Posts Tagged ‘economists’

No reason to get excited

1 August 2011

President Obama and Congressional leaders have apparently reached a deal on reducing the deficit, which might end the debt-ceiling crisis for now, assuming Congress passes it. Cause for celebration? More like cause for heavy sighs. I’ve been saying over and over that cutting government spending in an economic slump makes the slump worse. The best that can be said about it is that the (real-world political) alternative is worse, i.e., not raising the debt ceiling.

In a front-page article in today’s NYT a chorus of economists make the same point. In a time of slack demand, don’t weaken demand further by cutting government spending. The headline (from’s republished version):

“Economists warn cuts to federal spending ill-timed:
Debt deal to spend less on US economy puts recovery at risk, experts say.”

The Times could have put this story on its front page months ago. Too late — by now, slashing social spending has gone from Republican fantasy to Washington Wisdom.

The job market is pretty vacant. And we don’t care!

21 December 2009 reports today that its panel of mostly business economists says no more government stimulus spending is needed:

“Though unemployment will remain stubbornly high, and the economic recovery sluggish in 2010, the government doesn’t need to provide another round of stimulus spending to keep the economy afloat, they say.”

That’s a mighty big “though” there!  Just how stubbornly high do they expect unemployment to remain?

“The forecasters are not upbeat about the outlook for the job market next year. Though the latest employment data point to the end of a nasty cycle of job cuts, next year’s recovery is not expected to make much of a dent in the unemployment rate, which is hovering around 10 percent. The consensus is that the jobless rate drops by just two-tenths of a percent, to 9.8 percent, by the end of next year.”

That forecast is in line with other general predictions I’ve seen.  And each point in the unemployment rate represents about 1.5 million jobless persons.  So why not have a jobs program to relieve this stubborn problem?  (First, to be fair, let’s note that two of the eleven members of the panel do support another round of stimulus.  They are Jan Hatzius, chief economist of Goldman Sachs, and Ethan Harris, head of North American economics for Bank of America Merrill Lynch.  When Goldman Sachs and Bank of America are the good guys, maybe there’s something wrong with my profession?)

Edward Leamer of UCLA, whom I have heretofore associated with common-sense empiricism and clear writing, channels his inner Scrooge and mixes his metaphors in offering this beatings-will-continue-until-morale-improves prescription:

‘“The time to short-circuit the negative feedback from job losses is behind us,” said Ed Leamer[,] director of the UCLA Anderson Forecast. “Let the private sector heal the economy.”’

To paraphrase Homer Simpson and Proverbs 21:13:  “It’s not that we’re not listening to the cries of the unemployed, honey, it’s just that we don’t care.”

Obama’s economists, Part I

10 February 2009

This is a topic I’m sure I’ll be returning to many times.  Among my greatest post-election disappointments was Larry Summers’s comment that it was a misconception that deregulation was somehow responsible for the financial crisis.  Hello?  And I still don’t know what to think about Tim Geithner — New York Fed experience a big plus, accomplice role in flawed Paulson bank bailout and AIG handout a red flag (though the “just following orders” defense may apply here).  Clearly Geithner and the overall economic policy of the Obama Administration will be much more of a known quantity after 11 a.m. this morning when Geithner gets his “moment in the sun” to announce the new bailout plan.

In Sunday’s New York Times, Frank Rich, not for the first time, rips Obama’s economic team as pretty much the same Summers-Robert Rubin crew that rubber-stamped every major deregulatory initiative in sight, giving rise to behemoth too-big-to-fail banking conglomerates and unregulated credit default swaps.  A lot of it is familiar, but I’d missed this news item from last week.   Reports are that the great Paul Volcker, the former Federal Reserve chair who conquered double-digit inflation in the early ’80s and has been a voice of sanity in financial policy ever since, is being frozen out of policy discussions by Summers.  (This brings to mind Willem Buiter’s line that “adding Larry to a team is like putting a whale in an aquarium.”)  Now, the Economic Recovery Advisory Board that Obama set up and tapped Volcker to head is officially supposed to be an  independent voice, separate from the cabinet and Summers’s National Economic Council, so maybe the idea is to keep them separate and avoid a groupthink mentality.   But the word is that Volcker isn’t happy with his current treatment.   We’ll see what happens now that the Economic Recovery Advisory Board is finally up and running.


“You might be an economist . . .

29 January 2009

. . . if you sing the praises of free markets while working for a public university.”

I forget who said that (Yoram Bauman?), but I thought of it again after seeing the Cato Institute’s full-page ad in today’s (Jan. 28 ) New York Times, against a fiscal stimulus package.   It was signed by a few hundred economists, the overwhelming majority of whom teach at state schools (as do I).  I didn’t have time to get an exact count, but the first ten were all at state schools, as were about eighty percent of those above the fold.  Given that the gist of the ad was that we need to reduce the “burden of government,” maybe they could offer to help shrink or privatize their schools?

At least one person on the list, Jeffrey Miron, is consistent in opposing state-funded higher education (which he has done in past op-eds) while teaching at a private university.  For most of the rest, I think the Disposable Heroes of Hiphoprisy said it better than I can.)