Category: economists

Via Joe Malchow, a priceless video clip of Dartmouth Trustee Peter Robinson doing Q & A on libertarianism with Milton Friedman. Classic.

From our local paper, The Valley News, an article on the time the Friedmans spent near Dartmouth.

Via Greg Mankiw, the WSJ's sampler of Friedman's opinions. On Social Security:

I have long been a critic of Social Security, basically because I believe that it is not the business of government to tell people what fraction of their incomes they should devote to providing for their own or someone else's old age. On a more pragmatic level, Social Security is another example of the generalization that government programs typically have effects that are the opposite of those intended by their well-meaning sponsors (what Rep. Richard Armey calls the "invisible foot of government").

The well-meaning sponsors intended Social Security to ensure a minimum income to the poor in their old age. It has largely done that, but at the cost of what they would have regarded as a perverse redistribution of income from the young to the old, from black to white, from the relatively poor to the relatively well-to-do.

From its inception, Social Security has been an unholy combination of two items: a flat-rate tax on earnings up to a maximum with no exemption and a benefit program that awards subsidies that have essentially no relation to need but are based on such criteria as marital status, longevity and recent earnings. As I wrote many years ago, "hardly anyone approves of either part separately. Yet the two combined have become a sacred cow. What a triumph of imaginative packaging and Madison Avenue advertising!"
--from "Social Security: The General And the Personal," March 15, 1988

Enjoy!

The Wall Street Journal reported today that Milton Friedman passed away at age 94. He was without question the leading conservative economist of the 20th century. I had the pleasure of meeting him a few years ago while he was visiting a Dartmouth colleague of mine who was a former student of his at the University of Chicago. He was kind and gracious--and not the least bit hesitant to tell me that my various conceptions of Social Security reform didn't go nearly far enough.

Quoting the WSJ article:

Among his most famous books were: "Price Theory," 1962 (with Rose Friedman); "Capitalism and Freedom," 1962; "An Economist's Protest," 1972; "There Is No Such Thing As a Free Lunch," 1975; and "Free to Choose," 1979, co-authored with his wife. "Free to Choose" also was a series on the Public Broadcasting Service.

The producer of that series, Bob Chitester, told the University of Chicago that Mr. Friedman's "insatiable curiosity" made him a different kind of thinker. "He set forth ideas without regard to their popularity or acceptability. He has been equally tough on himself and others in his search for tools of analysis that consistently and accurately predict outcomes in both micro and macro economics. And he has never compromised the resulting analysis to please those in power. Such courage is essential to the survival of a free society," Mr. Chitester said.

I think that quote sums him up pretty well. As I've mentioned before, I think that Capitalism and Freedom or Free to Choose should be read by anyone interested in economics.

From David Rosenbaum of the New York Times, (by way of Brad DeLong), we learn that Douglas Holtz-Eakin will leave his position as Director of the CBO to join the Council on Foreign Relations. From the CFR's press release:

November 14, 2005—Council President Richard N. Haass has named Douglas Holtz-Eakin, current director of the Congressional Budget Office (CBO), the new director of the Council’s Maurice R. Greenberg Center for Geoeconomic Studies (GEC), and the Paul A. Volcker Chair in International Economics. Founded in 2000, the GEC works to promote a better understanding among policymakers, academic specialists, and the interested public of how economic and political forces interact to influence world affairs.

“We are thrilled to have an individual of Douglas Holtz-Eakin’s stature and experience join the Council,” said Haass. “He is the ultimate scholar-practitioner, someone able to advance thinking about the connections between economic and strategic developments and to make sure that the fruits of such thinking reach policymakers, business leaders, and others with a need to understand how the world really works.”

Holtz-Eakin is known for his longstanding and broad interest in the economics of public policy. He previously served as chief economist for the president’s Council of Economic Advisers, where he also served as senior staff economist in 1989 and 1990. He was trustee professor of economics at the Maxwell School, Syracuse University, where he has served as chairman of the Department of Economics and associate director of the Center for Policy Research. “This is a once in a lifetime opportunity,” said Holtz-Eakin. “I look forward to the chance to continue my nonpartisan, high-caliber work in an organization that is not only national but has a global reach.”

Congratulations to Doug. I had been hoping that he would be offered the position of CEA Chairman, to succeed Ben Bernanke when Ben takes over at the Fed. Doug would have brought some outside credibility on budget policy along with a familiar face from the early part of the Administration to a White House that is very much in need of both.

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I'm having a hard time figuring out why this (of all things) would leak from the White House prior to the President's announcement, but the AP Wire reports that Ben Bernanke is expected to be nominated to replace Alan Greenspan:

WASHINGTON - President Bush on Monday selected Ben Bernanke, chairman of the president's Council of Economic Advisers, to replace Alan Greenspan as Fed chairman, according to an administration official.

The official spoke on condition of anonymity because the nomination had not yet been announced. Bush was to announce his choice at 1 p.m. EDT, said White House spokesman Scott McClellan.

Bernanke is an excellent choice. It will be interesting to see how the Fed now implements his ideas about more transparency in the Fed's communications with financial markets. I am particularly pleased that someone with such a talent and insight for research will be at the head of the Fed's staff of professional economists. I suspect that plenty of his former students are already there.

As usual, Grep Ip provides useful commentary in the Wall Street Journal.

UPDATE: See a sampling of blogger reactions at the WSJ's Econoblog site.

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Via Dan Drezner, I learn that the New York Times has written about Bruce Bartlett's dismissal from the National Center for Policy Analysis. Last December, I wrote of my admiration for Bruce's writing:

In truth, he's more like a blogger than he is a reporter, but perhaps more accurately he is the rare columnist who is the best of both worlds rather than the worst.

[...]

But note that he's an independent thinker--he would very likely offend people across the political spectrum with that one.

I started reading Bruce's columns when I worked at the CEA last year. He's been out in front of the MSM on so many issues--the Medicare bill, outsourcing, tax policy, and others. I wish I had been reading him earlier. His online archive stretches back to 2000. For those of you who arrived here by some way other than Bruce, bookmark the page. Skim it, read it, and enjoy it.

I think that's still good advice and that we should view what has transpired as Bruce being liberated. I hope his newfound freedom from the NCPA will lead to a better placement. I would suggest the New America Foundation, which I think is the most interesting policy think tank in Washington for people with interesting ideas and an ability to write an op-ed. If I had the right zip code and the requisite talent, that's where I would want to be.

Many commentators have picked up on the fissures appearing in the conservative coalition that had come together to put the President in office but now seems unwilling to support the administration going forward. Bruce's need to find a new home is a symptom of that coalition pulling apart. I think we will look back at the summer and early fall and see that the nomination of John Roberts for Chief Justice was the last piece of shared good news for that coalition.

After that, the (collective) ineffectiveness of the government's Katrina relief on the ground, the immediate federal response to throw money at the New Orleans rebuilding, the pressure of the investigations into the conduct of Rove's and Cheney's offices in the Plame affair, and the nomination of Miers to the Supreme Court seem to have buried the White House in the last seven weeks. And it is not clear that anyone's got a shovel to dig them out of the avalanche. Certainly, we cannot hear them digging from the inside.

This is not to say that there were no problems before, but this confluence of bad governance may be a fatal blow to the coalition. And on each of these issues, it has been the White House rather than the Congress calling the shots, and so it is hitting the President particularly hard. As I noted in the spring, in "The Conservative Movement at the Crossroads:"

I'm inclined to support the Republican Party, but the question becomes, how much other stuff do I have to put up with to maintain that identification?

Eventually, it can become too much. And I think I become the object of this parlor game by Brad DeLong, because the most bothersome issues for me are the expansions of federal spending (first) and the lack of a willingness to raise current revenues to pay for it (second).

None of this should be construed to mean that I am a Democrat. I am, in the proud tradition of my home state of New Hampshire, undeclared in matters of national politics.

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