Pandering, Indeed

Economist Greg Mankiw has an op-ed this morning in the New York Times in which he wonders what our politicians would be campaigning on if they were pandering to economists. His list is:

 Support free trade
 Oppose farm subsidies
 Leave oil companies and speculators alone
 Tax the use of energy
 Raise the retirement age
 Invite more skilled immigrants
 Liberalize drug policy
 Raise funds for economics research

Dr. Mankiw is probably thinking of American economists since I suspect that European economists might have a somewhat different consensus and different list and I even wonder whether there’s a consensus among American economists on all of the items in his list. If American economists had to pick a list of seven hot-button items would a liberalized drug policy really make the cut?

Although I’m no economist I’d have no problem with the first five items on his list with a few caveats. To make his observations a little more timely does Dr. Mankiw consider the FNMA and FHLMC (“Fannie Mae” and “Freddie Mac”) speculators? If not, why not? Should they be bailed out? Or does “leaving them alone” pertain only to profits and not to losses?

Not all American workers work in sedentary occupations as economists do. Some Americans, many of them the most dependent on Social Security in their old age, perform physical labor and by the time they’re 65 (in some cases much earlier) their bodies are worn out. Some accommodation for that would need to be reached if the Social Security retirement age were to be raised.

I’m for “inviting more skilled immigrants” if some more systematic job of harnessing the talents of skilled natives were to be part of the package. Right now running an ad for engineers in the Billings Gazette is enough for technology companies to demand an H1-B visa to import a worker with the skills they’re seeking.

I’ve posted my views on drug legalization already so I won’t burden you with them again. I think that any move to liberalize drug policy needs to be accompanied by a serious commitment to drug treatment and support for the families of drug abusers. Would economists support such moves?

The last item on Dr. Mankiw’s list is the most obvious pander, literally buying votes, and illustrates what appears to me to be a conflict between economists’ roles as scientists and their roles as individuals. Of course they’d like more money for research. Raises all around! I think the return on investment to the public good of basic reserach funded by the federal government has been lousy while the return on government support for engineering projects like dams, the space program, and the Internet has exceeded the wildest dreams of their supporters.

The engineers of economics are stock traders, commodities traders, bankers, and financiers. The direct compensation for their efforts is so great I doubt that any foreseeable government support for their projects would even be noticed.

7 comments… add one
  • Hmm. I’m certainly no economist, but I like the list. I put forwarda modest suggestion for increasing immigration myself about a year back.

    http://sidewaysmencken.blogspot.com/2007/08/crazy-suggestion.html

  • I don’t think that increased immigration as a means of funding Social Security and Medicare is that hot an idea. Off the books immigrants don’t contribute and we’ll continue to have a lot of off the books immigrants because they’re off the books. This will be true regardless of how we liberalize.

    Secondly, the more people we’ve got the higher the costs of health care, education, roads, sewers, water, and so on—costs not borne by the federal government.

    As I’ve said before we’re thinking about funding Social Security the wrong way. The problem isn’t that there aren’t enough people subject to the tax. The problem is that there isn’t enough income subject to the tax. Over the period of the last 25 years much of the change in income has been increases in the income of people in the top decile and that income isn’t subject to the tax. Eliminate FICA max.

  • kreiz Link

    I agree with the list generally, MR, although raising the soc sec retirement age is heresy in your party. You would be disowned immediately, but I suspect that probably won’t keep you up at night. Taxing energy use seems redundant; escalating energy prices are already taxing enough.

  • Dave:
    My proposal was for increasing immigration in a way that would almost entirely eliminate “off the books” immigrants. It required a cash buy-in. And the new program would have a very low rate of indigent immigrants.

    I’m all for making SS less regressive, but it would still have the effect of being a tax increase. Money out of my pocket is out of my pocket whether it goes for SS or to the IRS.

    Kreiz:
    I think we need to look at all the assumptions about retirement. Mid 60’s is the new mid 50’s. I don’t intend to retire in ten years, and I’d be appalled to be taking money from hardworking kids trying to raise families.

  • My point is that being off the books reduces payrolls. Employers whose employees are off the books now will never put their employees on the books unless there’s no advantage to doing so.

  • kreiz Link

    Actually, Michael, I’m in total agreement with you on upping the retirement age. We do live longer, which outdates current actuarial assumptions. Baby Boomer retirement, as presently structured, will put extreme pressure on our youngins- so I’m all for a change. But it will take a bipartisan push, as Dems have historically demagogued such suggestions to death.

  • Larry Link

    New findings here in Maine, the life expectancy of our poorest are in fact
    in decline, especially for women…they are not living as long as those counties that are better off economically…could this be true for the country as a whole? [url=http://bangornews.com/news/t/news.aspx?articleid=166841&zoneid=502]Why women in Washington County are dying too young[/url]

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