On Second Thought, Maybe Bernie Sanders’ Growth Claims Aren’t As Crazy As I Thought

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


A couple of days ago I blasted the Bernie Sanders campaign for touting a stupendously optimistic study by economist Gerald Friedman of how their domestic spending plans would supercharge economic growth. This was based on a simple fact: the projections were far higher than anything in postwar US history.

But I got to pondering this a bit more. The Friedman study projected very high GDP growth, which is just a combination of workforce growth and productivity growth. You can increase GDP by having more workers, or by keeping the same number of workers and making them more productive. The study suggested that Sanders’ programs would increase workforce participation by a huge amount, but I figured I’d let that go for now. I was more interested in the 3.18 percent average annual productivity growth over a decade. That’s was pretty wild: we’ve never done that since World War II, and we’ve only come close twice. So how does Friedman justify this? Here it is in its entirety:

Higher demand for labor is also associated with an increase in labor productivity and this accounts for about half of the increase in economic growth under the Sanders program.18

18There is a strong positive correlation between productivity growth and levels of unemployment and rates of GDP growth; the R2 in a regression for productivity growth and real GDP growth is 0.65. Higher GDP growth explains all of the higher productivity growth projected here. The association of higher productivity growth and low unemployment is sometimes called “Verdoorn’s Law”….

That didn’t sound very promising. Friedman is projecting historically unprecedented productivity growth based on some old papers that examine an association proposed in 1949 between long-run GDP growth and productivity—which seems a bit circular for our purposes even if it’s true. That’s pretty thin.

Still, I was curious. Then on Thursday economist Jamie Galbraith mocked a severely critical letter from former CEA chairs because it roasted Friedman’s study without doing any actual analysis of his forecasts. Now, Galbraith was rather careful not to suggest that he actually thinks Friedman is right, but he nonetheless conceded only that one might “quibble” with Friedman’s productivity numbers. Overall, he said, Friedman’s methods were thoroughly mainstream. “When you dare to do big things, big results should be expected. The Sanders program is big, and when you run it through a standard model, you get a big result.”

Maybe so, though I continued to be pretty skeptical of Friedman’s rosy projections. So I decided to take another look at historical productivity figures to back myself up. This turned out to be far more difficult than I expected. You can get productivity figures from the BLS, the OECD, and from various academic estimates, and they’re all different. And none of them go back further than 1950 or so. Still, after an eye-blurring bit of work powered by dexamethasone, I came up with fairly reasonable estimates averaged from a few sources, including my own homebrew calculations. Then I broke them up into 20-year buckets, because you frequently see productivity fall and then make up ground when you look at more than just a few years at a time. For the final bucket, I averaged actual numbers from 2006-15 with Friedman’s estimate for 2016-25. You can see the result on the right.

And it turns out that…Friedman isn’t projecting anything wildly out of the ordinary after all. However, I’d caution about two things. First, my productivity numbers might be wrong. Probably not by a lot, but maybe by a modest amount. Second, the final figure for 2006-25 assumes that Sanders’ programs can make up for the unusually dismal productivity numbers of 2006-15. I think there are good reasons to doubt that. Nonetheless, given past history it’s not insane to think it might happen if we implemented a pretty massive spending and stimulus program.

I dunno. Maybe you’re interested in this, maybe not. I’m still pretty skeptical myself since different ways of looking at the data make Friedman’s projections look a lot less plausible. In any case, I’m sure that qualified economists will weigh in with more sophisticated evaluations fairly soon. But I set out to take another whack at these projections, and I didn’t really get what I expected. So I figured I should share.

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

AN IMPORTANT UPDATE

We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with the Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate