More Mankiw

Earlier, I gave a piece of advice to Greg Mankiw, incoming chair of the Council of Economic Advisors:

Note: Mankiw has also written a few books, including a Macroeconomics textbook. I advise keeping public pronouncements consistent with theories in the latest editions of those books.

Atrios has the goods on Mankiw’s Principles of Economics. Here’s an excerpt from Atrios’ excerpt:

An example of fad economics occurred in 1980,” Mr. Mankiw wrote, “when a small group of economists advised presidential candidate Ronald Reagan that an across-the-board cut in income tax rates would raise revenue.”

After reviewing the impact of Mr. Reagan’s policies, which included a run of high budget deficits that lasted until the mid-1990’s, Mr. Mankiw wrote that the moral of the experience was that “when politicians rely on the advice of charlatans and cranks, they rarely get the desirable results they anticipate.

In later editions of his textbook, Mr. Mankiw dropped the entire section on “charlatans and cranks” and muted his criticism. But he has not mended his fences with today’s advocates of big new tax cuts.

Now I almost wish I hadn’t said “latest editions”, because this creates some wiggle room for Mankiw to say that the thinking about deficits changed. But in the late 1990s, I can’t think of any new events that would make an economist decide that lowering taxes would increase federal revenue, since the exact opposite had occured (taxes were raised in 1993, the economy boomed, and deficits began shrinking and then turned into surpluses).

Doesn’t the Whitehouse have staffers who can vet for this kind of stuff? I suspect they do, but to find an economist who remained true to Supply Side economics and the Laffer Curve throughout the 1980s and 1990s, the administration would have to go pretty far into the ranks of Republican hack-economists. This would cost the administration much-needed credibility (scroll down to question 10 to see less than half favor Bush’s economic plan and that opposition reached 40%) on the economy.


Still to come: more Rawls, Alterman and Bailey, but as Matthew Yglesias points out, it takes some care and time.


Max Sawicky has another great quote (tying deficits to long term interest rate) from Mankiw’s book here.

Slate’s Daniel Gross also discusses Hubbard and Mankiw here.

And here’s a link to the list of economists opposing Bush’s tax cuts. Even excluding the ten Nobel Laureates, it’s an impressive list.