Having an overly confident business student tell you that you don’t understand economics is something of a rite of initiation for anyone with left-wing inclinations. Apparently, conservatives know how to run the economy. The left? Not so much. As Trump touted his economy as the best “EVER,” his Treasury Secretary seconded the assertion that Bernie Sanders would “ruin” the economy if elected president.

A less hyperbolic version of this stance is that the left’s economic policies, while not ruinous, do hurt the economy in some way. Faced with a choice between more equality and maximizing economic performance, the left tends to choose more equality. Art Laffer, the famous conservative economist and father of trickle-down economics, put it this way in a recent interview: “Whenever you redistribute income, whenever you do, you always reduce total income… This is just math!” As Laffer and conservatives like him would have it, left-wing economics is bad for the economy. If you want to maximize economic performance, go with the right.

It’s easy to point to American history, the success of the New Deal and progressive programs, in response to this argument. Or to the experiences of other countries, as Paul Krugman did when observing, “If we look at those advanced countries that do much, much more redistribution than the United States does, none of them… appears to have gone too far. Even Denmark, there’s no real sign that any economic damage is done by their redistributive policies.”

Leaving aside the question of the validity of this argument, the reality is that a similar critique to the one Laffer and others make of the left applies to the right. The difference is that while the left is critiqued for sacrificing economic performance for more equality, the right can be critiqued for sacrificing economic performance in pursuit of less equality. In other words, faced with a tradeoff between equality and economic performance, the right chooses to do worse on both measures. In the end, as interested as they claim to be in running the economy well, conservatives are a bit more interested in making life even easier for a few people on top and more difficult for most of the population.

One clear example of the conservative willingness to trade worse economic performance for less equality is the right’s advocacy for privatizing Social Security. As Dean Baker notes, “[a] large body of literature shows that the administrative costs of running a decentralized privatized system are far greater than the costs of the current Social Security system.” Yet conservatives’ support for Social Security privatization remains unfazed, because some things are more important than efficiency, and one of those things is being able to watch the elderly attempt to pull themselves up by their bootstraps.

Looking more broadly at the conservative economic framework that has dominated since Reagan, the results have been less than stellar. Since the 1980s, conservative economic policies have certainly made a dent in the welfare state. They’ve also made a dent in economic performance. Most obviously, deregulation of the finance industry paved the way for the Great Recession, the largest financial crisis since the Great Depression. Perhaps non-coincidentally, the Great Depression itself followed the right-wing, pro-business economics of the 1920s. It took the election of a progressive in the 1930s to enable the United States to rebound from the downturn.

Conservative policies like tax cuts, the crackdown on unions, the suppression of the minimum wage, and neoliberal globalization have likewise hurt the economy by spurring a marked rise in inequality. In fact, the resulting heightened inequality has been linked directly to the Great Recession. WashU professor of economics Steven Fazzari and co-author Barry Cynamon make a straightforward historical case for this link in their paper, “Inequality, the Great Recession and slow recovery.” Their argument is that as inequality rose from the 1980s onward, so did household debt for the bottom 95% of Americans. Debt allowed this group to maintain and even slightly increase their consumption rate, the share of their disposable income they consumed, from 1989 through 2007. But when credit dried up, the consumption rate of the bottom 95% dropped substantially. Fazzari and Cynamon point to this collapse in household spending as “the proximate cause of the Great Recession.”

Beyond helping bring about the Great Recession, the rise in inequality driven by conservative policies appears to have further damaged economic performance, particularly in terms of economic growth. One explanation for this is that inequality, by sapping wage growth for most Americans, has led to weak aggregate demand. Because those at the top of the income distribution spend less as a percentage of their income than the lower and middle classes, the upward redistribution of income that has occurred over the last several decades would logically have dampened aggregate demand. Fazzari and Cynamon comment that this downward pressure on demand was offset for many years by an increase in borrowing, but the Great Recession blew up that dynamic. In their view, then, the slow recovery from the Great Recession can be explained at least in part by income inequality weakening aggregate demand.

Josh Bivens of the Economic Policy Institute has lent further support to this line of argument. He estimates that rising inequality reduced growth in aggregate demand by 4.2% of GDP annually from 1979-2007. Despite things like the bubble in the housing market helping to cover up for this shortfall in demand, weak demand probably held back growth even before the Great Recession. Bivens notes that the period from 2001 through 2007 “saw the slowest economic growth then on record,” and that this slow growth “was likely a function of too-slow growth in aggregate demand.”

Inequality can, at least in part, explain the failure of the U.S. economy to reach as strong GDP growth as possible. This failure is illustrated in the following graph, constructed by Bivens:

This graph shows the extent to which the U.S. economy has underperformed in recent years. There’s a particularly visible dip during the Great Recession, but there’s a noticeable gap between actual and potential GDP for most of the period from 1995 through 2017.

Economic rents contribute to this output gap as well. Simply put, an economic rent is money paid above market value. If I’m willing to sell you apples for $10 but you pay me $15 for the apples, I’m receiving $5 worth of economic rent. Now imagine the same thing but with the American financial sector. As Dean Baker explains in Rigged: How Globalization and the Rules of the Modern Economy Were Structured to Make the Rich Richer, the financial sector has expanded significantly over recent decades, “from 4.5 percent of GDP in 1970 to 7.4 percent in 2015.” That expansion would be fine from a macroeconomic standpoint if it helped maximize productivity and growth, but there’s good reason to believe that it hasn’t. Baker, for instance, cites a paper showing “an inverted U-shaped relationship between the size of the financial sector and the rate of productivity growth.” 

A large financial sector has meant large rents to members of that sector, a nice gift to many of the people who crashed the economy in 2008. According to Baker, the total annual value of rents to the financial sector stood between $460 and $636 billion in 2015. To put that cost in perspective, $636 billion could fund tuition-free public college for eight years. It could cover Americans’ medical debts more than four times over. Or it could fund the LIFT Act, which “[t]he Center on Budget and Policy Priorities estimates… would lift 9 million people out of poverty,” for three years. Baker makes his own comparison of the cost of financial sector rents to the cost of food stamps, shown in the following graph:

However you look at it, the cost of these rents is huge. How could it be reduced? Regulation and taxation. How could it further inflate? Deregulation and privatization. Here, again, conservative economics proves it’s not all about efficiency and GDP. Sometimes you just have to give it up to Goldman Sachs for doing God’s work. Teachers? Have you seen the deficit?

When it comes down to it, conservatives aren’t all about making the economy work as well as possible. They’re completely willing to have worse economic outcomes if it means they also get to reward rich people and make service workers sweat a little more about whether they can afford that dose of insulin. Conservative’s preferred economy is a punitive one for the worse off, illustrated, for instance, by the conservative insistence on adding work requirements to Medicaid expansion. Did work requirements help economic performance? Harvard researchers found no effects on employment as a result of Arkansas’ Medicaid work requirement. Did work requirements make life worse for a bunch of people? In Arkansas, over 18,000 people lost coverage in seven months, resulting in “adverse consequences, including having problems paying off medical debt and delaying care or forgoing medications because of cost.”

According to conservatives such as Art Laffer, though the left may claim to be able to deliver more equality without infringing on economic prosperity, such an outcome is impossible. The left’s policy program will hurt the economy, period. Yet, when it comes to their pursuit of inequality, conservatives’ opposition to suboptimal economic performance seems to suddenly vanish. After concluding that the left wants to have its cake and eat it too, the right’s solution is apparently to make poor people choose between cake and healthcare while leaving the rich to feed their pet stingrays cake off the side of a yacht.