Stephen Moore’s career as an economic analyst has been a decades-long continuous procession of error and hackery. It is not despite but precisely because of these errors that Moore now finds himself in the astonishing position of having been offered a position on the Federal Reserve board by President Trump.
Moore’s primary area of pseudo-expertise — he is not an economist — is fiscal policy. He is a dedicated advocate of supply-side economics, relentlessly promoting his fanatical hatred of redistribution and belief that lower taxes for the rich can and will unleash wondrous prosperity. Like nearly all supply-siders, he has clung to this dogma in the face of repeated, spectacular failures.
I first started writing about Moore in 1997. Four years before, President Clinton had raised the top tax rate to 39.6 percent, and supply-siders had insisted this would without question cause tax revenues to drop. This prediction was a necessary corollary of supply-side economic theory, which holds that tax revenue moves in the opposite direction of the top tax rate. The prediction was spectacularly wrong — revenue not only rose, it rose much, much faster than even the most optimistic advocates of Clinton’s plan had predicted.
Most supply-siders simply ignored this fact altogether. Moore, somewhat unusually, attempted to defend the original failed prognostication. His effort was hilariously buffoonish, using a series of errors that would embarrass a high-school economics student, such as failing to correct for inflation, and combining payroll tax data with income tax data.
In the years since, I have continued following his career, and he has shown no intellectual growth at all. He is capable of writing entire columns that contain no true facts at all. He made so many factual errors he achieved the rare feat of being banned from the pages of a Midwestern newspaper. He has sold his policy elixir to state governments which have promptly experienced massive fiscal crises as a direct result of listening to him. He believes what he calls “the heroes of the economy: the entrepreneur, the risk-taker, the one who innovates and creates the things we want to buy” should be lionized, and that the idea that a recession might be caused by anything other than excessively high rates on these heroes defies “common sense.” He was pulled into Trump’s orbit during the 2016 campaign and co-wrote a ludicrous hagiography of Trump and his agenda. By all appearances, Moore opposes mainstream fiscal theories because he simply doesn’t understand them.
And yet, for all their extravagant ignorance, Moore’s beliefs on fiscal policy are actually more sophisticated and well-developed than his views on monetary policy. It is the latter that he would be in a position to influence as a Federal Reserve governor.
Moore’s beliefs on monetary policy — it might be more accurate to describe them as “impulses” — tend to default to partisanship. During the Obama presidency, he warned that runaway government spending would produce hyperinflation. In 2009, he appeared on Glenn Beck’s program to wax hysteric. “We’ve seen this happened to Mexico, Bolivia, Argentina, Zimbabwe, Russia, all consumed by government, all do-gooders — some of that led to the decline of their civilizations,” he said, describing the scenario in lurid detail:
BECK: So, do we have hyperinflation with this scenario?
MOORE: Could be. I mean, that’s happened — in some countries, hyperinflation gets so bad, Glenn, that people have to go to the shopping stores literally with wheelbarrows full of their currency. In some countries, that people don’t even use the currency. In other countries, they print the currency but they don’t put the denomination on it because they write it down on the piece of paper.
MOORE: And the currency becomes as valueless as the paper that it is printed on.
MOORE: And why do people buy gold?
MOORE: Because they don’t think money is worth anything anymore.
GERALD CELENTE: Not worth the paper it’s printed.
MOORE: Right. They don’t think it’s worth anything.
In 2010, Moore was still predicting hyperinflation and urging his audience to buy gold. Even by 2015, Moore was still urging the Federal Reserve to raise interest rates. “We’ve had seven years of zero interest rates and the lousiest recovery in 75 years,” he said, “So that’s one reason a lot of us feel like it’s time to get off the zero interest rate policy.”
There was no evidence for this position at all. Had Moore’s advice been followed, it would have led to a quick end to the recovery and a deep recession. It did, however, dovetail with the Republican Party’s political imperative of encouraging contractionary fiscal and monetary policy, in order to slow down or strangle the recovery.
Since Donald Trump moved into the White House, the Republican Party has reversed its views on both fiscal and monetary policy. Whereas it had previously deemed deficits and inflation a mortal threat, and called stimulus and lower interest rates counterproductive, the party line now demands both.
Moore has naturally ridden along with this reversal, but what has set him apart is the fervency with which he has embraced the volte-face. He has insisted on television that the economy is experiencing deflation, and when corrected by panelist Catherine Rampell on this unambiguous error of fact, refused to give ground. He has called for firing the Federal Reserve chairman as well as firing the entire Federal Reserve board.
Mooore’s current ultra-dovish stance is hardly anywhere near as ridiculous as his previous ultra-hawkish stance. The problem is that he has no grasp of the policy, and simply follows whatever line helps the Republican Party. While the internal workings of his mind remain a matter of speculation, I doubt he is consciously venal enough to tailor his thinking explicitly to partisan goals. Rather, Moore has extremely strong partisan instincts and extremely limited analytical skills. The combination results inevitably in the latter giving way to the former. He should not be permitted any position of serious responsibility, in government or anything else.