Jason Furman: Excellent or Sad
By David Henderson
Tyler Cowen recently linked to an article in the Washington Post about “the excellent Jason Furman.” And if you read the
puff piece article, you would certainly think Furman is an excellent economist. The writer, Zachary A. Goldfarb, tells tale after tale about Furman’s smarts and accomplishments. They really are impressive. And I remember hearing about him years ago when he made such a powerful evidence-based case for the incredible amount of consumer surplus that Wal-Mart has created for American consumers.
So let’s stipulate that, based on past performance, Furman is excellent. Two things he has done or said lately, though, are the opposite of excellent.
One is his recent White House press conference to respond to the Congressional Budget Office study that finds that by 2024, Obamacare will have reduced work hours of low-income people by the equivalent of 2.5 million full-time jobs a year. I posted about the CBO study here. (By the way, I did both Blinder and Krugman an injustice in that post, one that I will correct this week. I didn’t get time this weekend because I was working on two articles and a presentation that I’ll be giving on Capitol Hill tomorrow.)
Blinder and Krugman, both defenders of Obamacare, nevertheless, to their credit, admit that the high Obamcare-induced implicit marginal tax rates on work will reduce the amount of work supplied and will make real GDP somewhat lower than otherwise.
But Furman engages in much evasion and failure to answer the questions asked by the somewhat energized White House press corps. At times, he explicitly grants the point but won’t come out and say that the disincentives reduce jobs. And he doesn’t even come close to admitting the effect on real GDP. On that latter, here’s an excerpt from the press conference:
Q My second question is, am I understanding what you’re saying correctly that the change in incentives for people is not a net drag on economic growth? If 2.5 million people change their choice about working, that is not a net drag on economic growth?
MR. FURMAN: First of all, I haven’t accepted the number. There’s a lot of factors that go into that number, not all of them an uncertainty. And second of all, I’m saying that that whole analysis refutes the claim that this is about employers cutting back on jobs and increasing unemployment, and that has been a central argument against the Affordable Care Act.
All in all, not an impressive performance. I strongly recommend that you read the whole thing.
Furman’s second statement that is the opposite of excellent is one he made about the relative merits of government welfare and the economy. This is from the earlier-mentioned Washington Post article:
At an event late last month in Washington, Furman displayed a chart showing how food stamps and other social programs had lowered poverty dramatically over the past half century. This was a big success, he said.
But the graph also showed that the economy itself had done nothing for the poor: Only government dollars had. Here he stressed that the economy needs to work better, so people can enjoy higher incomes without relying on the government’s assistance.
Really? In 2005, in a study of just one firm, Wal-Mart’s, effects on Americans, including poor people, Furman wrote:
There is little dispute that Wal-Mart’s price reductions have benefited the 120 million American workers employed outside of the retail sector. Plausible estimates of the magnitude of the savings from Wal-Mart are enormous – a total of $263 billion in 2004, or $2,329 per household. Even if you grant that Wal-Mart hurts workers in the retail sector – and the evidence for this is far from clear – the magnitude of any potential harm is small in comparison. One study, for example, found that the “Wal-Mart effect” lowered retail wages by $4.7 billion in 2000.
Moreover, in that same study, Furman showed that by lowering prices just on food (i.e., not counting other items Wal-Mart sells) Wal-Mart raised real incomes of the bottom fifth of the population by 6.7 percent, a higher percent than for any of the higher fifths.
That sounds to me like the economy working for poor people.