Last week President Obama while in Mansfield, OH stated that based on an unbiased, nonpartisan, objective and independent study, Romney’s economic plan would have quite a negative effect on the recovery and raise taxes appreciably on the middle class. He then implored the audience to stay the course with his economic plan.
Obama’s hubris was stunning, beginning with the statement that a recovery was occurring. The blatant assertion of an independent, nonpartisan, unbiased analysis was also false. It was sponsored by the Brookings Institute (a self-described liberal/progressive think tank); and was conducted under the auspices of the Tax Policy Center (a joint venture of Brookings & the Urban Institute). Finally the analysis and its conclusions were authored by Adam Looney (a former Obama White House aide with the Council of Economic Advisers). Of course Obama’s public relations firm, the Main Stream Media, has run the story without any real “validation of his statements”!
Obama’s ‘tiny” lie aside, as a holder of an MBA, and one who has been fascinated with macroeconomics and econometrics for years, I decided to survey a range of highly respected economists and their stand(s) on Obama’s economic/jobs approach. Understand those surveyed are the products of the completely unbiased and objective world of academia (sarcasm intended). Nevertheless, except for extreme partisans like Austan Goolsbee, Paul Krugman and that noted economist, David Axelrod (yes, just a little more sarcasm), I was motivated by no recollection of any recent support for the Obama strategy in the economist community.
But first some basics: Economics is a social science (like sociology or psychology) that analyzes the production, distribution, and consumption of goods and services. An Economist is a professional in the social science discipline of economics. Macroeconomics analyzes the entire economy (in a holistic way), including unemployment, inflation, and economic growth, monetary and fiscal policy. Econometrics is the application of mathematics and statistics to economics.
The survey encompassed nine economists, eight living and one who has passed. Eight have described their political leanings; three are democrat/liberal (two of whom served in the Obama administration); two are republican/moderate-conservative; and three are libertarian, two have left the academic womb. All have been influenced by other economists, notably Adam Smith, Freidrich A. Hayek, Milton Friedman, and John Maynard Keyes. All the economists cited have written extensively; their work can be found by Googling.
Six have cited Friedrich A. Hayek as an influence. Hayek famously stated, “The advantage of a free market is that it allows millions of decision-makers to respond individually to freely determined prices, allocating resources--labor, capital and human ingenuity--in a manner that can't be mimicked by a central plan, however brilliant the central planner”.
The surveyed Economists include: Lawrence Summers, Ph.D. Harvard-Economics 1982; Summers was Obama’s Chairman of Economic Advisers (Jan. 09-Nov. 01); a former Sec. of Treasury, (Clinton, 1999-2001); President of Harvard University (2001-2006); and served as a member of Reagan’s Council of Economic Advisers. Summers strongly lobbied for cuts in corporate & capital gains taxes under both Reagan and Clinton to stimulate the economy. Summers, based on research, has also written that welfare payments and unemployment benefits are “major contributors to unemployment and should be scaled back”. More recently he said, “Equally, arguments that suggest the only way to raise the incomes of middle-class families is through measures to regulate business practices more heavily or to restrict increases in international trade are very dangerous”, 2007-Financial Times. These views are diametrically opposed to the Obama policies he supported early in the Obama administration. He now indicates he believes that redistribution of wealth is good “social policy”. In essence, Summers has materially changed and modified his thinking on regulation, wealth redistribution, government control/activism and regulation. Many critics suggest it is due to his opportunism, and believe he is being intellectually dishonesty.
N. Gregory Mankiw, Ph.D., MIT-Macroeconomist, New Keynesian Economist 1984; G.W. Bush Chairman of Council of Economic Advisers (2003-2005); currently serving M. Romney as an economic adviser and continuing as professor of economics at Harvard; noted for his very popular blog on economics (full disclosure-I follow the blog). Mankiw has spoken of the benefits of free trade, noting that outsourcing of jobs by U.S. companies is "probably a plus for the economy in the long run”. This view reflected mainstream economic analysis, yet was decried by many democrat politicians, who have linked outsourcing and the slow recovery of the U.S. labor market since early 2004. Mankiw believes in a free enterprise system and the magic of the diverse, largely unregulated marketplace and says so…thus making him a lightning rod/target in the liberal community. Many other economists view him as pragmatic and courageous.
Peter Boettke, Ph.D., George Mason University-Economics 1989; Economist-Austrian School. Since 1998 his reputation has grown due to activities as a faculty member at George Mason, his involvement as a Hayek Fellow at the London School of Economics, and as a faculty fellow at Charles University/Georgetown University American Institute for Political and Economic Studies in Prague. His reputation has helped the somewhat unorthodox economic doctrines of the Austrian School gain visibility.
The non-neutral aspects of money, as described by the Austrian School, have been used by a few politicians to justify stimulus spending, without accounting for the concept of diminishing returns. Boettke has voiced appreciable concerns regarding Obama’s economic initiatives (primarily taxation due to diminishing returns) and has indicated they are holding back/slowing a recovery; in particular he has posited that regulation can be destructive to an economy.
