And so you should avoid commenting on Bush's record: it was horrible. Starting two wars and enacting a huge tax cut. This did more harm than any president in modern history. Not to mention the problems in the middle east that are having huge ramifications in the US...
Totally agree. The policies provide a long-term influencee on the economy. This is a thoughtful way to grade Presidents and assess future Presidents. In my work in Brand Planning, the best strategies are those that have long term influence on equity or image of the brand. It's a slow burn (a turn off for stakeholders who want immediate ROI) but it's a sure way to create space in the consumers' mind if implemented consistently and efficiently. Similarly, economic policies take time to implement before we reap its rewards and needs continuity if proven efficient (even if administration changes). I live in the Philippines where so much is yet to be done to uplift the quality of life and policies are imperative to ensure sustainable economic gains. The present administration has done a lot in carrying out economically sound policies e.g. Conditional Cash Transfer, etc. This despite difficulty in ratification and implementation due to lack of foresight and self-serving interests of those in the government. It's easy to be dismayed by unsolved problems we experience everyday but we have a long way to go. What's important is that the fundamental issues e.g good governance, job creation-- are being addressed and policies have been done for these to be in place. As we elect our new President this May, i hope my fellow countrymen are discerning enough to find out-- how can their prospective candidate uplift their quality of life? What is his economic vision? And how will he get there?
So, Mankiw was Bush's economic adviser when the worst housing bubble in American history developed? Ouch! Talk about policies that have a lasting impact. We're still dealing with the fallout from that. Market fundamentalism - a core GOP ideology - is perhaps the most dangerous economic policy and the worst threat to mankind besides nuclear proliferation.
3
If policy plays such lasting influence and we anticipate a stall in technological leaps (not sure I think that is the case, but am no expert), then it would seem like the most far reaching impact now would come from investment in modernizing public infrastructure (we're way behind), bolstering clean energy, and investing in science. Unfortunately the GOP doesn't have much use for science, clean energy or public infrastructure. Another seemingly obvious policy with far reaching impact would favor higher wages for the 99% who are still falling behind, unable to save for retirement or putting our kids through college. Those deficits in personal budgets have a growing impact on the larger economy with an arc that goes well into the next couple of generations.
2
Everyone! Everyone! The fact that Republican presidents almost invariably preside over economic catastrophe and the fact that the economy generally improves once a Democratic president is elected is PURE COINCIDENCE. Listen to Professor Mankiw, whose understanding of economics is so sophisticated and pure that it is completely unsullied by FACTS or RESULTS or other experiential datapoints touted by those in the "reality-based community" that was derided by the administration he advised in literally those terms.
By the way, it is also not worth pondering that Jimmy Carter, the only president to which this really fairly applies, was a one-term president, while most presidents sit a full 8 years. One should also not think too hard about how most of the improvement in the economy under Republicans happened early in Reagan's years, when Carter's anti-inflation policies did "cast a long shadow," and how both GHWB and GWB left their Democratic successors serious recessions.
By the way, it is also not worth pondering that Jimmy Carter, the only president to which this really fairly applies, was a one-term president, while most presidents sit a full 8 years. One should also not think too hard about how most of the improvement in the economy under Republicans happened early in Reagan's years, when Carter's anti-inflation policies did "cast a long shadow," and how both GHWB and GWB left their Democratic successors serious recessions.
3
Honestly. " Take Jimmy Carter, for example. Many people view him as one of the worst modern presidents."
YES, I will take Jimmy Carter 200x over the failed, disastrous, incompetent presidency of your boy w.
The entire world is still trying to recover from the "missteps" of his failed policies. Not just economically speaking, let's talk ISIS.
YES, I will take Jimmy Carter 200x over the failed, disastrous, incompetent presidency of your boy w.
The entire world is still trying to recover from the "missteps" of his failed policies. Not just economically speaking, let's talk ISIS.
3
most of the world is laying the ISIS problem at the feet of Obama. Most here, except the most left, are, too. Just saw an example of a history rewrite. 151,000 new jobs for January. In 2008 or 2009, I saw a speech by the Wharton Business School's head person. He said that 200,000 is the number needed to keep even with population growth. Now, the NYT cheers 75% of that. Suppose if Obama could play baseball, the NYT would be telling me next that his .180 average was really a "solid .180, not one of those paltry ones". And that any Republican hitting .250 was just lucky, or the result of a stacked deck. Moving targets of jobs well done do no one any good. Makes NYT look like part of a propaganda machine actually. Plus, cannot believe cooked numbers anyway. The methodology for unemployment is flawed, what is "good", or "bad: seems to move around depending on who m they are "analyzing". And analyzing job, unemployment numbers is akin to the great Stills' line the first time we heard of him, "mostly say hooray for our side". That covers it.
Phooey on Mr. Gordon. Previous generations introduced electric lighting but, that was just a change in quality not in kind. Neanderthals had means of interior artificial lighting too. The ability to effortlessly and cheaply exchange information across the globe via the internet was unimaginable as recently as when Jimmy Carter was in the white house. Today we can injection mold metal, splice genes, print 3D parts and determine the location of a ship at sea to within 30 feet accuracy at night in a fog. All things impossible generation ago.
Are you trying to avoid saying Obama did a great job? Or that electing a lunatic running on the GOP Side shouldn't be judged on their collapsing the economy?
1
The real reason you should look at a president's policies and not his results is because if you do that it is no contest between the Democrats and the Republicans, especially if you are looking at the national debt vs gdp.
From WWII, the debt/gdp ratio fell under every president until the Reagan administration. Since then that ratio has climbed for every Republican administration.
From WWII, the debt/gdp ratio fell under every president until the Reagan administration. Since then that ratio has climbed for every Republican administration.
2
Obama and Clinton take credit for the "ACA" and Clinton intends to keep it. But it is nothing like real health care or affordable health care. We would be better off if Obama had disowned the ACA as it turned out. Bernie's policy, single party payer is the only way to get health care especially given the insurance plutocrats who will undermine any other system. Are we to judge Obama on what he proposed or what he settled for? Clinton's health care policy is based on the ACA as it exists now, which is even worse than what Obama wanted but gave up on.
You said, "In Mr. Gordon's view, ... we had better get used to slower growth in productivity and incomes." I agree, but not because "technological change is just not what it used to be".
Just as agriculture has declined in importance relative to the rest of the economy, so is (has) manufacturing. The service sector is king today and that sector's growth is led by population growth. In the United States, that means immigration; the growth rate of natural-born citizens is nearing zero or going negative, as in a growing number of other countries.
Just as agriculture has declined in importance relative to the rest of the economy, so is (has) manufacturing. The service sector is king today and that sector's growth is led by population growth. In the United States, that means immigration; the growth rate of natural-born citizens is nearing zero or going negative, as in a growing number of other countries.
Clinton was in fact a disaster for the US economy. The surpluses he gained cut the money supply into the economy. This is a major reason Bush had to deal with a recession soon after taking office. To function normally the economy requires budget deficits. The only reason the US is doing somewhat OK now is because the budget is in deficit. Heaven help it if the politicians push the budget into surplus!
