Jonathan Chait

Is Goldman Sachs On the Take?

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A Goldman Sachs study found that the House Republican plan to cut the budget would cause slower economic growth. National Review's Lou Dolinar waxes populist:

Speaking of crony capitalists in bed with the administration, Goldman Sachs continues to clarify the “Too Big To Fail” issue I wrote about yesterday. Witness its release of a “study” today...

Goldman Sachs is one of President Obama’s strongest backers, second perhaps only to JPMorganChase. If Republicans find “government-subsidized malefactors of great wealth” too strong, they might try bashing “Wall Street Welfare Queens.”

I always enjoy the general pattern of right-wing commentators to ignore the effects of economic self-interest upon the influence of big money in politics until such time as an interest group support Democrats, at which point they will sound like Ralph Nader on coke.

It's certainly true that investment banks influence Democrats -- largely to do things conservatives like, such as leave alone the carried interest loophole. But you don't need to tell an influence study to explain why Goldman Sachs would think that cutting spending during present conditions would decrease economic growth. That is a completely standard view. As far as I know every economic forecaster shares this assumption. You'll find disagreement from some conservative economists and think-tank denizens and the entire Republican Party, but everybody who does this for a living accepts the basic Keynesian framework.

Now, if you told conservatives that there's an issue in which people in the private sector with money on the line all believe one thing and the primary dissent comes from professional ideologists with no financial incentive to get it right, they wouldn't take that as a reason to side with the public sector. But within the cocoon of the conservative movement, the small bubble of Austrian economics looks like conventional wisdom, and the academic/professional consensus like some kind of outlandish liberalism whose existence must reflect ulterior motives.

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