Thursday, June 18, 2009

Heads I Win, Tails You Lose

This article from illustrates how macroeconomics allows politicians to have it both ways:
President Obama and his critics have a major disagreement. He says his accelerated economic stimulus efforts will create 600,000 jobs by the end of the summer. Senate Republican Leader Mitch McConnell of Kentucky, however, doubts "the spending binge we're on is going to produce much good." Both can't be right. But neither has to fear being proved wrong.

Why not? Because there is no persuasive way of determining the effect of implementing the president's policies. No matter what happens, each side can claim vindication.

If the economy improves and unemployment drops, Obama can take credit. If it fails to improve and unemployment rises, though, he can say he averted an even worse showing. Republicans will take the opposite tack—attributing any improvement to the natural resilience of the economy and blaming the administration if things get worse. And neither side will really know who's right.