Mankiw gets it wrong about both Carter and Clinton. Carter initially appointed G. William Miller as chair of the Fed, whose mismanagement and incompetence led to the need to bring in the heavy hand of Paul Volcker. He may have been "dealt a bad hand" but he contributed to it mightily with that appointment. On the other side, Clinton's 1993 push for a lowered deficit with increased taxes on the rich effectively led to a full-employment balanced budget, and made monetary stability easy during the 90's. His policies were prescient and correct as (Keynesian) macroeconomics, even if he also had favorable tailwinds. And his team did pretty well during the various currency crises of those years. (Financial deregulation is another story, oh well...)
Maybe the most insipid article I've ever seen in the Times.
Mankiw's point is well-taken, but what ARE the "good" policies?
A possible logical construct is:
1) Low taxes which foster economic growth are good policies; and
2) The Obama administration raised taxes; therefore
3) No matter how well the economy performs, Obama is a disaster.
But can we prove that #1 is true? Only on faith.
The two problems with economics are that (a) it's the only science that cannot repeat experiments under controlled conditions and (b) far more than any other science, its practitioners are biased and see what they want to see. Today we have something close to a controlled experiment where the USA adopted stimulus while Europe adopted austerity, and the USA economy is markedly outperforming Europe - yet many politicians and economists still insist that austerity is the way to go, and that the "results" of the current "experiment" don't properly control for all relevant factors.
If you look back, it seems surprising how often presidents get their way on economic issues. Despite solid Democratic majorities in both houses, Reagan got his way on taxes and Obama overcame Republican majorities to largely prevail over the expiration of the Bush tax cuts.
When you have a two-term president, I think it's pretty valid to compare the economy a year after he took office to a year after he left office.
Mankiw's point is well-taken, but what ARE the "good" policies?
A possible logical construct is:
1) Low taxes which foster economic growth are good policies; and
2) The Obama administration raised taxes; therefore
3) No matter how well the economy performs, Obama is a disaster.
But can we prove that #1 is true? Only on faith.
The two problems with economics are that (a) it's the only science that cannot repeat experiments under controlled conditions and (b) far more than any other science, its practitioners are biased and see what they want to see. Today we have something close to a controlled experiment where the USA adopted stimulus while Europe adopted austerity, and the USA economy is markedly outperforming Europe - yet many politicians and economists still insist that austerity is the way to go, and that the "results" of the current "experiment" don't properly control for all relevant factors.
If you look back, it seems surprising how often presidents get their way on economic issues. Despite solid Democratic majorities in both houses, Reagan got his way on taxes and Obama overcame Republican majorities to largely prevail over the expiration of the Bush tax cuts.
When you have a two-term president, I think it's pretty valid to compare the economy a year after he took office to a year after he left office.
3
How can I get a job writing for the post and advise the president? I just don't want to know anything that has to do with J Bush.
JEC's approval ratings went up after that speech.
3
Since WW II the unemployment rate has increased under every Republican president except Reagan. The unemployment has never gone up under a Democratic president during that period.
But ignore the results and believe that Republican policies are good for the economy. Even if empirical results don't support those policies.
Nice try.
I agree there is a lag effect. Many economists have suggested measuring results from the end of the inauguration year to account for that lag. That would give Reagan a pass on results in 1981, Bush on results in 2001 and Obama on results in 2009. Probably better than measuring from inauguration.
It's not perfect. Carter's appointment of Volcker did have positive effects beyond 1981 that this methodology misses. But a flawed measurement is better than none at all.
Of course measuring with a lag makes Bush look worse and Obama look better. Can't have that.
But ignore the results and believe that Republican policies are good for the economy. Even if empirical results don't support those policies.
Nice try.
I agree there is a lag effect. Many economists have suggested measuring results from the end of the inauguration year to account for that lag. That would give Reagan a pass on results in 1981, Bush on results in 2001 and Obama on results in 2009. Probably better than measuring from inauguration.
It's not perfect. Carter's appointment of Volcker did have positive effects beyond 1981 that this methodology misses. But a flawed measurement is better than none at all.
Of course measuring with a lag makes Bush look worse and Obama look better. Can't have that.
9
Karl is absolutely right. While adjustments are required, such as to account for the lag time after a president takes office, judging by policy rather than results is ludicrous. It is the tail wagging the dog. Professor Mankiw makes the same mistake as the man on the street, supporting policies that sound good, no matter how many times they have failed in practice. It is similar to a joke I am told is familiar to economists that goes: "Sure, it works in practice, but will it work in theory?"
3
"Because the pace of scientific and technological advance has a life of its own, slow productivity growth may be a problem without a solution."
The problem seems to me to be not technology but the fact that there is a belief that WITH technology we can get more work done with few people . The real use of technology should be in CREATING MORE PROJECTS to use the technology. Instead of one computer doing the job of ten people, put ten people doing 10 diverse jobs that need to be done so we get the benefit of speedier and perhaps more accurate results, but we don't discard the human operator. Yes, of course we then need to employ 10 people but our whole system is based on CONSUMPTION and that should include consuming workers. Employers consumer workers, workers consume the products (real or data) thereby making the world go round.
The automobile not only replaced the horse and buggy, it allowed more people TO GO to work at places that they wouldn't otherwise have been able to travel to, and BE productive. It created a need for more gasoline, for more rubber, for more metal, for more bank tellers, ad infinitum. Technology , as currently used, has REDUCED all those categories thereby creating its own downfall. Hence, no one left to BUY stuff. Common sense is out the window replaced by one-way greed.
The problem seems to me to be not technology but the fact that there is a belief that WITH technology we can get more work done with few people . The real use of technology should be in CREATING MORE PROJECTS to use the technology. Instead of one computer doing the job of ten people, put ten people doing 10 diverse jobs that need to be done so we get the benefit of speedier and perhaps more accurate results, but we don't discard the human operator. Yes, of course we then need to employ 10 people but our whole system is based on CONSUMPTION and that should include consuming workers. Employers consumer workers, workers consume the products (real or data) thereby making the world go round.
The automobile not only replaced the horse and buggy, it allowed more people TO GO to work at places that they wouldn't otherwise have been able to travel to, and BE productive. It created a need for more gasoline, for more rubber, for more metal, for more bank tellers, ad infinitum. Technology , as currently used, has REDUCED all those categories thereby creating its own downfall. Hence, no one left to BUY stuff. Common sense is out the window replaced by one-way greed.
2
Even better than grading prospective presidents on their policy proposals--- which often amount to no more than sound bites, slogans or brazen appeals to voters' short term economic interests---would be to grade them on their grasp of macroeconomics and economic history.
Two questions I would put to the current crop candidates---were I lucky enough to be a business or economics journalist---are these: 1) Whose explanation of the causes of the 2008 financial crisis do you find most persuasive? 2) Which economist, living or dead, would you choose to head up your Council of Economic Advisers if he or she were available?
If the candidate's answer to #2 was "Gregory Mankiw", I would be likely to eliminate him or her from consideration.
Two questions I would put to the current crop candidates---were I lucky enough to be a business or economics journalist---are these: 1) Whose explanation of the causes of the 2008 financial crisis do you find most persuasive? 2) Which economist, living or dead, would you choose to head up your Council of Economic Advisers if he or she were available?
If the candidate's answer to #2 was "Gregory Mankiw", I would be likely to eliminate him or her from consideration.
4
To grade Presidents on the economy Mankiw tells us we should look at policies, not results: “judging presidents based on outcomes rather than policies is an egregious error. We would end up blaming them for results over which they have little control. We would find ourselves disappointed in our leaders, even if they are doing the best they can.”
So I have to wonder, where does Greg Mankiw stand on teacher accountability and evaluation?
