UMass Amherst Economists Give Academic Heft To Sanders' Proposals | Connecticut Public Radio
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UMass Amherst Economists Give Academic Heft To Sanders' Proposals

May 3, 2016
Originally published on May 3, 2016 5:19 am

As Bernie Sanders tries to keep his fight for the Democratic nomination for president going amid primary losses in recent weeks, his campaign is starting to talk about influencing the party platform.

Economists at UMass Amherst have been providing academic fodder for Sanders’ proposals.

His critics, including his rival for the Democratic nomination, Hillary Clinton, have accused Sanders of not thinking through his policy proposals. The UMass economists have been rebutting those accusations.

The Battle Over 5.3 Percent

Sanders is proposing to more than double the federal minimum wage, to provide free public higher education, and to offer single-payer health care for all Americans.

Perhaps no economist has provided as optimistic an assessment of the economic impact of those proposals as UMass Amherst’s Gerald Friedman has. He calculated that Sanders’ policies would grow the economy at 5.3 percent a year over the next 10 years.

“So it would return the economy to the growth path that it was on before the Great Recession, and it would basically bring us to full employment, an unemployment rate of a shade under 4 percent,” Friedman estimated. “It would increase inflation somewhat, and it would dramatically reduce poverty, and it would dramatically reduce the gap between rich and poor.”

Critics focused on Friedman’s predictions of 5.3 percent growth a year.

Friedman conceded in an interview with WBUR that his calculations may not have factored in that as the economy comes close to producing at full capacity, the impact of Sanders’ policies would diminish.

“The multipliers would go down because we would start importing more, and I didn’t explicitly model the foreign sector,” he said. “Also, it’s possible that my estimates of the effect of the minimum wage increase are too high because maybe more of that would go into prices and less into productivity growth than I’m figuring. So, if you make those adjustments, maybe instead of 5 percent growth, you’d get 4 percent growth.”

Sanders is proposing more than doubling the federal minimum wage, to $15 a hour. Friedman predicts that would have vast repercussions.

“Going to $15 would substantially raise wages for low-wage workers, and it would work [its] way up to raise wages for about half of the American workforce,” Friedman predicted.

Robert Pollin, co-director of UMass Amherst’s Political Economy Research Institute, said 5.3 percent economic growth is “unrealistic.” But he came to his colleague’s defense after critics pounced on Friedman’s growth projections.

“On the other hand, can Sanders deliver a healthy economy, with solid growth and much more fairness in the economy, much more equality, higher wages, better health care, better education, all of the above?” Pollin asked. “Yes. And if the economy grows at 3 percent, the long-term historical trend, so what? That’s fine. Doesn’t have to grow at 5 percent. That’s basically my position.”

None of the UMass economists are officially advising Sanders. The economists officially advising him are James K. Galbraith, at the University of Texas, and Stephanie Kelton, of the University of Missouri-Kansas City.

But the UMass economists are providing Sanders’ policies with academic heft. Pollin says last summer, Kelton asked him to help out with the campaign now and then. He put together a petition of more than 200 economists around the country in support of a $15 minimum wage.

“And it’s not just us, obviously, but these ideas, I think, have met the test of serious research,” Pollin said. “People can disagree. I can’t claim that I’m always right, but you know, there is a solid foundation, and for Bernie Sanders to build off of that and to make it into a presidential program, of course, is wonderful; it’s exciting.”

Pollin worked out the details of a financial transactions tax that Sanders is proposing. He calculates that it would more than pay for Sanders’ plan to provide free public higher education.

“We can generate $300 billion a year, assuming trading even falls by 50 percent,” Pollin estimated. “Sanders says that his free education program is going to cost $75 billion a year. So this would be four times that; it would pay for it four times over, so there would be plenty left over to invest in green economy and infrastructure, which are his other main investment agendas.”

Critics have calculated that the tax would bring in only $52 billion a year.

Pollin counters that his critics assume a financial transactions tax would cause a much bigger decline in trading than is likely to happen. He wrote an article in The Nation recently defending Sanders’ economic proposals.

‘An Opportunity To Talk About Better Ideas’

UMass Amherst is perhaps socialist central for economics in the United States. Sanders’ adoption of many of the ideas of its economists is generating excitement here.

Friedman says for the past 35 years, this country has been experimenting with the idea that the economy will always self-correct if the government stays out of it.

“And I think this is an opportunity to start reversing that, starting with a new, better economic theory, which in this case, often means just picking up some of the older ideas that go back to Adam Smith and John Maynard Keynes, and the Sanders campaign has given us an opportunity to talk about these better ideas, and I’m hoping that these better ideas will help guide a better politics,” Friedman said.

Beyond the increasingly elusive nomination, the UMass economists are hoping to get Sanders’ ideas onto the party platform.

Some are working on establishing a think tank that would provide policy ideas for the left in the same way the Center for American Progress does for Clinton, or the Heritage Foundation, the American Enterprise Institute and the Cato Institute do for Republicans.

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