Is Bernie Sanders Economically Naive?

Just today, Clash Daily published a scathing piece about Bernie Sanders titled “How Bernie Sanders Will Ride to the White House On a Wave of Economic Dumb@sses.” The article disputes a claim by economics professor Gerald Friedman, who argues that Bernie’s economic policies will produce soaring wealth and job numbers.

The anti-Bernie piece appears to have been written after a CNN Money endorsement of Friedman and Sanders’ ideas. The CNN endorsement seems to have struck fear into the heart of this particular reporter, who takes pains to slam Friedman as “a typical left-wing faculty member.”

Bernie-hating author Andrew Allen opens his article not with a statement about economics but with a list of points about Friedman cherry-picked from the Bernie-loving economist’s faculty page. It is a crass opener that borders on ad hominen (an argument made by attacking the person making the argument, rather than attacking the argument itself.)

“The verdict is in. Bernie Sanders is riding to the White House atop a wave of economic illiterates. A recent claim – praised by CNN – that Bernienomics would produce ‘soaring’ wealth and job numbers is proof.

“Gerald Friedman, an economics professor at University of Massachusetts Amherst, is the source of this claim.

“Friedman is typical of far-left faculty types. According to his Amherst faculty webpage, Friedman’s:

– Never held a job outside academia.

– Never had to meet a payroll.

– Limited his field of study to that narrow segment of economics bounded by labor unions, socialism, class envy, and social justice.

– Spent his free time writing “single payer” health care models for various states.

– A New Deal worshipper.”

Allen is not very good at ad hominem, anyway. He zeroes in on Friedman’s success in academia — some would think that success in a critical, peer-reviewed academic environment would be a mark in favor of someone’s ideas, not a mark against them, but go figure.

Allen also reveals that he is not a fan of academic specialization — he blasts Friedman’s decision to focus his interests on the economic impacts of labor unions and the effects of class envy.

The attack goes on to give a distorted account of the New Deal. There are strong parallels between Roosevelt’s Depression-era plan and Sanders’ Recession-era one, as reported by PBS. The New Deal was “an unprecedented number of reforms addressing the catastrophic effects of the Great Depression,” and it restored Americans’ faith in the economy and banks, according to the Federal Reserve History website.

Unlike his predecessor, Herbert Hoover, who felt that the public should support the government and not the other way around, Roosevelt felt it was the federal government’s duty to help the American people weather these bad times.

That sounds a lot like Bernie Sanders.

Bernie: "The American people bailed out Wall Street — now it's Wall Street's time to help the middle class." #fitn

— The National Memo (@NationalMemo) February 10, 2016

Roosevelt signed the Glass-Steagal Act, which separated traditional banking activities from speculative ones. The purpose of Glass-Steagal was “to provide for the safer and more effective use of the assets of banks, to regulate interbank control, to prevent the undue diversion of funds into speculative operations.” In other words, banks would not be allowed to gamble with the assets entrusted to them by ordinary Americans, and to risk losing them and crashing the economy.

Bernie Sanders’ website gives a great breakdown of why, like Roosevelt, Bernie supports Glass-Steagal and wants to bring it back.

Bloomberg reports that public distrust of banks was so great in Roosevelt’s time that people were demanding deposit insurance i.e., a payout from the government in the event that a bank lost a person’s money. Roosevelt opposed this until the moment he signed Glass-Steagal — even he felt that the burden on his government should not be quite that large.

It was the checks of Glass-Steagal that allowed the economy to flourish after the war. Like Montesquieu insisting on a separation of legal and governing powers, Glass and Steagal did us all a favor by curtailing banks’ power through the magic of separation.

In 1999, Glass-Steagal was repealed, and a decade later, in 2008, the world suffered the consequences as wild, risky speculation by financial institutions caused the crash that crippled middle America, as reported by Vox.

Bernie critic Allen scoffs that “a 94% tax rate was levied on those earning more than $200,000 per year” in Roosevelt’s recession America but that still did not stimulate the economy. Allen calls the New Deal a case of “Keynesian economics on overload,” betraying a startling lack of understanding of basic economic history. Keynes’ key work, The General Theory, was not published until 1936, three years after New Deal was signed. The New Deal was not an “overload” of Keynesian economics — it was a decision by policymakers to adopt an experimental attitude to budget balancing. It was this that guided Roosevelt policy-makers, as well as compassion for those bearing the brunt of the downturn.

“The New Deal was an experimental program, not specifically a Keynesian one. At that time, economists did not have the theory that federal deficits by themselves would stimulate the economy by making up a deficiency in aggregate demand. Rather, the New Dealers decided that they would not let a balanced budget get in the way of government spending on programs designed to help the economy and relieve some of the suffering of unemployment. Nevertheless, the New Deal has come down to us as a de facto Keynesian program.”

Indeed, the scholars at American Thinker argue that a Keynesian would slam New Deal as too “soft” — larger deficits should have been sustained, in order for the economy to be boosted!

“Keynesians will argue that had the deficits been larger, the effect on the economy would have been more beneficial.”

It’s not that Roosevelt went too far — he didn’t go far enough. Thankfully, Bernie Sanders is here not just to impose stricter regulations. Sanders will go further, breaking up the massive companies who gamble with our lives.

[Photo by Alex Wong/Getty Images]