Median income would soar by more than $22,000. Nearly 26 million jobs would be created. The unemployment rate would fall to 3.8%.
Those are just a few of the things that would happen if Bernie Sanders became president and his ambitious economic program were put into effect, according to an analysis given exclusively to CNNMoney. The first comprehensive look at the impact of all of Sanders’ spending and tax proposals on the economy was done by Gerald Friedman, a University of Massachusetts Amherst economics professor.
Friedman found that if Sanders became president – and was able to push his plan through Congress – median household income would be $82,200 by 2026, far higher than the $59,300 projected by the Congressional Budget Office.
In addition, poverty would plummet to a record low 6%, as opposed to the CBO’s forecast of 13.9%. The U.S. economy would grow by 5.3% per year, instead of 2.1%, and the nation’s $1.3 trillion deficit would turn into a large surplus by Sanders’ second term.
After decades of undermining labour unions, it turns out the biggest winners have been the super-rich.
According to a recently published study from the research department of the International Monetary Fund (IMF), declining unionization around the world since the 1980s have driven down wages and left top earners even richer than they were before.
“We found strong evidence that the erosion of labor market institutions in the advanced economies examined is associated with an increase of income inequality,” says the study’s authors, IMF economists Florence Jaumotte and Carolina Osorio Buitron.
The study says that although globalization, technology and financial deregulation have contributed to rising inequality, declines in unionization “limit workers’ influence on redistributive policies,” while “the rise in top income shares is possibly supported by the weakening of labour market institutions” as this “reduces the bargaining power of average wage earners relative to top earners”:
“The most novel result is the strong negative relationship between unionization and top earners’ income shares. This finding challenges preconceptions about the channels through which union density affects income distribution. Indeed, the widely held view is that changes in labor market institutions affect low- and middle wage workers but are unlikely to have a direct impact on top income earners. We argue that if de-unionization weakens earnings for middle- and low-income workers, this necessarily increases the income share of corporate managers and shareholders.”
The study compares declining union density with rising inequality between 1979-2010 using data from twenty advanced economies (including Canada):
CNN reports that under Sanders, income and jobs would soar, according to economist. The economist’s name is Gerald Friedman, a Ph.D. from Harvard. Typical, the way he reached to this conclusion wasn’t linked by CNN, and looking for some more info about this my first result was his Twitter which mind you is full of the same old, unintelligent, political picture-posting that you find on Facebook. What’s funnier is that his description says “alternative economic theories” even though he’s quoted saying that Sander’s economic plan will juice up the economy simply because it is injecting money to it the same way FDR’s New Deal did… i.e. Keynesian economics i.e. the standard economic theory in every contemporary, government-endorsed, banking institution.
I’m sure that it’s true that adding 10% more workers to London and letting them live like factory hens would make London’s corporations more profitable. Londoners may even acquire more tablet computers and smart phones. Yet our lives would be worse! Already the definition of a kitchen in a flat in Hackney is a line of cupboards down the side of the living room. Just how many times can they divide up these beautiful old houses into smaller and smaller boxes?
The mistake that these economists make is to become totally business centric. Their analysis stops at the profits of business and they fail to follow the process through to ensure that it benefits the population as a whole.
It is notable that the venerable economists who wrote the letter to Mr. Osbourne uttered not a squeak about the corporate profits which are being filched away overseas to avoid paying tax as was reported in the same edition of the FT. Surely that too is “deeply damaging to the competitiveness of our science and research sectors and the wider economy”.
“As economists, we understand that universal, publicly financed health care is not only economically feasible but highly preferable to a fragmented market-based insurance system,” the letter reads. “Health care is not a service that follows standard market rules; it should be provided as a public good. Evidence from around the world demonstrates that publicly financed health care systems result in improved health outcomes, lower costs and greater equity.”
The issue of our day is: How do we measure teacher effectiveness? Most of the studies by economists warn that there is a significant margin of error in “value-added assessment” (VAA) or “value-added modeling” (VAM). The basic idea of VAA is that teacher quality can be measured by the test-score gains of their students. Proponents of VAA see it as the best way to identify teachers who should get merit pay and teachers who should be fired. Critics say that the method is too flawed to use for high-stakes purposes such as these.
The bulk of studies warn about the inaccuracy and instability of these measures, but the Gates Foundation recently released a study called “Measures of Effective Teaching” that supports the use of VAA and VAM. As is customary for the Gates Foundation, it hired an impressive list of economists at institutions across the nation to give the gloss of authority to its work. Among its key findings was this one: “Teachers with high value-added on state tests tend to promote deeper conceptual understanding as well.” Ah, said the proponents of measuring teacher quality by the rise and fall of student test scores, this study vindicates these methods and effectively counters all those cautionary warnings.