Thursday, May 21, 2020

Why Are Some Economists So Awful Right Now? Part 2

by Neil H. Buchanan

A bit more than a month ago, I published a Dorf on Law column under the title: "Why Are Some Economists So Awful Right Now?"  I have now added "Part 1" to that title, and today's column is an addendum to my discussion there.

Part 1 focused mostly on two people (Tyler Cowen, who holds formal credentials as an economist, and Richard Epstein, who holds no such credentials but is considered a big shot among the right-wing Law & Economics crowd), both of whom have been particularly awful about the current pandemic.  Both essentially say that they know more than epidemiologists, or at least (per Cowen) that maybe epidemiologists are not all that smart and should not be taken seriously.

To that small brotherhood we can now add Kevin Hassett, former chair of Donald Trump's Council of Economic Advisors (CEA), who was made a Senior Advisor to the President on April 15 of this year.  Hassett, who had mostly flown under the radar even when he was at CEA, has had his moment in the spotlight recently, making particularly galling comments about the COVID-19 catastrophe.  It is worth thinking about what Hassett has done, and why.

As it happens, Hassett and I crossed paths years ago on the collegiate parliamentary debate circuit, which is unsurprising in that large numbers of veterans of that circuit have moved into positions of political power.  Former Obama Administration chief economist Austan Goolsbee debated for Yale, Senator Chris Coons debated for Amherst, and (an academic generation or two later) Senator Ted Cruz polluted those waters for four years at Princeton, among others.  People like Professor Dorf and I are among those who instead chose an academic career path.

As I will discuss below, Hassett and I happened to sit across from each other at an academic dinner in 2006, but that is the extent of our direct contact.  Because his name regularly popped up in the news while he built his career as the Republicans' most reliably, er, flexible hack economist, however, I have been grimly aware of his impact on the policy and political scene.

Thus, I wrote a column eighteen months ago in which I skewered Hassett's clumsy red-baiting on Trump's behalf.  Hassett's CEA published a report attacking single-payer health care by relying on simple guilt by association: "Modern journalists and analysts routinely claim that single-payer programs are more efficient—and thus are similar in spirit to Lenin and Mao, who justified government takeovers on the basis of the virtues of single-payer programs."

Sarah Kliff, one of the people cited by the CEA report as sharing a spirit with Lenin and Mao, wrote a column in reply entitled: "A White House report points out that Mao and I both like low health care costs. True, but…"  The illogic of Hassett's position is obvious, and very mainstream economists have noted that the markets for health care are inherently prone to failure and thus create "inefficiency" in the (fundamentally meaningless, but I digress) sense that conservative economists typically champion.

And that is hardly the first time that Hassett has gleefully sprinted down the red-baiting path.  Back when Thomas Piketty's book Capital in the 21st Century was making a splash by detailing the extent and consequences of beyond-Gilded-Age levels of inequality, Hassett (as I described in a Dorf on Law piece at the time) was invited to speak at a D.C. think-tank event at which Piketty's book was the topic.  As I noted, Hassett approvingly cited the conservative mid-century economist Joseph Schumpeter as follows:
"[Schumpeter] argued that the academy would become the focal point of opposition to capitalism and would subsequently breed an intellectual elite that would control the media, and ultimately politicians themselves. The academy would reflexively hate capitalism because it is the job of the intellectual to criticize, and because academics detest people who actually accomplish something. Professors would envy the wealthy, and feel themselves more worthy."
In other words, Hassett's modus operandi is to scream "Commie!" at anyone to his left and to direct particular bile at "intellectual elites" who think they know more than everyone else and who supposedly "feel themselves more worthy."  It was thus inevitable that Hassett would step up as soon as Trump decided that it was important to undermine those smartypants infectious disease "experts" who claim to know so much more than everyone else and who apparently "hate capitalism."

And what did Hassett come up with in his new role forecasting the path of the pandemic?  According to reporting in The Washington Post:
"A small team led by Kevin Hassett — a former chairman of Trump’s Council of Economic Advisers with no background in infectious diseases — quietly built an econometric model to guide response operations.

"Many White House aides interpreted the analysis as predicting that the daily death count would peak in mid-April before dropping off substantially, and that there would be far fewer fatalities than initially foreseen, according to six people briefed on it.
...

"By the end of April — with more Americans dying in the month than in all of the Vietnam War — it became clear that the Hassett model was too good to be true. 'A catastrophic miss,' as a former senior administration official briefed on the data described it."
Hassett, according to the same article, has engaged in post-hoc derriere covering of a fairly spectacular variety:
"Hassett said he merely built a tool to evaluate the evolution of data from the Institute for Health Metrics and Evaluation at the University of Washington. He confirmed that he shared his charts internally and that they often showed fewer deaths than IHME or others were projecting — but that he was drawing a curve based on real-time mortality data versus what the charts predicted would happen for the same days.

