Economics Bloggers See Innovation, Immigration as Paths to Recovery
Despite official data showing that the U.S. economy is out of recession, leading economics bloggers remain cautious about the nation’s economic prospects, with almost half saying that conditions are worse than the official numbers indicate. But government policies boosting entrepreneurship and allowing more high-skilled immigrants into the country could bolster recovery, bloggers say. That’s all according to a survey of online observers of the U.S. economy (including this reporter), released this morning by the Ewing Marion Kauffman Foundation in Kansas City, MO.
The overall condition of the economy is “mixed,” according to 59 percent of the bloggers surveyed, while 23 percent see the possibility of a double-dip recession and 10 percent believe a second recession is already underway. About half of the survey respondents said conditions for lending to individuals and small and large businesses are bad or very bad, and the group’s overall feeling is that government budget deficits, interest rates, inflation, and poverty rates will all rise substantially over the next three years. But all of that may actually mean more opportunities for innovators: nearly 60 percent of bloggers said conditions for entrepreneurship are either good or fair right now. (You can download the full survey report here.)
Surveys of leading economists are plentiful, but this may be the first time anyone has tried to quantify the views of economics bloggers, whose work appears in dozens of online publications (or on their own personal blogs) and ranges across the ideological spectrum. Tim Kane, a senior fellow at the Kauffman Foundation and the author of the survey report, says the foundation plans to repeat the survey each quarter.
“A survey of economic bloggers might seem like an exercise in herding cats, but it honestly struck us as a puzzle why nobody else was conducting one already,” Kane told me. “Here we have a crowd of the most knowledgeable and outspoken analysts of the economic scene, and nobody had bothered to take their pulse.”
Kane developed the survey questions with help from Donald Marron, former acting director of the Congressional Budget Office and a former member of the Council of Economic Advisers. He sent survey invitations to the top 200 economics bloggers as ranked by the Palgrave Econolog, a directory maintained by New York, NY-based academic publisher Palgrave Macmillan. In the end 83 bloggers participated in the survey. I was one of the bloggers surveyed, and I was also on the board of advisors that helped Kane to design the questions. (For full disclosure: The Kauffman Foundation is one of the underwriters of Xconomy’s Startups Channel.)
To me, one of the most striking findings was that most respondents—71 percent, in fact—felt that the federal government is too involved in the U.S. economy. That seems unexpected, given that economists on the left and the right seem to agree that the bank bailouts and aggressive federal stimulus spending, while perhaps unpalatable, saved the economy from disaster. More than half of respondents gave the U.S. Congress a failing grade when it comes to their performance steering the economy; Wall Street firms also got dismal grades. The Congressional Budget Office and other watchdog groups fared much better.
Asked to name the federal policies that would best stimulate economic growth, the bloggers named increasing high-skill immigration (63 percent), increasing legal immigration at all skill levels (57 percent), promoting new firm formation (48 percent), increasing financial regulation (41 percent), and increasing education spending (33 percent).
Kane says the finding that surprised him most was that bloggers have such bleak views about the economy’s near-term future. “Despite the individualistic nature of bloggers, I was shocked to see how pessimistic the group was in general about the 3-year outlook for the U.S. economy, but I attribute that to their ability to see beyond both the headlines and the official statistics,” he says. “I was also heartened by the consensus for cutting payroll taxes and shifting the tax burden to consumption generally and gasoline specifically.”