can't agree on the past, let alone the future. Who needs them?
There are, for example, economists who say that Clinton's 1993 tax increase caused the subsequent economic boom by (a) reducing the deficit, which (b) resulted in lower interest rates, which (c) stimulated consumer and business spending. There are, on the other hand, economists who say that (a) deficits have no discernible effect on interest rates and, therefore, (b) the boom of the '90s was a normal post-recession recovery pumped up by rapid gains in productivity -- phenomena beyond the influence of presidential power.
The Bush tax cuts have economists equally divided, pro and con. Some economists argue that reversing the cuts in higher tax brackets wouldn't harm economic recovery but would reduce the deficit, which would in turn…blah, blah, blah. Other economists say that reversing any of the Bush cuts would put the economy into a nosedive by discouraging investments in new technology and business ventures.
Switching from macroeconomics (the study of aggregate economic activity) to microeconomics (the study of, what else, disaggregate economic activity), we find opposing camps on such issues as the minimum wage. Some economists say that raising the minimum wage has little effect on the employment of minimum-wage earners. Others argue the opposite. Both sides have data to support their conclusions -- of course.
Then there's Social Security -- the economic issue of the Twenty-first Century. Some economists argue that Social Security can be "saved" by "tweaking" the system, namely, by increasing Social Security taxes (oops--"contributions") and/or cutting Social Security benefits. Others argue that the system is moribund and the only way to save it is to kill it and replace it with private retirement accounts.
Now, if you've been reading carefully you'll have noticed a trend. There are those economists who think the federal government should intervene in the economy (unless there's a Republican president), and there are the others who believe we'd all be better off if the federal government didn't try to fine-tune the economy, kept its hands out of taxpayers' wallets, didn't interfere with businesses' (legal) operations, and didn't run (badly) the world's largest ponzi scheme (oops -- pension program).
Can you guess which side I'm on?
Next post: why Social Security should be privatized, in one easy lesson.