The second set of questions from the Kauffman Economic Outlook Q1 2010 focus on policy options for the U.S. economy. The summary text from the report itself is copied here:
Despite being a balanced panel in terms of political alignment (16 percent Republican, 19 percent Democratic, 47 percent independent, and roughly 18 percent libertarian/other), there is a strong consensus around many policy recommendations. Seventy-one percent of economics bloggers think the U.S. government is “too involved in the economy,” with only 17 percent calling for greater involvement. When asked what the government should be doing, the only policies with more than 50 percent support are: 1) to increase high-skill immigration (63 percent), and 2) to increase legal immigration at all skill levels (57 percent). Two policies stood out sharply with nearunanimous opposition: increasing business regulation (9 percent) and increasing tariffs (4 percent).
On taxation, the panel was widely in favor of lowering taxes on payrolls (74 percent) and income, both corporate (64 percent) and individual (62 percent). Likewise, there was strong support for higher taxes on gasoline/carbon (68 percent and 57 percent, respectively), and consumption (54 percent). A common battleground for tax policy is progressivity, but 47 percent of bloggers are calling for flatter taxes compared to 26 percent in favor of increased progressivity (i.e., even higher tax rates on higher incomes relative to lower incomes).
According to economics bloggers, the top three variables that policymakers should emphasize in a model of economic growth are human capital, innovation, and economic freedom. In a related question, bloggers were asked to rate the beneficial importance of numerous key players in the U.S. economy. One hundred percent of the panel rate entrepreneurs as “important” or “very important,” and innovation also had unanimous support. Only slightly less important are free trade and education, with nearly all respondents rating them as “important” or “very important.” In contrast, only 30 percent of economics bloggers think labor unions are important, and nearly 70 percent rate them as “unimportant” (numbers may not add to 100 due to non-responses and rounding). Opinion is decidedly mixed on manufacturing, while there is mild support for the importance of big business.
And here are the individual charts (in .gif format) from this section:
As a few observors have pointed out, not all of these policy recommendations might be as popular with a random sample survey of the American public. For example, increasing immigration is arguably a political non-starter. But that has been a top priority here at Kauffman as a boost to economic growth. I was pleased to see this had broad support from the econ bloggers panel, which again I would emphasize is politically balanced.
Is it biased? Naturally, a reader of the survey should wonder if this survey is biased. There is a big difference between an ideological bias versus an experiential bias. Indeed, the question of bias goes to heart of survey research. There are random sample surveys (like Gallup) that try to capture public opinion, and most econometric research aspires to the standard of an unbiased sample of observations. The KEO is not of the variety. The Kauffman Economic Outlook is a lot more like a co-authored research paper, with scores of co-authors. Although some might characterize it as "expert" opinion, that seems to me like a diversionary label and conversation.
It is trendy these days to hint that economists as a class of thinkers have been discredited for not forecasting the recession. That was the topic of a few panels at the recent American Economic Association conference in Atlanta, where a handful of economists were on hand who expressly had warned of the stock market bubble, the housing bubble, the financial dangers of leverage, various deficits, etc. Indeed, the much-maligned Alan Greenspan mentioned the dangers of Fannie and Freddie more times in Congressional testimony than most Congressman can count. Even if the vast majority of economists and economic commentators warn of the dangers of unsustainable budget deficits, we can never know the exact month when the U.S. will lose credibility and the dollar will fall, but that surely isn't proof of ignorance or failure of the discipline.
The point is that the KEO economics bloggers survey includes numerous voices who warned either of the coming recession or of pitfalls, or both. Even now, the sample includes a balance of opinions that differ on a range of issues. Thus, finding areas of consensus, especially strong consensus, is a very interesting result.
Specifically, on the issue of taxes, this survey found a consensus for taxing consumption more. That would be unpopular, true. But the finding is not in isolation. Bloggers also overwhelmingly support lower taxes on work (payrolls) and income. The consensus to shift the tax burden should not be couched as a public-versus-expert paradox at all (as the public would probably favor such a change as well). Rather, the finding offers some common ground for policymakers in the years ahead.