Students sometimes ask if the presidents of one party have better economic advise than those of the other. Paul Krugman incorrectly makes this claim in a recent post for the New York Times, referring the outgoing economic advisors to President Bush as hacks and those of the incoming advisors as grownups. Krugman, whose economics are sublime, discredits only himself by insulting colleagues so unfairly.
In a post made December November 27, 2008, Greg Mankiw defends himself and other advisors to President Bush writing,
But are they really in a different class than those in the previous administration? Based a standard ranking of economists' academic accomplishments as of October 2008, here is where these three stand (out of more than 18,000 economists), together with the rankings of all the CEA chairmen appointed by President Bush:
11. Larry Summers
21. Greg Mankiw
35. Ben Bernanke
99. Eddie Lazear
132. Glenn Hubbard
249. Harvey Rosen
391. Christy Romer
653. Austan Goolsbee
Judging by this objective criterion, it looks like the two adminstrations are drawing economists from roughly the same talent pool.
The real question is do presidents and their political advisors listen to the good economic advise that they receive? Stephen J. Dunbar deals with this question writing for Freakonomics. Dunbar provides solid evidence that President Clinton, and President Elect Obama place economists in more prominent positions than President Bush and opines that the bad economy may force the incoming administration to listen more closely to their economists.
Dunbar then quotes Steve Levitt who offers a hypothesis as to why economists off all administrations seem to get short shrift,
Politicians don’t listen to academic economists because the solutions economists favor are rarely politically popular. Although Obama is one of the most intellectual presidents that we have had in a long time — which might predispose him to listen to economists — the policies that economists favor tend to be free-market oriented, which likely won’t sit well with his inner circle.
Presidents and their non-economic advisors, or more likely, the people who elect them may suffer from what Brian Caplan in his book, The Myth of the Rational Voter, calls the antimarket bias, "a tendency to underestimate the economic benefits of the market mechanism.
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I do think that Steve Levitt made a good point when he said that the things that most economists would like to do wouldn't be favored by the public. Not because they are incorrect, but because most people want things to be fixed immediately instead of taking the time to fix them so that the problem won't happen again.
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ReplyDeleteSteve Levitts' hypothesis, "Politicians don’t listen to academic economists because the solutions economists favor are rarely politically popular", does highlight the publics arguments with most economist. Most people are naive to how the economy works and its damaged. The public, I'm sure, is very difficult to please because they only look at the results and how they may benefit. A lot of thought processing and planning goes into how to best benefit our economy and avoid the probabilty of it happening again.
ReplyDeleteI believe that the placement of power for the economic advisors has little effect on the economy. The economy has so many other factors that effect it that the place the president places his/her economic advisor is a small factor, although it does effect the way people vote.
ReplyDelete--Emily Stern
I don't believe that the placement of power has any effect on how economy will be. There are so many factors that distinguish on how the economy will be. Everybody has there input on how to change things but by now I think if the people in charge hadj any good ideas the economy would be a lot better then how its going now. The people have no one else to blame biut Bush right now, although others help with the decisions also.
ReplyDeleteLooking at Steve Levitts' hypothesis, I think that many people would rather have the economic advisors listened to instead of the President doing what he thinks because it's "politically correct". These economists seem to have solutions to fix our economy and we need it. Obviously these economists are very much qualified for their job and were chosen as advisors for a reason. So why not listen to them?
ReplyDeleteAs I see it, you cant always please everyone. Some people think its good while on the other hand some think its bad. Just how people are. Not everyone person can be happy at one time. Well if you have a problem with it then why dont you just try and fix it yourself and see what people think.
ReplyDeleteI have to agree with Mr. Levitt too. If the government were ran by an economist we would probally be much better off in our economic standpoint. Because this is what they are paid to do right... make these difficult decisions for the president? But on a serious note, an economist would always figure out a solution that would end on a positive reaction. It may take time and a slight downturn, but in the end would fix the problem. However, this is not what the public desires. The public today wants answers immediately and does not want to wait a few years for success, they want it right away. This is why many of the economic decisions made today fail. Government leaders give the public what they want...immediate solutions, which do not always end well. Im not trying to insert that we should have chose an economist for a president, because lets fave it, economists make great advisors but poor leaders (no offence Dr. Wilson). In my opinion, we should let economists have a greater role in economic decisions made by government leaders.
