Ideal Taxes Association

Raymond Richman       -       Jesse Richman       -       Howard Richman

 Richmans' Trade and Taxes Blog



Pres. Obama Appoints Non-Economists to Key Economic Positions
Raymond Richman, 3/25/2012

Pres. Obama’s latest appointment, last week, of a non-economist as head of the World Bank suggests that he disdains economists. Jim Yong Kim, , currently Dartmouth’s president, was formerly the Chair of the Department of Global Health and Social Medicine at Harvard Medical School, and was a co-founder and executive director of Partners in Health. All preceding appointments to head the World Bank were economists.

Pres. Obama’s first Chairman of his Council of Economic Advisers was Prof. Christina Romer, a Professor of Economics at the University of California at Berkeley. Prior to Pres. Obama’s inauguration, Romer worked with Jared Bernstein on the administration's economic stimulus plan for recovery from the 2008 recession. As a Keynesian, it apparently did not matter to Romer what the money would be spent on; it would stimulate the economy.

When she resigned as chair of the CEA to return to academia, she stated in a speech at the National Press Club that more stimulus was needed. She should have said that more ineffective stimulus was needed! (See below.) The first evidence of the non-existence of the Keynesian multiplier was the downturn in the economy between 1936 and 1937 which occurred as soon as the Roosevelt administration reduced expenditures in preparation for the 1936 election. Additional evidence is very recent. When Recovery Act expenditures moderated in 2010, the temporary increase in employment diminished.

The real architect of the Recovery Act of 2009 appears to have been Jared Bernstein who had no economics degree at all. He graduated from the Manhattan School of Music with a Bachelors Degree in Fine Arts. He earned a Masters Degree in Social Work from the Hunter College School of Social Work, a Masters Degree in Philosophy, and a Ph.D. in Social Welfare from Columbia University. In 1992, he was hired at the Economic Policy Institute (EPI), a think tank with ties to the labor unions. He was appointed Chief Economist at the US Department of Labor in 1996. It does not appear that he had the qualifications to be the chief economist of anything. Any economic knowledge that he may have gained must have come from osmosis, his association with economists.

It is no surprise, given his background, that the Recovery Act of 2009 transferred hundreds of billions of dollars to the states in support of teachers’ salaries and education infrastructure. It is no coincidence that teachers’ unions were and are huge supporters of Obama’s political ambition. The act subsidized expenditures on a variety of environmental projects, including hundreds of uneconomic wind and solar power companies and ear-marked hundreds of billions dollars for projects in every government agency. 

The current Director of the National Economic Council, Gene Sperling, appointed in January, 2011, like Bernstein, does not have an economics degree. He has a B.A. degree from the University of Minnesota and a law degree from Yale University. He hitched his star first to Gov. Cuomo in his campaign for Governor of New York and later to Pres. Clinton during the latter’s successful run for the Presidency in 1992 and served in various capacities from 1993-2001. In an American Thinker piece that appeared on February 3 2011, we reviewed Sperling’s  2005 book, The Pro-Growth Progressive: An Economic Strategy for Shared Prosperity (NY: Simon & Schuster, 2005), to learn more about him. We found him to be deficient as an economist and wrong, but politically correct, as a leftist on every topic he discussed.

On foreign trade, he argued that we have only two choices: free trade or  protectionism. He opts for politically correct free trade. There is a third choice, a  policy designed to achieve balanced trade. He apparently is unacquainted with the work of economists Baumol and Gomory which we have extolled on this site a number of times. Sperling seem totally unaware of the economics of international trade.  He extols exports as creating jobs and does recognize that imports may cost jobs. We wrote:

“Sperling's solution to the job losses caused by our chronic trade deficits is to retrain workers for nonexistent jobs.  But if trade were balanced, there would be no job losses.  Those jobs lost to imports would be replaced by even better jobs producing exports.  The balanced trade solution is obvious.  But to Sperling, doing anything that makes imports more expensive for poor people is not "progressive."

What about the fact that many are poor because they lost well-paid manufacturing jobs that were outsourced abroad?

And as we noted, the horrible idea of a payroll tax cut apparently came from this non-economic economist:

“During his last days at the U.S. Treasury Department before becoming national economic director, Sperling helped negotiate a tax provision as part of the Bush tax cut extension.  That provision reduces worker contributions to Social Security from 6.2% of wages to 4.2%, even though Social Security is heading toward insolvency.”

And we would add, it would not and has not contributed to economic recovery for economic reasons that we have pointed out on this site.

In Sperling’s book, all his examples of American corporate executives are female. They are all referred to as “she”. Talk about being politically correct!

