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.
