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Sunday, August 31, 2008

Obama's Projected Economic Plans: A Good First Step

Today's Topic: Obama's Projected Economic Plans

At Carpe Diem, a libertarian web site run by a talented economist, Mark Perry of the University of Michigan, prof bug left a fairly lengthy commentary that took issue with the libertarian posters' worries and fears regarding Barack Obama's economic plans . . . to the extent that he touched on them in his recent acceptance speech, plus a few other (fairly non-detailed) speeches in the past.

The Buggy View

Though I agree with Mark Perry that our economy has done much better than most media coverage portrays its recent performance --- a testimony to its remarkable flexibility and efficiency, a result of several decades of desirable change --- I don't share the concerns about Obama's tax and spending plans voiced by him or Thomas Sowell (another very good social scientist like Mark) or the most of the posters in this thread.
And though I don't expect to alter anyone's opinion of those plans, I would like to underscore two or three points that might add some perspective on your concerns.
1) Obama has assembled an impressive group of economic advisers --- not far-out left-wing zealots, let alone socialists. They include Austin Goolsbee, a professor in the University of Chicago's economics department --- not know for harboring socialists, and three highly respected specialists at the Brookings Institute and Harvard . . . as well as financial wizards like Richard Rubin, Bill Clinton's first Secretary of the Treasury. Greg Mankiw of Harvard, a former Chairman of the Council of Economic Advisers in the first George W. Bush administration, has openly praised these advisers.

2) Mankiw's predecessor as Chairman of the CEA, Glenn Hubbard of Columbia, also openly praised Goolsbee . . . though, alas, a google search didn't bring the link up. I do recall reading it in the last few months.
3) Alan Blinder, a professor of economics at Columbia --- and a former member of the Federal Reserve (Vice Chairman) --- has openly espoused Obama's plans for infra-structure and other federal spending . . . even as he reminds us, citing a very good book by a Princeton political scientist, that our economy has grown faster under Democratic administrations in the first term than under Republican ones, and for a long time.
here for Blinder's views and a summary by a good economist (linked to at the Marginal Revolution by Mark Perry's former Ph.D. superviser, Tyler Cowan . . . a convinced libertarian). Cowan, I should add, frequently cites Mark Thoma, the economist in question.

3) Mark cited yesterday a good commentary by Ben Stein, a conservative who is regularly used by the NY Times. Well, here is a different take on a Stein commentary on Obama. Take it or leave it: as I say, I don't expect to change anybody's views --- only, I hope, encourage less slamming of the opposition with name-calling and excessive fears, and more thoughtful criticism of Obama's plans. Click here for the parsing of Stein comment about Obama --- and remember, it's not the sound one that Mark himself linked to yesterday.
4) Oh, as for which presidents and party in control of Congress --- Republicans or Democrats --- have run the biggest fiscal deficits and added the most to national debt (a big concern for many of you, not for me as things stand), it turns out that Republican presidents since the start of Nixon's presidency and especially Reagan (with a Republican Senate) have been the worst offenders.  Click
here for the link . . . and in particular go to figure 3, which should be read vertically in each column.
5) To repeat, Obama's intended programs are hardly perfect --- but then (to the extent we know them) neither are McCain's. And I for one think that a major fiscal spending shift to infrastructure would do more good for the country's economy in the next decade would be a big boon for the right kind of sustained growth in the future.


The same is true of subsidies aimed at weaning us off imported oil from utterly corrupt gangster-regimes in the Middle East . . . the same imports funding the aggressive behavior and threats posed by anti-democratic autocratic regimes in Russia and Iran, which otherwise would be basket-economies.  Nor is that all.  Take our energy subsidies: remember, we do not live in a world of competitive free markets: not at home, not in the international arena. The Bush administration has spent tens of billions of dollars on oil, gas, nuclear energy, and coal subsidies in this decade; and proposed $18 billion additionally for that industry this spring.
What follows?  Well, to analyze global oil markets as free-markets in the light of such distortions and spillovers --- OPEC (a cartel that would be illegal in all democratic industrial countries) and enormous subsidies spent by Republican presidents and Congresses (when they controlled it) --- strikes me as unsound, even unwise.
Michael Gordon, AKA, the buggy professor

P.S. As I tried to convince my students, undergrad and grad, before I retired at UCSB four years ago, you need --- in a productive debate between clashing viewpoints --- to be able to summarize fairly the other guy's position(s) as a starting point. If you can do that, you can then pin down concretely where you differ, how seriously, and why. At which point,  the disputes probably won't be settled, but hopefully conducted more enlightenedly and maybe even narrowed in their clashing views.