In a 2011 piece he argues education reform should be a high priority for President Obama and says “research suggests that one key is getting rid of bad teachers” (How to Break Bread with the Republicans, Jan. 1, 2011). He cites a study by Hoover Institution economist Eric Hanushek who asserts “replacing the bottom 5 to 8 percent of teachers with average teachers could move the U.S. near the top of international math and science rankings.”
According to Hanushek’s own website, he “introduced the idea of measuring teacher quality through the growth in student achievement that forms the basis for the development of value-added measures for teachers and schools.” Certainly Mankiw disagrees, right? Judging teachers based on outcomes rather than curriculum and teaching practices is an egregious error. We would end up blaming them for results over which they have little control. We would find ourselves disappointed in our teachers, even if they are doing the best they can.
So I have to wonder, where does Greg Mankiw stand on teacher accountability and evaluation?
In a 2011 piece he argues education reform should be a high priority for President Obama and says “research suggests that one key is getting rid of bad teachers” (How to Break Bread with the Republicans, Jan. 1, 2011). He cites a study by Hoover Institution economist Eric Hanushek who asserts “replacing the bottom 5 to 8 percent of teachers with average teachers could move the U.S. near the top of international math and science rankings.”
According to Hanushek’s own website, he “introduced the idea of measuring teacher quality through the growth in student achievement that forms the basis for the development of value-added measures for teachers and schools.” Certainly Mankiw disagrees, right? Judging teachers based on outcomes rather than curriculum and teaching practices is an egregious error. We would end up blaming them for results over which they have little control. We would find ourselves disappointed in our teachers, even if they are doing the best they can.
3
" (Full disclosure: I was an economic adviser to Mr. Bush from 2003 to 2005 and will avoid commenting here on his record.)"
Of course you'll avoid commenting on how bad his record was. Of course.
And you present your reluctance as being objective.
Of course you'll avoid commenting on how bad his record was. Of course.
And you present your reluctance as being objective.
8
a simple enough thesis - don't judge them on the economy which is influenced by other factors
in Australia we had a couple of memorable left leaders in the 1980s - one floated the dollar - a single largest factor in growth, the other was legendary for his insults to the opposition - but spoke hard truths which we needed to hear.
in short - judge people by what they Did that had good results - not by changes that would have happened anyway.
in Australia we had a couple of memorable left leaders in the 1980s - one floated the dollar - a single largest factor in growth, the other was legendary for his insults to the opposition - but spoke hard truths which we needed to hear.
in short - judge people by what they Did that had good results - not by changes that would have happened anyway.
1
I have no idea what Mankiw is trying to say here - except for the obvious fact that he's spinning. I assume his point is 'don't give Hillary any credit for the good economy of the 90's' when her husband was president. But his 'facts' are simply that there were other factors at play that deserve much of the credit.
True, maybe. So if a good economy proves nothing, what *can* we say about the 90's and the 00's (about which Mankiw declines to comment). Well, for one, Clinton's tax increases did not bring about the fiscal disaster predicted by Republicans at the time. Instead, there was bubble-fed prosperity, and the economy as a whole did very well. And Bush's tax cuts did not bring about the tremendous growth predicted by Republicans at the time. Instead, there was bubble-fed semi-prosperity, and the economy as a whole was lousy - culminating in the worst recession since the Great Depression.
So while we might not be able to say much about presidents and their effects on the economy, we can sure say a thing or two about Republicans and their lousy, but convenient, economic policies. And about Republican hacks like Mankiw who, for some reason, keep being given space at the Times for their all-but-native-advertising 'articles' about economic topics.
True, maybe. So if a good economy proves nothing, what *can* we say about the 90's and the 00's (about which Mankiw declines to comment). Well, for one, Clinton's tax increases did not bring about the fiscal disaster predicted by Republicans at the time. Instead, there was bubble-fed prosperity, and the economy as a whole did very well. And Bush's tax cuts did not bring about the tremendous growth predicted by Republicans at the time. Instead, there was bubble-fed semi-prosperity, and the economy as a whole was lousy - culminating in the worst recession since the Great Depression.
So while we might not be able to say much about presidents and their effects on the economy, we can sure say a thing or two about Republicans and their lousy, but convenient, economic policies. And about Republican hacks like Mankiw who, for some reason, keep being given space at the Times for their all-but-native-advertising 'articles' about economic topics.
9
Can we all, at least, agree that trickle down economic policy is, exactly, the voodoo charade G.H.W.Bush pegged it to be 36 yrs. ago. Never has an economic policy been more devastating to a populace in the way it mischaracterized the motives of the 1% and the brains of the other 99%. The results are finally in and so are Trump and Sanders.
6
Supply side economics are appropriate when inflation is high and business profit margins are low. Demand side economics are appropriate when inflation is low and profit margins are high. Neither is appropriate all the time in every situation, but being locked into an ideology is always a bad idea.
4
The author's mention of Carter's "malaise" speech caused me to go read it for the first time since I heard him deliver it. Carter didn't use the word "malaise" of course. It was a remarkable speech that received immediately positive public opinion until the so-called liberal media went to work on it. For starters, it showed a president who was really listening to people as he tried to rally the country toward conservation, alternative energy, and a sense of sharing in a great national cause.
Lastly, Carter warned of becoming merely a nation of consumers, obsessed with material possessions. America instead chose self-indulgence, and was immediately hoodwinked by the growing oligarchy. We got what we voted for: inequality, a loss of the public commons, a failure to embrace alternative energy earlier, and a sense of belonging something bigger than our own small personal acquisitions.
You can read it at
http://www.pbs.org/wgbh/americanexperience/features/primary-resources/ca...
Lastly, Carter warned of becoming merely a nation of consumers, obsessed with material possessions. America instead chose self-indulgence, and was immediately hoodwinked by the growing oligarchy. We got what we voted for: inequality, a loss of the public commons, a failure to embrace alternative energy earlier, and a sense of belonging something bigger than our own small personal acquisitions.
You can read it at
http://www.pbs.org/wgbh/americanexperience/features/primary-resources/ca...
25
it was a horrible speech by a horrible president, who was ill equipped to be in office.
As much as everybody wants to connect Reagan and his policies to why we are in the current situation of mediocre growth in spite of massive monetary easing, the simple fact is that Reagan was the result of a 40 year period where the government got much larger, and entitlements were vastly expanded, and policies were not working. Most don't remember the misery index - the sum of inflation + unemployment - but it was over 20% at the end of the Carter years.
What this country needs to learn is that there is a balance of private sector and public sector that makes an economy hum along and maximize its inherent advantages. Global economic history is littered with so much mismanagement - look at Argentina and Brazil right now. Brazil did well because of China's buildout, but it did not do enough to diversify its economic base, and now is in a massive mess of recession and very high interest rates. And, China has everybody scrambling to understand the idea of the impossible trinity.
There are no simple solutions in economics (remember, not a physical science). But, there is enough economic and political history for us to know how to set up as system that has a chance of succeeding over a multi year period, and what the trade offs are. Ultimately, that seems to be what we fight about every election, and we often do so without thorough understanding of the consequences are.
As much as everybody wants to connect Reagan and his policies to why we are in the current situation of mediocre growth in spite of massive monetary easing, the simple fact is that Reagan was the result of a 40 year period where the government got much larger, and entitlements were vastly expanded, and policies were not working. Most don't remember the misery index - the sum of inflation + unemployment - but it was over 20% at the end of the Carter years.
