Adventures in Circular Logic and Free Market Fallacies

Yesterday, I got a really angry and rather humorous comment from a reader/blogger, who objected to a diary where I suggested that tax cuts have little effect at stimulating the economy. My commenter complained that I used a government study as my source to make that point. The study in question was from the Department of Treasury's Dynamic Scoring Analysis, which was conducted in 2006, in the middle of Bush's second term. The study, in other words, was done by the Republican administration's own Treasury. Nevertheless, here's what the commenter said:

Oh, the Pubs "controlled" the Treasury at the time of this bogus report? Just like they "controlled" the CIA and the AGs office, and the State Department, yeah right. Those places are chock full of liberal careerists who are no more conservative or Republican than I am a Martian.

In other words, if they don't like the message, the conservative's preferred method of debate is to discredit the messenger. So, a report by Treasury, which had a Republican Secretary, John Snow, was biased against the Republicans because the Department's unbiased professional economists didn't toe the boss's line. It is, by the way, to John Snow's credit that he allowed the report to go forward. We know that in too many other cabinet agencies, political appointees actively interferred with scientific studies and, in the case of DOJ, the pursuit of real justice. Political loyalty, not commitment to facts, was the rule in the Bush administration. That, alas, is still true among Republicans, especially of the conservative variety.

Not content to produce junk science, junk economics, junk intelligence, and faux justice, they are now attempting to rewrite history so that the Keynsian economic policies that got us out of the Great Depression suddenly become the cause of it.

I'll get to why they are so wrong about that contention in a moment. First, let's discuss what they consider an unbiased and proper source of evidence for making their argument and why they object to what I consider to be unbiased evidence.

The same people who criticize me for using "biased" sources, like the New York Times, the Department of Treasury, and the Washington Post, never seem to get beyond taking all their information from the Cato Institute and its derivatives. It would be the equivalent of me using the Economic Policy Institute or the AFL-CIO website as my sole sources. In fact, I seldom use those sites, even though I read them, because I know they have a left wing bias, which would make them less convincing to those who don't share my particular world view. I try to use mainstream sources rather than left/liberal sources. So, I don't go the Nation, Mother Jones, or the EPI to back up my arguments in most cases.

The times where I might link to the AFL-CIO website is when I want to inform readers of some event, activity or news item. I might use them as a news source for labor-related reports. That's very different from using them for evidence to back up an opinion.

In GOP-world, however, there is no source but Cato. These writers and bloggers seem not to have an understanding of the notion of circular logic. And they provide few outside, objective resources to back up their claims with objective evidence. They live in a circular little world - ok, let's be less polite, it's a circle jerk, where opinion masquerades as fact, and evidence is badly abused and misrepresented most of the time.

One example is the ludicrous claim, not coincidentally, making its way around Cato and the conservative blogs, that Hoover was a Keynsian and that Roosevelt's programs prolonged and deepened the Great Depression. Wow, what a re-write of history.

As a matter of fact, the Great Depression was a deep, intractable economic bog that mired the country, and the world, for many years. It wasn't truly until WW II that we came out of it. That wasn't because free markets mysteriously kicked in and began working again of their own accord. It's because the government, gearing up for war, spent a lot of money on weapons, uniforms, food, and other war related goods. Factories were converted to produce war materiel. In other words, massive government spending occurred, men were drafted into the army, and a shortage of workers at home brought the country to almost full employment. In fact, the job market was tight, which drove up wages. Remember Rosie the Riveter? She left her kitchen to work in the factory producing the guns her husband and brothers were using overseas. And she made a damned good salary doing it.

Here's an illustration that shows how the Cato arguments are wrong. You'll have to forgive me that it comes from another of those biased sources I always use, this time the U.S. Census Bureau.

As you can see, from the graph, unemployment fell throughout the 30ss and 40s, after Roosevelt's election. To be sure, there were fits and starts and it wasn't a steep, immediate decline. And today's stimulus package also won't bring immediate relief. When things are that bad, it never does. It's like when somebody is seriously ill, they don't recover completely and leap from their sickbed the day after you start them on the penicillin. Sometimes, even with the strongest medicines, it could take weeks for a full recovery. Translated into economic terms, it will probably take several years to see the fruits of the economic stimulus package, but some relief will start to be felt sooner rather than later.

Of course, the chart doesn't tell the full story either. Although unemployment was low in the 1920s, before the Great Depression, that was part of the era known as the Gilded Age, where the disparity in salaries between the ordinary worker and the captains of industry was enormous. The middle class was small. There was a large group of working poor at the base of the pyramid, and at the very top of the pinacle, there was a tiny amount of truly wealthy people, who controlled most of the country's resources. Many people lived in abject poverty, barely able to make ends meet.

The low unemployment from the 1940s onward, was also accompanied by greater real prosperity and a large, solid middle class. It's not just that Roosevelt produced jobs, he delivered well paying jobs, a strong manufacturing base, and a large, strong middle class, which endured into the 1970s and 80s. After the Reagan Revolution, the beginnings of the Second Gilded Age, with its inequity and declining prosperity for the middle class took over - but that's the topic for a later post.