Max Sawicky writes about the dilemmas of economists in government. These dilemmas were soft in the Clinton administration. (Here's where I state that the "200,000 net jobs projected from NAFTA" number was mine: we took an estimate of overall economic efficiency gains from tariff reductions and an employment elasticity with respect to the real wage from the Labor Department, and estimated that in the long run stable-inflation employment would grow by 0.14 percent as a result of the deal. I think it was the right answer to the question asked in 1993; I don't think that was the right question to be asking.) These dilemmas have been much harder in the Reagan and Bush administrations, where Dick Cheney especially has let few opportunities to claim that tax cuts increase revenues pass him by.
Here is Max:
MaxSpeak, You Listen!: J'ACCUSE: Professor N. Gregory Mankiw takes umbrage at the implication from some "bigshot at the left-wing thinktank Economic Policy Institute" (that would be labor market genius Jared Bernstein) that he is "a hypocrite." But Jared did not use that word, and his remark was not personal...
Here's Jared Bernstein:
Predicting with a Handicap: Why are Economists’ Predictions So Often Wrong? | TPMCafe: Economists sometimes serve vested interests, and will change their views accordingly. The best example is also one of the best economists, Greg Mankiw. This textbook-writing Harvard prof was Bush’s chief economist for awhile, and during his confirmation hearing and subsequent tenure at the White House, he constantly defended Bushonomics, including supply-side beliefs that he once argued were the musings of “cranks and charlatans." Now, Mankiw may well have felt he could do the nation more good if he were working from the inside, trying to nudge the administration’s economic policy in a better direction (if so, he failed)...
Let me call this one for Jared: Mankiw was indeed correct in thinking that he personally could do more good for the country and the world working inside than if he were to march up to Dick Cheney, tell him "you have to stop saying that tax cuts raise revenues," and so get fired. But the Bush administration did frequently argue that tax cuts raised revenue. And there is the much harder question: is it worth the sacrifice of the economics profession's outside credibility and the further confusion of the public that is entailed when good economists defend bad policies on the outside that they are working to change on the inside?
I don't know the answer to that.
Max Sawicky continues:
[Jared Bernstein's point] went to whether NGM altered his respectable views on supply-side economics out of political considerations when he took the helm of the President's Council of Economic Advisers. Unfortunately [Mankiw] does not make the case he wants. (Nor by the way does Jared provide conclusive evidence in the original post, which is mostly about other things.) Jared does, however, point to Mankiw's testimony at his confirmation hearing. Mankiw's defense is that he has always taken explicit issue with the most notorious of the supply-side tenets -- that across-the-board reductions in tax rates would raise revenue.... In his book, NGM is forthright that the giant revenue response from a tax cut is hokum. In his testimony, he is less emphatic, or as he puts it, "skeptical" of such claims. Moreover, he asserted that the Bush Administration did not adhere to the "extreme" view, which is flat wrong, as Senator Paul Sarbanes made explicit in the hearing....
We should not be surprised when academics in political positions use and invoke their professional expertise to defend their bosses in public. This could happen in any administration. When you take a political appointment, you can't protest when you are accused of having been political. Political service can be an honorable pastime. The bigger source of embarrassment here is the disjunct between Mankiw the academic ace and Bush the economic nitwit, between the standards of professional work in academia and the intellectual corruption of really-existing Bush economic policy...
And here's Brendan Nyhan:
Brendan Nyhan: McCain and Mankiw on supply-side economics: Harvard's Greg Mankiw, who bad-mouths McCain on his blog:
The interviewer, however, did not ask [McCain]... "If you think tax cuts increase revenue, why advocate spending restraint? Can't we pay for new spending programs with more tax cuts?" I doubt that, in fact, Senator McCain believes we are on the wrong side of the Laffer curve. But unfortunately, fealty to the most extreme supply-side views is de rigeur in some segments of the Republican party.
But what Mankiw doesn't mention is President Bush and Vice President Cheney's expressed "fealty to the most extreme supply-side views," which Mankiw conspicuously failed to change.... [D]uring his Senate confirmation hearing, Mankiw was asked about claims that tax cuts were self-financing, and he disavowed them, saying "I remain skeptical of those claims." However, he also stated that he thought the administration had not made such claims, which was -- and is -- false:
[T]he most extreme advocates of tax cuts, I think, sometimes paint an excessively rosy picture out of what they can get out of them. I don't think this administration has done that....
Now that he is no longer part of the administration, will he admit that Bush and Cheney have repeatedly suggested that tax cuts increase revenue? Shouldn't Mankiw have asked his question #2 to President Bush? What's good for the goose is good for the gander and all that...
