Let Me Strongly Agree with Ben Bernanke on the Wall Street Journal Editorial Page: It Is and Has Long Been a Clown Show
…[They say that because] the FOMC’s projections of economic growth have been too high… monetary policy is not working and efforts to use it to support the recovery should be discontinued. It’s generous of the WSJ writers to note… that ‘economic forecasting isn’t easy.’ They should know, since the Journal has been forecasting a breakout in inflation and a collapse in the dollar at least since 2006, when the FOMC decided not to raise the federal funds rate above 5-1/4 percent….
They fail to note that, while the FOMC (and virtually all private-sector economists) have been too optimistic about growth… growth in output has been slow… because productivity gains have been slow…. But nobody claims that monetary policy can do much about productivity growth…. The Fed’s aggressive actions are an important reason that job creation in the United States has outstripped that of other industrial countries by a wide margin.
The WSJ… argues that because monetary policy has not been a panacea… we should stop using it…. But the right inference is not that we should stop using monetary policy, but rather that we should bring to bear other policy tools as well. I am waiting for the WSJ to argue for a well-structured program of public infrastructure development…. We shouldn’t be giving up on monetary policy…. We should be looking for a better balance between monetary and other growth-promoting policies, including fiscal policy.
What is there to say other than to agree?
That eight years of being not just wrong but completely and totally wrong about the macroeconomic situation have provoked precisely zero rethinking of any issues by Paul Gigot and company is… not unexpected.
These are the people, after all, who claimed that the Clinton tax increase of 1993 would lead to a deep and long economic depression.
These are the people, after all, who claimed that the Reagan tax cut of 1981 would reverse the productivity slowdown of the 1970s and restore the growth rates of the 1950s and 1960s.
The point of the Wall Street Journal editorial page is to pander to the prejudices of its core readers. It is not as malevolent and destructive as Fox News, which takes its mission to be to scare its core readers so that they keep their eyeballs glued to the screen so that those eyeballs can be sold to advertisers. But its mission of reinforcing evidence-free right-wing epistemic closure against any incursion of empirical reality is a malevolent and destructive one.