What this country needs to learn is that there is a balance of private sector and public sector that makes an economy hum along and maximize its inherent advantages. Global economic history is littered with so much mismanagement - look at Argentina and Brazil right now. Brazil did well because of China's buildout, but it did not do enough to diversify its economic base, and now is in a massive mess of recession and very high interest rates. And, China has everybody scrambling to understand the idea of the impossible trinity.
There are no simple solutions in economics (remember, not a physical science). But, there is enough economic and political history for us to know how to set up as system that has a chance of succeeding over a multi year period, and what the trade offs are. Ultimately, that seems to be what we fight about every election, and we often do so without thorough understanding of the consequences are.
1
Perhaps Prof Mankiw is not old enough to remember the Carter years or is suffering from selective recall. Carter appointed Volker only after OPEC and the EU threatened to cease holding reserves and pricing product in dollars (for a reference, Google ECU, the European Currency Unit, which was suggested as a replacement for the dollar.). He simply had no choice but to replace G. William Miller, a Carter appointee generally recognized as the worst FRB Chair in history. Carter did not defeat inflation, Volker did.
US energy policy under the Carter administration was totally inept. His administration famously came up with the "old gas", "new gas" distinction that kept some supplies price regulated while allowing new wells to price at market. This lead owners of "old gas" wells to simply shut them in leading to natural gas shortages that caused factories and schools to close.
Sorry Prof. Mankiew, but we energy economists who lived through the Carter years remember him and his advisers well - as a ship of fools.
US energy policy under the Carter administration was totally inept. His administration famously came up with the "old gas", "new gas" distinction that kept some supplies price regulated while allowing new wells to price at market. This lead owners of "old gas" wells to simply shut them in leading to natural gas shortages that caused factories and schools to close.
Sorry Prof. Mankiew, but we energy economists who lived through the Carter years remember him and his advisers well - as a ship of fools.
3
This invective from Chris on President Carter's energy policies is misplaced. Carter had innovative policies, which were ahead of their time. He advocated transitioning from fossil fuels to non-carbon energy sources including solar, and had solar panels placed on the White House. They were promptly taken down by his successor, President Ronald Reagan.
Chris glibly dismisses the policy to regulate the price of "old" gas. It wouldn't be rational to shut "old gas" wells unless the regulated price was less than the average fixed cost of extracting it.
Carter's energy advisor was John Deutch, Institute Professor of Chemistry at MIT, one of the world's leading experts on the physical chemistry of photovoltaic energy cells and energy economics.
It is people such as President Reagan, Interior Secretary James Watt, and Senator James Inhofe who continue to sail on the ship of fools.
Chris glibly dismisses the policy to regulate the price of "old" gas. It wouldn't be rational to shut "old gas" wells unless the regulated price was less than the average fixed cost of extracting it.
Carter's energy advisor was John Deutch, Institute Professor of Chemistry at MIT, one of the world's leading experts on the physical chemistry of photovoltaic energy cells and energy economics.
It is people such as President Reagan, Interior Secretary James Watt, and Senator James Inhofe who continue to sail on the ship of fools.
11
So grade on the basis of fitting the ideology. Forget the data. Revisionist nonsense.
6
"I have no idea whether Mr. Gordon’s pessimism is justified. In light of economists’ abysmal track record of long-term forecasting, all such prognostications should be taken with a shaker of salt." or as stated in the words of the sage Yogi Berra "'It's tough to make predictions, especially about the future.'
1
if predictions were outlawed, all we'd have left would be the want ads and the sports pages. What on earth would we do with all the left over time?
That is an important and true statement by Mr. Mankiw. It suggests that economics is not a science. Science, if it has any power, should be a guide to the future: based on theory, physicists have predicted the existence of new planets and new elementary particles.
Economics cannot make important predictions about the economy. All it can do is to explain retroactively what caused the last recession. It struggles even to do that.
It is a kind of mathematical politics, conservative or progressive depending on your point of view.
Economics cannot make important predictions about the economy. All it can do is to explain retroactively what caused the last recession. It struggles even to do that.
It is a kind of mathematical politics, conservative or progressive depending on your point of view.
1
Re: grading physicians.
It is easy to pick out physicians who repeatedly do stupid things with bad results. But these are relatively rare folk, because (a) the long training eliminates some and (b) most illness is modest and healed by the body.
For the rest of the physician population, checking whether they follow the standard guidelines is NOT a basis for scoring their quality. Guidelines are based on a population of patients NOT the one sitting across the desk from the practicing physician.
Stephen Rinsler, MD
It is easy to pick out physicians who repeatedly do stupid things with bad results. But these are relatively rare folk, because (a) the long training eliminates some and (b) most illness is modest and healed by the body.
For the rest of the physician population, checking whether they follow the standard guidelines is NOT a basis for scoring their quality. Guidelines are based on a population of patients NOT the one sitting across the desk from the practicing physician.
Stephen Rinsler, MD
4
It seems like grading on policy would be heavily based on the grader's beliefs. I would imagine economic advisors with similar political beliefs would grade high and the ones with opposite beliefs would grade low. Even when past data prove policies to be ineffective they are still touted by both politicians and economists. I agree there are too many variables involved to fully give credit or blame to a President for the economy during his time in office, but at least that criteria is more objective than someone's subjective worldview.
7
Based on this assessment, it is clear that Barack Obama will emerge as one of the greatest presidents in US history. With respect to Robert Gordon's thesis, the greatest threat to future growth is not the demise of technological innovation (which is a means to an end, and not an end in itself), but the rise of 21st Century luddites (largely Evangelical Republicans) who use technology to promote policies that are anti-women, anti immigration, anti-union, and deny climate change. These are the policies that will reduce economic growth in the future, not the lack of technological innovation.
3
It is curious to see the former economic guru from the Bush year engaged in the sort of revisionism that aims to deflect basic facts: GWB was the worst president in history. Yes, the Iraq war -short and especially long term disaster-, tax cuts that added huge amounts to our budgets, and a loose policy of oversight that lead to ruins. And, what about Obama that you want us to ignore? his rescue of GM? or his steady, thoughtful and patient approach to foreign policy, or the fact that millions of otherwise uninsured Americans can sleep better at night knowing that they are covered. This is the worst article I have read from an otherwise thoughtful academic. I guess it is season for pundits on the right to gear up for lucrative advising roles. Sad.
13
So you won't vote for Clinton if she wins the nomination because she also voted for the Iraq War? Note also, Obama believe Sadam had WMD - he just would have ignored it. Insane.
Obamacare should be measured on a cost-benefit basis, not just because more are insured it's good. By that measure, all government spending is good because someone is getting something for less or for free.
GM cost billions. But GWB's TARP actually made the government money.
Obama lost Iraq and Afghanistan to ISIS. Patient or losing policy?
What about the debt? Obama spent $Ts for what? Even if you credit him with 10 million jobs (which would happen in any recovery, with or without stimulus) that' $400K/job. Insane.
GWB was among the best presidents in history. Obama is one of the worst.
Obamacare should be measured on a cost-benefit basis, not just because more are insured it's good. By that measure, all government spending is good because someone is getting something for less or for free.
GM cost billions. But GWB's TARP actually made the government money.
Obama lost Iraq and Afghanistan to ISIS. Patient or losing policy?