"'I have never, ever said that that’s my projection of what the death count was going to be, and no administration policy has been influenced by my projections,' he said, adding, 'It’s an utterly false story that I’ve been a rosy-scenario guy inside the White House.'"
Notice the deflection.  Hassett actually can say that he was not a rosy-scenario guy when it came to projections of the economic damage due to the pandemic-forced stay-at-home orders.  Indeed, "Hassett had such a negative outlook on the economy that he asked people in the room not to repeat his comments to others, according to people familiar with the meeting. At one point, he suggested that GDP could fall 40 percent and that tens of millions people could lose their jobs."

But that in no way means that he was not pushing a low-death-toll scenario.  In fact, it is completely consistent with doing so: big economic damage from shutting down + death forecasts below what the "experts" say = "Liberate!"  Moreover, there is all kinds of evidence that Hassett is simply wrong to say that "no administration policy has been influenced by my projections."  (What a weird defense: "I didn't do anything wrong.  I didn't even do what they say I did.  And besides, no one listened to me.")

Notice that, per one of the quotes above, "Hassett said he merely built a tool ..."  This is essentially the defense that Epstein offered when it turned out that his forecasts were so wildly inaccurate: "If you want to ask questions, ask questions. I put forward a model. But a little bit of respect."  A little bit of respect for what?  Anyone can build a tool or put forward a model.  If the assumptions behind them are absurd and their forecasts are laughably off target, however, then criticism will follow.

This is, in fact, reminiscent of Hassett's response to what is likely to be the lead-in to his eventual obituary: Dow 36,000.  On May 5, a few days after The Post published its article, Josh Marshall published "COVID 36,000" on TPM.  After pointing out the most imediately relevant point -- that Hassett's "model predicts the number of people dying of COVID19 in the US will fall to close to zero by May 15th" (which obviously did not happen) -- Marshall moved on to the story behind his column's headline.

In essence, Marshall wrote: "Hey, remember those two cranks who wrote that book Dow 36,000 back 1999, when the Dow was sitting just above 10,000, predicting a 36,000 level within three or four years?  Well, one of them was Kevin Hassett, who knows nothing about epidemiology but told Trump that coronavirus deaths would go to zero in a few weeks.  Yeah, that guy!"

Marshall's final paragraph begins with this:
"Anyone can make a dumb prediction. Few have made ones of a more high-profile and quickly discredited nature. And for Hassett it’s rather par for the course. [He] is a DC GOP think tank (sinecured) economist who has generally paid no professional or reputational price for being wrong about virtually everything for decades."
As it happens, at that 2006 dinner that I mentioned above, I gently teased Hassett about his infamous prediction.  (Dan Shaviro, who was also at the dinner, joked that the only question in the time after Hassett's book was published -- when the stock market had tumbled precipitously -- was whether Hassett's 36,000 number was "wrong by adding an extraneous number to the front or the back," that is, whether the Dow would drop to 3,600 or merely 6,000.)  Hassett quickly deployed the "I merely said" strategy to claim that he and his co-author had not done anything unreasonable.

He was so insecure about it, in fact, that very soon after the dinner he emailed me a prepared defense, trying to say that he really had not made any particularly outrageous assumptions in reaching his outrageously wrong conclusion.  His defense was so strained that it was embarrassing.

And as Marshall's column makes clear, Hassett's reprise of the "I merely said" defense is nonsense on two levels: Hassett did, in fact, make claims that understated likely death rates; and he did so by simply drawing lines on a graph that fit a predetermined outcome.  In other words, this was hack economics at its worst.

What has happened since early May?  When news broke that staffers in the White House had tested positive for the virus, The New York Times reported: "'It is scary to go to work,' Kevin Hassett, a top economic adviser to the president, said on CBS’s 'Face the Nation' program on Sunday. Mr. Hassett said he wore a mask at times at the White House, but conceded that 'I think that I’d be a lot safer if I was sitting at home than I would be going to the West Wing.'"

As one friend wrote acidly to me in an email:  "Don't worry, Kevin, I heard that the model the government is relying on PROVES that this will all be over soon! It's going down to zero! Just hang in there a few more weeks! TIME TO REOPEN!"

Hassett is, in my limited direct experience, a genuinely friendly guy during face-to-face interactions.  He comes across on TV as genial and well meaning.  But his track record speaks for itself.  Almost alone among right-wing economists with elite training, he was willing to work in the Trump Administration.  His standard move is to red-bait, which puts him solidly in the mainstream of his party.  And he cooks the books to get the answers that he and his boss want.

At the end of Part 1 of "What Are Some Economists So Awful Right Now?" my answer was: "Those economists are always awful, but we are now more aware of it because the stakes are higher than ever.  The tragedy is that they are given platforms to pollute the public debate, feeding the disinformation machine that drives Trump's disastrous decisions."  Hassett polluted the debate inside the White House, which is even worse.

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