Harvard economist Greg Mankiw has unearthed the unemployment predictions of the Obama administration during the debate over the stimulus bill (p. 4 of the economic teams January report), and mapped onto it the actual unemployment figures for March and April:
What the graph shows is that, not only was unemployment worse than the Obama administration said it would be after the passage of the stimulus plan, but it is worse after the passage of the stimulus plan than it predicted it would be if the plan were not passed in the first place.
Mankiw is customarily gracious about this little presidential oops:
What does this mean? One interpretation is that the fiscal stimulus has failed to achieve what Team Obama thought it would. Another interpretation is that the baseline was worse than they believed at the time. I am confident the report authors would adopt the second interpretation. If so, that fact is consistent with what I said in a previous post: In light of the shifting baseline, it is impossible to hold the administration accountable for whether its policies are achieving their intended effects.In other words, the stimulus may have worked or it may not have worked. We'll never know. In this vast socialistic experiment the President is subjecting us to, we will never know whether it would have been better or worse not to do it. Since we cannot know what would have happened if the stimulus had not been passed, we guinea pigs have no control to compare what happened after it was passed:
It is like asking a doctor, "How much sicker would this particular patient have been if you had not given him treatment up to now?" You can get, as an answer, the doctor's subjective professional judgment, but you cannot expect objective measurement.Instead of jumping on the administration and saying that the stimulus plan did not work, Mankiw is essentially standing up as the representative of Economics and taking the bullet himself.
Well, I'll have to admit, I'm impressed with the nobility of his act. But there's more to it than that. When, after issuing very specific predictions about what would happen under a certain policy, a socialist policymaker issues a report saying that such and such will happen if it passes and such and such will happen if it doesn't, and, after it is passed, the such and such that he said would happens if it was not passed happens anyway--and it fact it's worse than he predicted if it didn't pass, it's awfully hard not to say that the policy failed. And all the talk about changing baselines would sound like so many excuses.
I mean, you know what would happen if the predictions were met: there would be no question about shifting baselines then. The socialist policymaker would be trumpeting the their success from the rooftops.
But there is something else. Socialism itself is premised on the idea that centralized planners can know with some accuracy what the economy is doing--that their figures are accurate. If they make predictions and later, to avoid the obvious conclusion that it didn't happen they way they said it would, they say they didn't have all the facts--and they do this on a consistent basis--which they do--then, if you are logical, you will have to question the whole socialist paradigm--which, of course, they never do.
In other words, saying that either the Obama administration's stimulus plan either failed or is impossible to verify means we can come to one of two conclusions: either this one socialist stimulus plan failed or socialism is impossible.
In either case, it doesn't bode well for Obama's economic plan--or his health care reform plan.