Economists Outraged That Politics Is Hard, Actually
If student debt cancellation is too blunt for Jason Furman and Melissa Kearney, what's their actual alternative plan?
Welcome to Hack Watch from the Revolving Door Project. This (hopefully) weekly newsletter will document the conflicts of interest, perverse incentives, and just flat-out wrong analyses endemic to the 90’s types whom the mainstream media turns to for quotes about the economy far too frequently.
We’re living through a real renaissance of political-economic thought. Thinkers across the country are resurrecting and updating older traditions; fusing once-separate schools of thought; and developing completely novel approaches to solve today’s problems, from climate change to financialization to healthcare.
But your average New York Times reader or MSNBC watcher is probably barely aware of this. The same blabbermouths who’ve guided economic policy since the 90’s are still the talking heads who most of the mainstream media turn to for explanations of economic phenomena.
Never mind that these individuals guided us to staggering inequality, widespread precarity, and pending ecological collapse. Never mind that, in many cases, these people are cashing checks from corporations and wealthy benefactors who have a clear interest in what their patrons are saying to the world. Never mind that many of these analysts get to flaunt titles that have absolutely nothing to do with their actual primary sources of income: most are still introduced as a “former Obama advisor” or “former Clinton advisor” even if they haven’t served in the federal government in decades. Few of the ones who teach classes live on their academic salaries, instead enjoying exorbitant consulting, investing, or shadow-lobbying gigs. None of this is ever mentioned to news consumers.
Our goal with Hack Watch is to name the bad actors, explain why they’re conflicted and wrong, and beg the mainstream media to recognize that there’s a lot of other perspectives out there. If you like what we’ve got here, please subscribe and share around. If you have advice on who to look into, drop us a line any time.
Without further ado, let’s get into it!
“More Of A Comment…”
The usual suspects are absolutely livid that President Biden canceled some student loans last week. Their initial arguments about inflation, deficits, and economic history have already been debunked, including by our own Max Moran. It’s instructive how the Third Way machine just plugs and chugs talking points about scary-sounding terms and big-sounding numbers without worrying whether their arguments make sense.
Without an economic leg to stand on, some angry economists have instead become political pundits. See, the problem is that the President did what he can, instead of what would have been best.
“If there was a legislative policy that fixed student loans going forward and included targeted debt relief, I would be very supportive of that,” Jason Furman told MarketWatch. “Absent any reforms to make sure we’re not back in the same place five years from now I think my preference would be no relief at all.” Melissa Kearney — who runs the Aspen Economic Strategy Group, a who’s who of economic policymakers, corporate executives, and media pundits — wrote some angry tweets that got picked up by the New York Times.
If Furman and Kearney really want to pass legislation to end the student loan system and make college affordable for all — great! What’s the plan, guys?
Furman is one of the most influential economists in Democratic politics, and Kearney runs a network into practically every hall of economic power in the federal government. These are two of the best-positioned people on earth to lead the charge for more substantive higher ed reform.
Moreover, their whole posture of seriousness as “policy wonks” depends on their ability to actually develop plans for solving government problems. If they want long-term reforms to the cost structures of higher education, they should write a paper or two proposing alternative systems and start lobbying Congress about it. Their ability to do that is supposedly what grants them authority in the media.
That’s what actual higher education reformers have been trying to do for decades. Student debt cancellation didn’t spring out of nowhere; it’s the result of over a decade of hard work developing policies, conducting legal analysis, building grassroots coalitions, lobbying federal leaders, finding allies in high places, and ultimately taking what was possible at the negotiating table. It’s politics. It’s hard, so hard it breaks a lot of people.
It’s extraordinarily easy, by contrast, for Furman to just declare there ought to be “a legislative policy that fixed student loans,” or for Kearney to just blame “the lazy policy making” that didn’t produce “a serious plan to FIX THE SYSTEM going forward.”
