Writing in today’s Wall Street Journal, John Taylor argues that “…the best way to understand the problems confronting the American economy is to go back to the basic principles upon which the country was founded—economic freedom and political freedom.”
Taylor’s argument is based on assertion, rather than fact.
For example, he is a little vague on exactly what “economic freedom” means, but cites (among other things) the Patient Protection and Affordable Care Act the Dodd-Frank Wall Street Reform and Consumer Protection Act as examples of economically damaging overreaching on the part of the government.
Neither of these two pieces of legislation have been fully implemented. I’m not arguing that they are perfect pieces of legislation. But Taylor’s claim that they are hurting the economy are unfounded.
Taylor’s assertions about recent American economic history are also without foundation in fact. He writes: “With lessons learned from the century’s tougher decades, including the Great Depression of the ’30s and the Great Inflation of the ’70s, America entered a period of unprecedented economic stability and growth in the ’80s and ’90s. Not only was job growth amazingly strong—44 million jobs were created during those expansions—it was a more stable and sustained growth period than ever before in American history.”
Regardless of one’s views on the 1980s and 1990s, Taylor has got the numbers mostly wrong.
According to data compiled by the late Angus Maddison, real GDP in the US grew by about 3% in both the 1980s and 1990s. Compare that with the 1950s and 1960s, when real GDP grew by 4.13% and and 4.43%, respectively, and the 1980s and 1990s don’t look quite so remarkable. The results are similar with per capita real GDP. Then compare it with the 4% growth rate experienced between 1870 and World War I and Prof. Taylor’s statement becomes even more difficult to fathom.
How about the employment figures that Taylor mentions?
According to the Bureau of Labor Statistics, employment rose by 35 million between 1980 and 1999, and only by 21.5 million between 1950 and 1969. But, of course, there were many more people employed in 1979 than in 1949, so employment growth was higher during the 1950s and 1960s (38%) than in the 1980s and 1990s (36%).
Taylor argues that the the 1980s and 1990s were decades of spectacular economic success. He is wrong–they weren’t any more spectacular than the 1950s and 1960s.
Taylor’s arguments would be more convincing if he did not misrepresent the facts.