What about the debt? Obama spent $Ts for what? Even if you credit him with 10 million jobs (which would happen in any recovery, with or without stimulus) that' $400K/job. Insane.
GWB was among the best presidents in history. Obama is one of the worst.
America's long decline has to be at least partially tied to paying for our allies defense while allowing our jobs to be sent to other countries.
This has lead to the long term decline in the real median income in America and the lack of investment in infrastructure in our country. Imagine the benefit if a significant amount of long distance truck traffic on our roads were carried on railroads. Our highway death toll and associated medical expenses would decline drastically.
This has lead to the long term decline in the real median income in America and the lack of investment in infrastructure in our country. Imagine the benefit if a significant amount of long distance truck traffic on our roads were carried on railroads. Our highway death toll and associated medical expenses would decline drastically.
2
Mankiw does not upset the Blinder/Watson study from 2014 showing that since WWII - without exception - in every single case - the U.S. economy does better with a Dem in the White House instead of a GOP'er:
http://economistsview.typepad.com/economistsview/2014/09/the-us-economy-...
The results are not even close, with GDP being more than 80% higher under Dems than GOP'ers.
The data covers the unemployment rate, stock market profits, GDP, etc., etc., for 7 back-to-back-to-back-to-back-to-back-to-back-to-back decades encompassing the entire working lives of almost every living American, adjusted for the time lag between when a POTUS takes office and when their economic policies take effect.
And GOP'ers have the statistical advantage, since the 70 years ecnompasses 9 GOP'er admins to 7 Dem admins; Murphy's Law dictates that at least one time in 70 years, GOP'ers would slip up and just accidentally out-perform the Dems - at least once.
But, nope, GOP'ers have a perfect record of 0.000 vs. the Dems perfect 70-year record of 1.000; GOP'ers are provably economically destructive for Americans.
http://economistsview.typepad.com/economistsview/2014/09/the-us-economy-...
The results are not even close, with GDP being more than 80% higher under Dems than GOP'ers.
The data covers the unemployment rate, stock market profits, GDP, etc., etc., for 7 back-to-back-to-back-to-back-to-back-to-back-to-back decades encompassing the entire working lives of almost every living American, adjusted for the time lag between when a POTUS takes office and when their economic policies take effect.
And GOP'ers have the statistical advantage, since the 70 years ecnompasses 9 GOP'er admins to 7 Dem admins; Murphy's Law dictates that at least one time in 70 years, GOP'ers would slip up and just accidentally out-perform the Dems - at least once.
But, nope, GOP'ers have a perfect record of 0.000 vs. the Dems perfect 70-year record of 1.000; GOP'ers are provably economically destructive for Americans.
31
And the super bowl winner has predicted the stock market 40 out of 49 years. Causation or coincidence? Could it be that exogenous factors like wars, oil embargoes, global debt crises, randomness of business cycles, independent Fed policies have a bigger influence on economic growth than the party of the president? What do the stats look like if you consider who has a majority in congress? Should we credit improving growth in the 60s to a democratic president or because the democratic president cut tax rates by 25%? There are lots of factors affecting the economy other than the party of the president.
2
wking - If you read the link (safe site, no malware, short piece) each of your questions is answered, especially the fact that Fed policy didn't have an effect (which the authors say is odd, since Fed policy is actually looser under GOP'ers) and that whichever party runs Congress has no effect.
The sole predictor of higher GDP growth, high stock markets, lower unemployment, fewer recessions, etc., etc., is whether Dems are in the White House - the sole predictor for 70 continuous years :)
The sole predictor of higher GDP growth, high stock markets, lower unemployment, fewer recessions, etc., etc., is whether Dems are in the White House - the sole predictor for 70 continuous years :)
1
Democrats now admire Eisenhower for the 90% tax bracket and disparage Clinton for welfare reform and deregulation. Was it the party or the policies the biggest influence on relative growth during their terms? Nixon said "we are all Keynesians now" and instituted wage and price controls and the EPA began while he was president. Was it the party or the policies that had the biggest influence on growth if any?
Future presidents will absolutely face a tougher time "producing" good economic results because of the enormous national debt, and projected future deficits. The difficult budget path ahead will greatly limit the ability of any President to raise spending or lower taxes, and the economic costs of more generous social support actions that can slow economic growth will present more difficult trade-offs than they do at present when we can readily borrow to make up for weak growth. Likely in the next 20 years one of our great nation's presidents will be left holding the political and policy bag of a national debt they perhaps didn't create.
Good argument for why George W. Bush was an economic disaster. He used economic policies from Reagan era that were proven to be ineffective (tax cuts that lead to recession and huge debts) and then double-downed by entering 2 expensive wars without asking the nation (taxpayers) to pay for it. Those are the terrible policies that the current Republican presidential field are still pushing. Nice try at deflecting your role in promoting such policies.
26
It sounds like Mankiw is trying to play down the economy of Barack Obama while trying to upgrade the perception of the bad economy of George W. Bush. Sorry, but revisionism was part of the Soviet Union (and now Russia), not the U.S.
16
What a dumb article. Of course Presidents' actions have both short and long term consequences. In the short term, what a President does can have significant effect (a simple example is the bailing out of GM). In the long term, GWBush's unfinanced reckless war and, remember, his tax cuts had long term effects. Is any of this surprising? What's the purpose of this article, then, to say that nobody has any responsibility for anything?
19
Clinton era outcomes were enhanced also by the peace dividend after the Cold War (1945-1990) and the Bush 41 tax increases.
Clinton on the other hand failed to halt the escalation of health care costs, further facilitated the hollowing out of U.S. manufacturing, and signed legislation which green-lighted reckless financial activity (repeal of Glass-Steagall and prohibition of regulation of high-risk derivatives).
The harvest from Clinton's blundering and the additional mischief of the Bush 43 era gave us the free-falling economy inherited by President Obama.
Clinton on the other hand failed to halt the escalation of health care costs, further facilitated the hollowing out of U.S. manufacturing, and signed legislation which green-lighted reckless financial activity (repeal of Glass-Steagall and prohibition of regulation of high-risk derivatives).
The harvest from Clinton's blundering and the additional mischief of the Bush 43 era gave us the free-falling economy inherited by President Obama.
11
The question is how to judge the policies. I suspect the answer must include outcome of those policies. If so, perhaps considering outcomes is not so egregious after all.
I don't understand this at all. How is one to know what policies are "right"? If a doctor prescribes the "right" antibiotic, isn’t that the one that's been shown to have the desired effect?
5
hm....Mankiw makes some excellent points but its so interesting that he focuses so much attention on Jimmy Carter's poor economic data and reputation but nary a word on the President whom he advised, George W.. (note even the Times obscures what Mankiw did, he wasn't simply an advisor, he was Bush's chief economic advisor!). Based on Mankiw's paradigm, Clinton caused the Great Recession and GWB should get credit for pulling us out and restoring the unemployment rate to 5% and raising the stock market to 16,000. Does that mean that the declining participation rate was also GW's fault?
3
He does not mention Bush'said term because he is biased on tha respect. I give him credit for openly admitting it.
1
As for Gordon's hypothesis, he maintains that the innovation from 1870-1940 basically transformed life for a great portion of society, but except for transistor, vaccines, personal computers & wireless technology we haven't had as many innovations that have spawned decades of change and growth. Just look at the financial sector - I agree that the ATM has been the only useful innovation at the same time a lot of capital has been focused on rent seeking activity. Or look at drug cos shrinking their R&D budgets, focusing on me too drugs, while pouring money into marketing. Technology and biotech investments have been overhyped. Money is not necessarily going to things that would propel high growth, like a cure for malaria, upgrading dated infrastructure, and investments in human capital. Too many private cos require too quick payback or use too high hurdle rates and are sitting on a lot of capital. Finally the concentration of wealth will be a drag on growth.
