Many Americans imagine that the President runs the economy, in the sense that a CEO runs a business. When 200,000 people become employed in a quarter, sloppy media reports will say: “The President created 200,000 jobs.” Conversely, when the economy slips into recession, the President is blamed. In reality, the economy is a complex system, like the weather. It’s not predictable, let alone controllable.
Presidential policy does influence the economy, of course—but random variance influences it more. So good policy recommendations necessarily have to come from well-grounded theory. Just as climate scientists can tell you what policies will mitigate global warming and which will exacerbate it, but can’t tell you what the temperature will be a year from now, so too can economists tell you what policies are conducive to economic growth, despite their inability to game the stock market.
So when a presidential candidate promises to remold the economy according to a theory that lacks strong foundations, I get worried. My #1 political principle is, “Don’t kill the Golden Goose.” There’s always room to improve things, but any drastic policy change has much more potential downside than upside. At the risk of channeling Connor from Succession, I think it’s worth pondering the example of Venezuela. Initially, its economy seemed to improve under Hugo Chavez’ socialism. Then it collapsed. With so many left-wing policies implemented, no one can say for sure which one broke the camel’s back.
To take one policy example, look at Elizabeth Warren’s proposed wealth tax. What’s the theory behind it? It’s certainly not the most efficient way of raising revenue, since it’d require a large new bureaucracy to conduct appraisals and handle disputes. Rather, the proposal is motivated by the notion that wealth inequality has negative effects on society (popularized by the 2009 book The Spirit Level) and is perpetually rising (promoted by the 2013 book Capital in the Twenty-First Century). But The Spirit Level has been thoroughly discredited, and the wealth projections from Capital hotly disputed. Surely a policy initiative on the scale of trillions of dollars should have stronger intellectual foundations!
My sense of Pete Buttigieg is that he has the epistemic humility needed to avoid a disaster of his own making. He stands in contrast to Warren and Sanders, who seem intent on doing whatever it takes to “fix” an economy that Americans don’t think is broken. A president who tries to make things better the wrong way could make things a whole lot worse.
This is Part 6 of an ongoing series making the case for Pete Buttigieg in the 2020 Democratic presidential primaries.