Errant Nobels Try Again

S eventeen Nobel prize–winning economists have declared that the reconciliation bill currently in Congress, known as “Build Back Better,” is an essential part of a “robust economic recovery.” They are violating the science they got a prize for by ignoring economic tradeoffs.

Build Back Better (BBB) is a 2,100-page exercise in redistribution and government-directed changes in energy markets. The Nobel winners believe that redistribution is the fair thing to do, and that the U.S. should do its part to reduce worldwide carbon emissions. While arguably worth doing, both of these activities would shrink the U.S. economy. Tradeoffs are one of the economic facts of life.

Perhaps the Nobel winners have adopted a new and different lexicon from the one you and I use. When they say “robust economic recovery,” we should understand that to mean “slower economic growth for the sake of fairness and the environment.”

More likely, they haven’t read the bill. They’re just sharing with us their fantasy that clever Democrats have devised a way to eliminate tradeoffs and packed that great innovation into the BBB bill.

For example, they argue that the bill “will ease longer-term inflationary pressures,” even though the next leg of the Biden agenda will spur price hikes by encouraging loose monetary policy. We have been arguing since the summer of 2020 that there was a massive fiscal over-response to COVID, which caused a unique historical phenomenon: an increase in disposable incomes during a recession. Indeed, we saw a larger increase than in most previous booms. BBB continues this by discouraging work and business formation to an unprecedented degree, with consequences estimated to cause a reduction of about 7 million jobs. In addition, the BBB encourages government dependency and discourages marriage.

Conspicuously absent from the Nobel winners’ proclamation is any attempt to cite facts or show the work that led to their opinions. They don’t cite which provisions of the bill they think enhance productivity, or why evidence suggests that they are quantitatively important enough to offset the provisions that reduce productivity. Those who will be required to obey new laws are supposed to accept their advice on faith. We do not even get any proof that their advice owes anything related to their areas of expertise, which may be intentional as many of them have little expertise on the policy areas contained in the bill.

This is not the first time that a collection of Nobel prize–winners falsely disguised an expression of Democratic aspirations as objective analysis of legislation. In 2011, Nobel winners defended Barack Obama’s Affordable Care Act (ACA), asserting that it would provide a faster economic recovery and reduce the budget deficit. According to that particular fantasy, expanding health insurance would be partly paid for making health insurance cheaper, thereby easing a burden on employers. More funds would come from nationalizing student loans, which would purportedly serve as a government profit center.

In reality, the ACA imposed one of the largest implicit taxes on work and hiring levied by any program in history. Nationalized student loans proved to be massively expensive, costing taxpayers $1.5 trillion on top of all the other government spending unleashed by the ACA.

As another example, one of this year’s crop of signatories more recently ignored tradeoffs in an article in which he and his co-author argued that COVID lockdowns come with no unintended health costs, promising that “a wave of deaths of despair is highly unlikely” for the year 2020. Now we know from CDC data that almost 100,000 people died of drug overdoses from April 2020 through March 2021, as compared with 76,000 for the prior 12 months. In a way, he and his co-author were right: That’s a tsunami rather than a mere wave.

America learned the hard way that economic tradeoffs are real, but did the Nobel winners? Letters like these do nothing to enhance the value of Biden’s agenda. They only devalues the Nobel prize.