I think that we can't predict the future, but we should worry that too much capital is diverted to rent seeking activity, which will not lead to robust growth.
I think that we can't predict the future, but we should worry that too much capital is diverted to rent seeking activity, which will not lead to robust growth.
7
Timing is everything to a presidency, the best one can hope is that they don't get in the way of an upward rising economy and they don't worsen a fading economy. The Fed has more fine tune influence on the business cycle. I agree Clinton is overrated.
2
Federal Reserve plays much bigger role than the
president in shaping the economy. Fiscal policy,
spending, taxes and debt, is controlled by the president
and congress. We know that the fiscal policy during
president Obama's term, withe exception of $ 1T stimulus
in 2009, was stymied by the congress by spending
sequesteration and refusal to increase debt or raise taxes
on the wealthy. At best fiscal policy had minor impact
on economic recovery. Loose monetary policy pulled
the economy out of doldrums. Again the long run will
inform us how effective this policy is when Fed raise
the interest rate and unwind $4T sitting on its balance
sheet.
president in shaping the economy. Fiscal policy,
spending, taxes and debt, is controlled by the president
and congress. We know that the fiscal policy during
president Obama's term, withe exception of $ 1T stimulus
in 2009, was stymied by the congress by spending
sequesteration and refusal to increase debt or raise taxes
on the wealthy. At best fiscal policy had minor impact
on economic recovery. Loose monetary policy pulled
the economy out of doldrums. Again the long run will
inform us how effective this policy is when Fed raise
the interest rate and unwind $4T sitting on its balance
sheet.
3
"Particularly in this environment, judging presidents based on outcomes rather than policies is an egregious error." Is Dr. Mankiw's proposition there are some policies that are "good" even though they result in bad outcomes? Well then, YIPES!!!; economics has become a religion rather than a science. Or is the Professor trying to say we should judge President's by the outcomes caused by their policies? Is the point of the article that sometimes the outcomes of policy are not apparent during one's Presidency? Well. Duh!!!
If Prof. Mankiw is truly honest in his advocacy of the latter proposition, then I wish we would have been bolder and expressed his appreciation of the Obama Administration's economic policy, which given the financial collapse it inherited and obstructionism of Congress, has managed moderate growth, reduced unemployment and increased number of American's with health insurance. He also might have indicated how trickle down economic policies started in the Reagan Administration have led to debilitating income inequality that is undermining the faith many people have in the future of our nation.
If Prof. Mankiw is truly honest in his advocacy of the latter proposition, then I wish we would have been bolder and expressed his appreciation of the Obama Administration's economic policy, which given the financial collapse it inherited and obstructionism of Congress, has managed moderate growth, reduced unemployment and increased number of American's with health insurance. He also might have indicated how trickle down economic policies started in the Reagan Administration have led to debilitating income inequality that is undermining the faith many people have in the future of our nation.
14
" In Mr. Gordon’s view, technological change is just not what it used to be, and we had better get used to slower growth in productivity and incomes"
There are many of us (Martin O'Malley included) who believe that the harsh realities of climate change could be a driving force in our economy. Cheaper, renewable energy should create jobs in technology and infrastructure, and save us all some money. There has to be a political will though. Let's hope that our politicians are not sandbagging in order to sell out this movement to Big Oil type companies. One need look no further than those clinging to the coal economy to see that politics, not lack of technology, can hamper growth. Sometimes slow growth is due to political will and cronyism, not for lack of technology . Maybe not all the fault of a President, but a lack of vision or will in the White House surely does not help.
There are many of us (Martin O'Malley included) who believe that the harsh realities of climate change could be a driving force in our economy. Cheaper, renewable energy should create jobs in technology and infrastructure, and save us all some money. There has to be a political will though. Let's hope that our politicians are not sandbagging in order to sell out this movement to Big Oil type companies. One need look no further than those clinging to the coal economy to see that politics, not lack of technology, can hamper growth. Sometimes slow growth is due to political will and cronyism, not for lack of technology . Maybe not all the fault of a President, but a lack of vision or will in the White House surely does not help.
2
Who or how would one judge a president's policies? I suspect many of Mr. Mankiw's friends, or even Mr. Mankiw himself, would claim that austerity is the path to growth, that the only thing holding back the economy is the uncertainty of business leaders caused by government regulations, or that we'd be having a booming economy if only capital gains were not taxed.
5
Read the fine print, especially that last sentence: "He was an advisor to President George W. Bush." Actually, that doesn't really do his role justice. From 2003 to 2005, Mankiw was chairman of the Council of Economic Advisers under President George W. Bush. He was responsible for some of the most irresponsible economic policies this country has seen in while. I'd take everything he says & writes with a big grain of salt.
22
George W. Bush's irresponsible economic "policy" was his policy of not wielding the veto. Barack Obama's actual economic policies have directly led to the slowest recovery from a recession the U.S. has ever experienced. TH is arguing with emotion not facts.
How convenient your avoidance of Mr. Bush's presidency. Fortunately the rest of us have long memories and wouldn't have needed your comments to know what a catastrophe it was and what it left behind for the present President, whom, by the way, as done wonders.
6
How do we grade the U.S. Congress on the Economy? It seems that we do not grade them at all. To only grade the president is short sighted.
12
While Prof. Mankiw is correct in pointing out that economic performance during the tenure of a president is an inadequate measure of the president's stewardship of the economy, it is not at all clear what the alternative measure of a president would look like. Judgments of policy impacts are fraught with biases--just look at the recent debate over proper scoring of budget effects. The empirical limitations of economics make any such judgment too like to be manipulated by political, ideological, and partisan leanings.
1
So we won't find fault with Obama's spending more than every other president before him, his divisiveness of this country, his lack of leadership on the world stage or his lack of respect for the police and his racial overtone. So much for his inexperience with life.
And Bush spent more than Clinton and Clinton spent more than GHW Bush and whomever succeeds Obama will spend more than Obama. What tired trope and so very diverting from the real issue. Are Presidenst spending on the right stuff - depends on where you sit.
4
The racial "overtones" were not from Obama, but from those who could not stomach the idea of a biracial president. President Obama has not shown a lack of respect for police and their service, but has shown proper concern for those who violate official policy and, by their actions, denigrate the reputation of the good police officers. From the beginning, the Republicans in Congress pledged that they would never acquiesce to any presidential policy preference, even those that had their roots in conservative think tanks (e.g., certain aspects of the ACA). But Obama is the one who divided this country?
The pace of technological change has not slowed down, but the percentage of the population that can understand and utilize the advances has declined.
Anyone can turn on a light bulb and benefit from a longer day. Most can drive a car. Fewer can program a CNC (computer controlled) machining tool, or an industrial robot. Even MBA's don't have enough math training, now, to properly use Big Data analytical software. Powerpoint, Word, yes. Excel, maybe.
The "the pace of scientific and technological advance" has in essence outstripped the ability of most of society to absorb it. The de-funding of general education and the low wages payed to teachers are a big factor.