Do you want to pass a bill? Okay, what’s your plan to get 60 votes in the Senate? Absent that, how are you going to make this be treated as a must-pass part of budget reconciliation and a “Byrd Bath”? Does this matter more to you than the legislative filibuster, and if so, how are you going to persuade a majority of Senators to feel the same?
How are you going to fend off attacks from the higher education industry, which will probably get more personal the closer you come to success? What are you going to do when your colleagues set up false choices and grumble that fixing higher education can wait until after we’ve solved homeless vets, or healthcare, or whatever else might be a convenient distraction from day to day?
And once again, if you’re the Adults In The Room™ who know Policy™ and The Numbers™ then what’s your actual plan for solving higher education costs?
Because the left has plans for that. Matt Bruenig at the People’s Policy Project pointed out that to keep schools from exploiting the fantastic new income-driven repayment system, the Education Secretary could just add clauses capping tuition costs to the contract all schools have to sign to accept federal loans. Economist Marshall Steinbaum has always argued for student loan cancellation as part of a broader restructuring of higher ed finance toward free public college, and he’s been developing that plan for years.
These thinkers and others know this issue quite well. But the most influential media in America didn’t turn to them, it turned to establishment macroeconomists parachuting into the issue when it’s in the headlines, and offering nonsense economics and ivory-tower politics.
This is a discredit to news consumers and the quality of our political discourse. Fixing higher education takes an actual plan and a dedicated political effort. If Very Serious Thinkers like Furman and Kearney don’t want to reckon with that, maybe they’re not so serious about this issue.
Never Watch Cable News
Bloomberg’s “Wall Street Week” gives Larry Summers free air time almost every Sunday to blab about whatever’s on his mind. On Sunday, Summers assured investors that Fed Chairman Jerome Powell “did what he needed to do” by signaling he’d continue to hike interest rates — in other words, to deliberately throw workers out of jobs and immiserate the lower- and middle-classes as a workaround to addressing inflation. “It was clear that whatever the academic arguments about demand shocks versus supply shocks said, the Fed couldn’t accept continuing high inflation and had to act until it was clear that that was going away,” Summers cooed. “Very concise. There wasn’t a lot of more academic discussion. But there was a statement of being resolute, so I think that’s just right.”
It’s quite something to hear a guy who bills himself as a Harvard professor applauding a lack of academic discussion and praising macho posturing. But of course, Larry Summers’ income likely has almost nothing to do with his teaching salary. In 2013, he was a highly-paid consultant to Citigroup and private equity firm D.E. Shaw. Today, he sits on the board of fintech firm Block and crypto firm DCG, and is involved with other fintech startups like Doma. “Wall Street Week” never discloses any of this. Summers has every personal incentive to build an economy that serves investors over workers.
We called on Summers, Harvard, Bloomberg, and The Washington Post to disclose Summers’ current corporate funding sources in July. Summers told the Harvard Crimson that he discloses all of his funders to the university, which does nothing to inform the actual public of his conflicts of interest. Media literacy scholar Nolan Higdon told the Crimson that “A lot of these credentialed elites in corporate legacy media are going to other corporate elites to act as experts. We end up with a feedback loop — almost propaganda — in the sense that audiences are not getting different perspectives or critical perspectives on what’s being told by these credentialed elites.”
Even if his own pocketbook isn’t influencing his analysis, Summers is basically saying that if the Fed has a hammer (interest rates), it has a moral obligation to treat everything — including full employment — like a nail. (This also glides over the fact that the trade policies Summers set up, and continues to support, badly complicated our supply chains, which accounts for much of inflation.) The easiest way to fix the problem is to attack the poor, and that’s what Summers thinks we should do.
Worth Reading
Student Loan Debate Reveals Limits of Economist-Style Thinking | American Prospect | Beth Popp Herman
Enforcement: The Untapped Resource | Democracy Journal | Eleanor Eagan and Hannah Story Brown