As we wrote: “We believe that nearly all of Sperling's social amelioration proposals would fail benefit-cost analysis.  Just as he misses the economics of unbalanced trade, nearly everything he proposes is bad economics.”

On non-economic issues as well, Sperling appears to be politically correct but wrong. What should one make of this nonsense?

  • "Those who create great wealth do so on the backs and shoulders of previous generations of taxpayers[.]"
  • "The notion that 'you earned it' is more correctly, 'you earned it with the indispensable help of the government.'"

That all of us owe a great deal to the past goes without saying. But to make government the source from which all blessings flow is absurd.

We disagreed with Sperling on every one of the domestic issues. Here is what we wrote about his approval of affirmative action:

He writes, "Of course, there are goals -- banning child labor in our factories; preventing racial, religious, and gender discrimination in the workforce -- that require direct intervention in the market regardless of their efficiency or economies impact."  Really, "regardless"?  What  compounded happened to benefit-cost analysis?  What happened to consideration of lower-cost alternative solutions? …

And what we wrote on public pre-schooling:

Another proposal was to provide universal preschool for all disadvantaged kids. Sperling writes, "The progressive case for investing in education in the first five years has always been compelling, but the pro-growth imperative of this investment gets stronger every day."  But just the opposite is true.  Almost every study has shown that preschools produce no lasting gains in either IQ or achievement.”

We believe that Gene Sperling is not qualified to serve in any important economic post. But he is the most powerful member of the President’s inner circle and personally handpicked two labor economists for the Council of Economic Advisors: (1) Prof. Krueger, as chief advisor, and (2) Kaherine G. Abraham. Some rationality did apply to the third member, Prof. Carl Shapiro. Shapiro is on leave from the University of California at Berkeley, where he is the Transamerica Professor of Business Strategy at the Haas School of Business and Professor of Economics in the Department of Economics.

It is clear from these appointments that Pres. Obama wants change, but clearly not rational economic change.

Your Name:

Post a Comment:


Comment by Michael J.Corrigan, 7/25/2012:

Love you guys!




  • Richmans' Blog    RSS
  • Our New Book - Balanced Trade
  • Buy Trading Away Our Future
  • Read Trading Away Our Future
  • Richmans' Commentaries
  • ITA Working Papers
  • ITA on Facebook
  • Contact Us

    Archive
    Jul 2017
    Jun 2017
    May 2017
    Apr 2017
    Mar 2017
    Feb 2017
    Jan 2017
    Dec 2016
    Nov 2016
    Oct 2016
    Sep 2016
    Aug 2016
    Jul 2016
    Jun 2016
    May 2016
    Apr 2016
    Mar 2016
    Feb 2016
    Jan 2016
    Dec 2015
    Nov 2015
    Oct 2015
    Sep 2015
    Aug 2015
    Jul 2015
    Jun 2015
    May 2015
    Apr 2015
    Mar 2015
    Feb 2015
    Jan 2015
    Dec 2014
    Nov 2014
    Oct 2014
    Sep 2014
    Aug 2014
    Jul 2014
    Jun 2014
    May 2014
    Apr 2014
    Mar 2014
    Feb 2014
    Jan 2014
    Dec 2013
    Nov 2013
    Oct 2013
    Sep 2013
    Aug 2013
    Jul 2013
    Jun 2013
    May 2013
    Apr 2013
    Mar 2013
    Feb 2013
    Jan 2013
    Dec 2012
    Nov 2012
    Oct 2012
    Sep 2012
    Aug 2012
    Jul 2012
    Jun 2012
    May 2012
    Apr 2012
    Mar 2012

    February 2012
    January 2012
    December 2011
    November 2011
    October 2011
    September 2011
    August 2011
    July 2011
    June 2011
    May 2011
    April 2011
    March 2011
    February 2011
    January 2011
    December 2010
    November 2010
    October 2010
    September 2010
    August 2010
    July 2010
    June 2010
    May 2010
    April 2010
    March 2010
    February 2010
    January 2010

    Categories:
    Book Reviews
    Capital Gains Taxation
    Corporate Income Tax
    Consumption Taxes
    Economy - Long Term
    Economy - Short Term

    Environmental Regulation
    Real Estate Taxation
    Trade
    Miscellaneous

    Outside Links:

  • American Economic Alert
  • American Jobs Alliance
  • Angry Bear Blog
  • Economy in Crisis
  • Econbrowser
  • Emmanuel Goldstein's Blog
  • Levy Economics Institute
  • McKeever Institute
  • Michael Pettis Blog
  • Naked Capitalism
  • Natural Born Conservative
  • Science & Public Policy Inst.
  • TradeReform.org
  • Votersway Blog
  • Watt's Up With That


    Wikipedia:

  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]