Congressional de-funding of basic Research, I used to think was a problem, but in retrospect I recognize that we would have been ill prepared to deal, as a technically illiterate society, with a faster rate of advances.
Anyone can turn on a light bulb and benefit from a longer day. Most can drive a car. Fewer can program a CNC (computer controlled) machining tool, or an industrial robot. Even MBA's don't have enough math training, now, to properly use Big Data analytical software. Powerpoint, Word, yes. Excel, maybe.
The "the pace of scientific and technological advance" has in essence outstripped the ability of most of society to absorb it. The de-funding of general education and the low wages payed to teachers are a big factor.
Congressional de-funding of basic Research, I used to think was a problem, but in retrospect I recognize that we would have been ill prepared to deal, as a technically illiterate society, with a faster rate of advances.
3
The author is correct. So many voters lack a world view of the the appropriate role of government, and therefore vote short term factors like their "pocketbook." The result is that we lurch back and forth between the parties' policies creating a convoluted tangle of taxes, regulations, and social programs, the complexity of which harms long term growth.
4
N. GREGORY MANKIW has a valid point - judging presidents based on economic performance during their terms. It would be nice if he publicly scolded the republicans who hold him responsible for unemployment not improving as much as they'd like. What he didn't do is point out the flaws of his approach. With doctors, we have many more data points to discern best practices, but only with common diseases. There is great debate over the best course for specific decisions. I do think there is sufficient data to disprove the policy of tax breaks for the wealthy. We are in a new economic dynamic. There are fewer jobs for the lower classes and market forces and economic segregation depress wages and opportunity. N. GREGORY MANKIW should start advocating for funding education by means other than local taxes to reverse economic segregation and support minimum wages and low cost college education to provide greater opportunity.
6
This is an extraordinarily strange, no, an absolutely backwards position for a scientist to take.
Theories in science are evaluated by how they work. So in the case of President Carter cited here (and taking at face value Prof Mankiw's apparent belief that cutting inflation so drastically was more important than the harm that was done in the process), the proof of the value of the appointment of Paul Volker was not the appointment itself, but rather that it had the desired effect of diminishing inflation.
Or does Prof Mankiw no longer think that economics is a social science, but is simply a forum for expounding theories about the way he thinks the world should work without reference to objective reality?
Theories in science are evaluated by how they work. So in the case of President Carter cited here (and taking at face value Prof Mankiw's apparent belief that cutting inflation so drastically was more important than the harm that was done in the process), the proof of the value of the appointment of Paul Volker was not the appointment itself, but rather that it had the desired effect of diminishing inflation.
Or does Prof Mankiw no longer think that economics is a social science, but is simply a forum for expounding theories about the way he thinks the world should work without reference to objective reality?
6
So if you believe the economic policy is correct, you can say it works, whether the economy improves or not, because you can always blame unemployment, inflation, loss of whole industries, etc. on a former president from the other party, or conversely, if the economy improves after your own administration, you can claim credit for that? Oh, yes, that would explain much about the GOP . . .
3
So so tell me this. George W. Bush should not be blamed for doubling the national debt when handed a budget surplus at the beginning of his term?
8
According to Republicans no, that was Obama's fault....
6
It seem logical that the pursuit of policies have their consequences, that is, outcomes, so the two cannot be separated. Second, while the good or bad times are usually ascribed to the administration of the moment , when the political fervor is over, one can arrive at a more just assessment of the credit or responsibility of the person in charge. In summary, the inevitable political fallout may not coincide with the historical reality.
2
Frank, I agree with your points but not your language. Rather than "historical reality", I think you should have written "historical assessment", since the making/writing of history is an ongoing social process, perhaps getting closer and closer to some underlying "truth", but not necessarily.
1
This is one of the most of the artfully constructed pieces of sophistry I've read in the Times since I've been commenting. In the first place, it is based on assertions without any evidence or arguments. For example, it claims that Mr. Clinton's good economic record was based on increases in technological productivity. Why should we believe that? Might it not be due to to his tax increases, budget balancing and deficit reductions? Or his trade agreements?
Then Mr. Mankiw artfully recuses himself from commenting on President George Bush, Jr.'s economic record, which was the worst since President Herbert Hoover's and The Great Depression. The President's policies, including hefty tax cuts for the wealthy, continued dismantling of financial regulations, and spending trillions of dollars on failed wars in the middle east paid for by deficit financing, can be tied directly to The Great Recession of 2007--200? with millions of jobs lost and a large increase in income inequality.
Third, his economic assumptions automatically rule out price and wage controls. They might not have worked under President Nixon but they surely were just the right policies under President Roosevelt during World War II when it was essential to have a command economy.
Then Mr. Mankiw artfully recuses himself from commenting on President George Bush, Jr.'s economic record, which was the worst since President Herbert Hoover's and The Great Depression. The President's policies, including hefty tax cuts for the wealthy, continued dismantling of financial regulations, and spending trillions of dollars on failed wars in the middle east paid for by deficit financing, can be tied directly to The Great Recession of 2007--200? with millions of jobs lost and a large increase in income inequality.
Third, his economic assumptions automatically rule out price and wage controls. They might not have worked under President Nixon but they surely were just the right policies under President Roosevelt during World War II when it was essential to have a command economy.
50
Bush 41 supports Mr. Mankiw's premise as his willingness to raise taxes with targeted spending cuts went against his parties orthodoxy and was partially responsible for the economic expansion of the Clinton years. Additionally Clinton's deregulation of the derivative market and repealing Glass Steagel exacerbated the economic meltdown partially caused by Bush 43's misguided home ownership policies. Historically though I think that Obama's stewardship in the face of the economic calamity that he inherited has resulted in a sustained if modest recovery that is the envy of many a nation.
3
"a better way to judge presidents is by the policies they pursue, not the outcomes over which they preside".
Do you judge a:
Teacher by his devotion to the curriculum, or his students life achievements?
CEO by his mission statement, or the long-term stock price?
General by his strategies, or his battlefield prowess?
Parents by their home schooling, or their children's contributions to society?
Lothario by his promises, or his performance?
Bloviator by his balderdash, or by the blowback?
Do you judge a:
Teacher by his devotion to the curriculum, or his students life achievements?
CEO by his mission statement, or the long-term stock price?
General by his strategies, or his battlefield prowess?
Parents by their home schooling, or their children's contributions to society?
Lothario by his promises, or his performance?
Bloviator by his balderdash, or by the blowback?
27
What was good about Bill Clinton is that we had economic expansion without going to war with somebody. We had the computer revolution which slowly automated areas of work. We could be developing a significant alternative energy revolution but Big Oil and the Right is in the way. At the moment there is no next big thing.
7
This is an oblique reply to the Blinder and Watson paper (discussed by Paul Krugman) demonstrating that the GNP growth and stock market performance are measurably better under Democratic presidents than under Republican ones.
Having lost the intellectual battle that involves trivialities like facts, Mankiw proposes another metric that is more favorable to his tribe: do presidents follow right-wing economic policy prescriptions or not?
Having lost the intellectual battle that involves trivialities like facts, Mankiw proposes another metric that is more favorable to his tribe: do presidents follow right-wing economic policy prescriptions or not?
46
Be careful what you wish for! If we judge the current president by his policies, then the environmental community would consider him one of the best. However, if we judge him by his damage to energy policies, then the business community would consider him one of the worst. Yes, he inherited a dysfunctional economy, but arguably he made it worse by his concentrated use of executive action to overturn energy policies that had been carefully crafted over decades. Messing with energy regulations may be rewarding in the short time if it energizes the donors of one's party, but it is a sure ticket to economic problems in the rest of the economy.