ReplyDeleteLevitt's point that most economists would like to do things that would be unpopular with the public is a good one. Some things that would help the economy more are not supported by the people and economists do not use these strategies because of that.
ReplyDeleteI agree with Steve Levitt's hypothesis. The United States would have a more successful economy if economist had more say in what happens in government, but with that said, the American public must be patient with the incoming administration and give them a chance to evaluate and route an effective and aggressive plan of action to stabilize the American economy. Hopefully the President elect will support and consider the economic advisors recommendations this time around.
ReplyDeleteWe should maybe start listening to the economic advisers that are appointed, then we might not be in the situation we are in now. I think that Obama has his hands full and I do believe he is the right person to do the job. There is no better economist, its just that ideas and views tend to differ. You need a well rounded plan, that covers every aspect, and each advisor brings their own. I hope that they are all thinking at their top levels and capiblilities now, because we need it more than ever. I think we need to put all parties aside and concentrate on the problem at hand and get oursevles out of trouble, caue thats where we are headed.
ReplyDeleteYou can't always please everyone end of story. When you do the necessary to help the economy someone is obviously not going to completely agree with it. That's why everyone is going to have an opinion, and its not always going to agree with the decisions of the economists. Levitt mad a point that most economists would like to do things that would be unpopular with the public anyways. Though, I do agree with Steve Levitt's hypothesis. The United States would have a more successful economy if economist had more say in what happens in governments actions. Economists are extremely smart and well qualified and know what they are doing. Our economy needs their input!
ReplyDeleteI find it humorous that Mr. Krugman would call these advisors "hacks" when the lowest ranked of the ones mentioned is 653out of 18,000. That's in the top four percent! So I thereby have to agree with Steve Levitt. The economists are very well qualified and know what they're talking about, it's just a matter of whether or not the president listens to their advise. It may be that the president doesn't want to lose face with the people, but honestly who cares what the people think when it comes to what is best for all rather than the few? Many people who get upset about things aren't thinking of the economy as a whole but solely of themselves. It should be looked at in the "big picture". For the ordinary person, I don't believe they can see the economy as a whole, only how it affects the person on an individual basis.
ReplyDeleteI know Dr. B must agree with Mankiw since we are using his book for our class. I'm fascinated that any president wouldn't listen to his economic advisors and seriously consider their recommendations. The seemingly unpopular advice may be just what is needed. Obviously they must know more about the economy, at least these that the article is referring to, than those who are not studying it so closely. The present mess needs help, and those economists that dedicate their time to understanding this market would be invaluable in my opinion. I'm surprised that Bush did not place as much importance as the Clinton administration.
ReplyDeleteSince everybody is saying exactly what i was going to say i just have to put agree or i would just be repeating everybody else..
ReplyDeleteTIME does play a huge factor in the "want for" of economists. Presidents often seem to look toward popularity among their citizens (except George Bush,) when making decisions. When decisions are made... the popular quote "not everyone will be happy," comes into play. Some social or ethnic groups will be benefited from a change in policy or action, but the others opposed will be completely unsatisfied.
ReplyDeleteI'm sure that presisents listen to what they want. It is just like anyone else, what you think is write is the only way. Also are economic advisors always right.
ReplyDeleteI think economic advisors have wonderful ideas that do not make sense to anyone but other economic professionals. Most of America is used to getting what they want, when they want it. In the economy, things take time. When things seem to be in a downward spiral, any solution is going to take time to work.
ReplyDeleteIt's obvious that political leaning have little to do with one's economic prowess.
ReplyDeleteThat's why it's refreshing to see Obama creating a cabinet of diversity rather than a bunch of guys that think exactly like him.
See today's Waco Trib political cartoon for an illustrated video.
I suppose not even the pros are immune to politically biased outbursts. The truth is, advisors are called as such for a reason, and whether or not the advisees choose to heed their... erm -- advice is their own prerogative.
ReplyDeleteGive the Krugman fellow a break. After all, Bush has a knack for killing brain cells. Let's hear it for four more years!