Richard Vedder, Ph.D., University of Illinois-Economics 1965. Dr. Vedder subsequently studied economic history with an emphasis on interactions with public policy. Vedder has done extensive research into immigration, education, and the relationship between labor and capital. His most notable comment on the current economic situation follows: “I, somewhat reluctantly, supported the $700 billion bailout package... I also believe in perilous times that government has a role to play in restoring confidence. However, I am also convinced that the crisis itself largely reflects a series of public policy miscues. In the absence of these governmental mistakes, this financial crisis would never have happened... I am very concerned about attempts by an overly zealous congress/[president] to attempt to craft an economic program that likely will have adverse effects….”
Peter Morici, Ph.D., State University of New York-Macroeconomics 1974. Peter Morici is a Professor of International Business at the University of Maryland. Morici has served in numerous advisory capacities including assisting the House Ways and Means Committee and the Senate Finance Committee. His focus has been on international economic policy and he has served as Director of Economics at the U.S. International Trade Commission. Dr. Morici is an expert in macroeconomics, industrial policy, and international economics and agreements. He can often be found stating his views both on TV and on the opinion pages of newspapers and in other print media. He is a free market economist who frequently and loudly advocates for lower taxes, less regulation etc.
Arthur Laffer, Ph.D., Stanford University-Political Economics 1971. Laffer is best known for the Laffer Curve, an illustration of the theory that there exists some tax rate between 0% and 100% that will result in maximum tax revenue for governments. The Laffer Curve concept is not new; Laffer has said he learned it from Ibn Khaldun and John Maynard Keynes. Laffer first gained prominence during the Reagan administration as a member of Reagan's Economic Policy Advisory Board. Many economists now refer to him as ‘the father of supply side economics’. Interestingly, although Laffer identifies himself as a strong fiscal conservative and libertarian, he has staunchly supported President Clinton's conservative fiscal policies and voted for him in 1992 and 1996. Laffer references the cornerstone of his support for Clinton as his economic policies, which he believes are the antithesis of Obama’s. Clinton, he states, advocated tax reductions, less regulation and spending discipline.
Mark Skousen, Ph.D., George Washington University-Monetary Economics 1977. Skousen is also an investment analyst, college professor, and newsletter editor. He was recently ranked as one of the top 20 most influential living economists. Skousen was an economic analyst for the CIA from 1972 to 1975. He later worked as a consultant for IBM and Hutchinson Technology, among other Fortune 500 companies. Skousen is a champion of capitalism, the free market and its proponents. At FreedomFest (which Skousen founded) 2007, he announced the Free Market Hall of Fame. The hall solicits voting for the free-market economist, journalist, business leader, legislator, and think tank hero of choice. Notably FreedomFest also released a spoof of the ObamaCare healthcare reform act entitled "ObamaCare - Live Your Carefree Lifestyle".
Christina D. Romer, Ph.D., MIT-Economics 1985; Currently a professor of economics at the University of California, Berkeley. Romer served as the Chairperson of the Council of Economic Advisers, Jan. 2009-Sept 2012 with Obama. Romer has researched and written extensively on the causes and the actions that ended the Great Depression. Romer showed that fiscal policy played a limited role in that recovery, because taxes were raised almost as quickly as government spending increased during the New Deal, ergo higher taxes stifled the recovery. Romer’s recent work (with D. Romer, her husband) has focused on the impact of tax policy on government and general economic growth. This work looks at the historical record of US tax changes from 1945-2007, excluding "endogenous" (grown from within) tax changes (increases) made to fight recessions or offset the cost of new government spending. It finds that such "exogenous" tax increases, made (for example) to reduce inherited budget deficits, reduce economic growth.
Milton Friedman (1912-2006), Ph.D., Columbia University-Economics 1946; Economist & Statistician, (strongly influenced by Jacob Viner, Frank Knight, Friedrich Hayek, Harold Hotelling & Henry Simons). Friedman was an economic adviser to President Ronald Reagan and influenced the economic policy of each successive president until his death. He pushed the virtues of the free market economic system and recommended only minor government intervention. His beliefs on monetary policy, taxation, and deregulation substantially affected government policies in the 1980’s and 1990’s. The Federal Reserve still responds to global financial issues in ways based on his monetary theory.
His economic views opposed those of John Maynard Keynes, Murray Rothbard, and John Kenneth Galbraith; stating that Keynesian precepts were “naive”. He strongly promoted an alternative macroeconomic view called “monetarism” and subscribed to econometric analysis. Friedman’s influence has affected the thinking of Ben Bernanke, Alan Greenspan, David Friedman and the Cato Institute. Milton Friedman is now known as one of the most influential if not the most influential economist of the 20th century. Today his tenets are again receiving much attention since this year is the 100th anniversary of his birth.