1
"However, if we judge him by his damage to energy policies, then the business community would consider him one of the worst."....This requires a better explanation. The stock market has more than doubled since he took office. What business community are you talking about?
9
I'm not sure which problems with energy policy you refer to. Oil and gas production in the US are at record levels. Is the problem that gas and oil prices have fallen and energy companies are taking a hit (although consumers are seeing lower prices)? If there is a future problem with energy policy it is, unlike the biomedical and information technology industries where US business dominated as a result of years of government support of basic and applied research' NIH, NSF, DARPA) America isn't poised to lead the world in the renewable energy field. However, I don't think the fault lies with the President but rather the an anti-science, climate denying congress in the pocket of the fossil fuel industry.
6
A fundamental overlooked since the Reagan Revolution (government is the problem) is that public goods, in particular infrastructure and social investment in education and skills, are the backbone of a high growth modern economy. Public investment creates private productivity and innovation.
In 2017. large expenditures on infrastructure and labor force education would increase private sector productivity, a good first step.
An intermediate term goal should be to create more public goods that raise middle class standards of living in observable ways. Better transportation, schools, retirement homes, parks, housing, access to higher education, etc., would have wide acceptance, as these programs are in Europe, if the programs were truly broadly shared.
The U.S. today suffers from John Kenneth Galbraith's diagnosis of too much private wealth and too little public wealth.
In 2017. large expenditures on infrastructure and labor force education would increase private sector productivity, a good first step.
An intermediate term goal should be to create more public goods that raise middle class standards of living in observable ways. Better transportation, schools, retirement homes, parks, housing, access to higher education, etc., would have wide acceptance, as these programs are in Europe, if the programs were truly broadly shared.
The U.S. today suffers from John Kenneth Galbraith's diagnosis of too much private wealth and too little public wealth.
56
Thank you for this concise coherent explanation of one of the most important roles of government.
"Because the pace of scientific and technological advance has a life of its own, slow productivity growth may be a problem without a solution."
It's true that there is no 100% solution to slow productivity growth, but the government funds/directs a lot of research directly and indirectly and this can increase the likelihood of technological advances. Also, many believe that combating income inequality will promote innovation and entrepreneurship by decreasing the risk associated with "failing".
It's true that there is no 100% solution to slow productivity growth, but the government funds/directs a lot of research directly and indirectly and this can increase the likelihood of technological advances. Also, many believe that combating income inequality will promote innovation and entrepreneurship by decreasing the risk associated with "failing".
If I were N. Gregory Mankiw or any of his fellow Republican economists, you better believe I wouldn't focus on outcomes.
53
Agreed, because if they did, they would have to accept responsibility for the extraordinary increase in income inequality that they they have strategically engineered, but refuse to even acknowledge as a victory. They just keep lugging it to the bank.
5
Ex-post justification: pay no attention to W's bad economic performance. Look at the policies instead. And obviously ignore the results under Obama, but look at the policies instead.
And "experts are divided," so the chosen yardstick can be ideology.
And "experts are divided," so the chosen yardstick can be ideology.
25
It's not just the reputations of presidents that depend on factors that are not under their control (AKA "luck"), which is something those of us who have been lucky need to remember.
1
To economists like Robert Gordon, I suppose there is no value for concepts like sustainability, all growth is good, like filling junkyards with cars with smaller tailfins than "the latest model!" and sprawling suburbs.
But if measured by the value of achieving an equilibrium with the planet, we are clearly on the verge of multiple technological revolutions, in alternative energy and efficiency, genetics, the microbiome and disease management, sustainable and healthy food production and carbon emissions reduction.
But if measured by the value of achieving an equilibrium with the planet, we are clearly on the verge of multiple technological revolutions, in alternative energy and efficiency, genetics, the microbiome and disease management, sustainable and healthy food production and carbon emissions reduction.
10
Mankiw makes very good points. As for Gordon's pessimism, I agree in the sense that Silicon Valley is more hype than technology; I refer to the Silicon Valley billionaires as today's mad men - what they've created are platforms for advertising (that's how they generate most of their revenues), the irony being that what they are advertising are goods made the old fashioned way - in the world of atoms (to use Peter Thiel's metaphor). On the other hand, never before has the world's productive capacity been anything near what it is today, enough productive capacity to provide a decent standard of living for every person on Earth. The problem is that much of that productive capacity sits idle. The challenge isn't the absence of technology, but how to maximize use of the world's productive capacity. Why is so much of the world's productive capacity sitting idle? I think that's Mankiw's point.
4
Mankiw doesn't answer your final question directly, so I will. The reason for idle production capacity is that the producers cannot sell everything they could make. And the reason for *that* is that those who could buy those products (or the end products those products help produce) can't because their incomes are stagnant or declining. The real question is why that is the case. There are many answers, in my opinion, which include the weakening of labor unions, job destruction due to technology and off-shoring, and downward pressure on wages from the same causes.
2
Presidential libraries spin economic history. Presidential candidates must be judged for what they might do if Congress passes a bill. For example, if Congress votes to eliminate the Estate Tax, Trump would sign it quickly and Sanders would veto even quicker. Indeed most of the GOP support elimination of the Estate Tax but there may be some with the good sense to say it should not be done while the country has a budget deficit. Surprisingly, there are GOP candidates who support a VAT and at least two candidates that would replace regressive payroll taxes. Nothing is sacred this presidential season and Grover Norquist, who helped lead Mr. Romney to defeat, is not making waves.
At least progress can be seen in the scope of new economic ideas and better tax blends that might bridge the partisan divide. The public should become versed in the options and the new inverse taxation of wealth and income should be on the table. For Example, consider giving each taxpayer a choice of income tax rates from 8 to 28 percent paired with a wealth tax of 2% descending to zero. The rules would exempt up to $500,000 for retirement, health care and education savings; and allow cumulative wealth taxes paid to offset Estate and Gift Taxes. A 4% VAT and 8% C corporation income tax would replace revenue from the job killing payroll taxes.
Presidential and Congressional candidates should be judged by their tax reform fluency, flexibility and ability to restory family wealth and full employment.
At least progress can be seen in the scope of new economic ideas and better tax blends that might bridge the partisan divide. The public should become versed in the options and the new inverse taxation of wealth and income should be on the table. For Example, consider giving each taxpayer a choice of income tax rates from 8 to 28 percent paired with a wealth tax of 2% descending to zero. The rules would exempt up to $500,000 for retirement, health care and education savings; and allow cumulative wealth taxes paid to offset Estate and Gift Taxes. A 4% VAT and 8% C corporation income tax would replace revenue from the job killing payroll taxes.
Presidential and Congressional candidates should be judged by their tax reform fluency, flexibility and ability to restory family wealth and full employment.
3
Eugene--Sounds like a wealthy person's dream come true.
2
I would argue that the president does have an impact on technological progress, and thus the progress of the economy. A president who creates poor incentives for innovation and throttles competition, like the current one, is sure to slow progress. A president who understands the power of competition and the free-market is more likely to oversee prosperity and growth.
2
An excellent discussion of why blaming Obama for the state of the economy he inherited when he took office is incorrect (but that won't stop conservatives from trying).
3
Can't the same can be said for Democrats championing Obama's current economy?
2