What does politics in the United States have in common with that of declining empires of ages past? Too much, argues Glenn Hubbard. The Columbia Business School dean and former adviser to President George W. Bush and would-be president Mitt Romney makes the case in his new book (written with economist Tim Kane), called "Balance: The Economics of Great Powers from Ancient Rome to Modern America." He sees long-simmering failings in the American political system, and the economic policies that result, as risks that ultimately endanger the nation's standing in the world. He discussed why he is not, despite it all, a declinist, in a recent conversation with Wonkblog. This is a lightly edited transcript.
While many economists sympathize with the Republican Party's skepticism of government and support of free markets, a division has emerged over efforts by congressional Republicans to use the upcoming debt ceiling deadline to force President Obama to agree to deep spending cuts.
On Tuesday, for instance, the vast majority of top economists surveyed by the University of Chicago's Booth School of Business said that the debt ceiling, essentially, doesn't make any sense. A full 84 percent agreed or strongly agreed with the statement "because all federal spending must be approved by both houses of Congress and the executive branch, a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse financial outcomes."
Wonkblog regulars will know Columbia Business School dean Glenn Hubbard, a former key adviser to George W. Bush and a top pick for a major post in a Romney administration. He's the guy with the great mortgage plan. But the Internet now knows him as a the guy who had a CNBC set fall on him:
In GIF form:
When not getting hit in the face by a set piece, Hubbard has sensible ideas about pairing short-term stimulus with a progressive consumption tax.
In an interview with Bloomberg last night, Mitt Romney reiterated that he wouldn’t reappoint Ben Bernanke as Fed chairman, and strongly hinted that he would choose one of his two top economic aides, Harvard’s Greg Mankiw or Columbia’s Glenn Hubbard, instead. Fox Business reports that Hubbard is the front-runner for the post, but notes that Stanford’s John Taylor, a Romney adviser and senior treasury official under Bush, is also in the running. All three are economists with long paper trails indicating their views on monetary policy. So what can we expect them to do if Romney taps them for the post?
The Romney campaign is out with a new white paper, co-authored by Harvard’s Greg Mankiw, Columbia’s Glenn Hubbard, Stanford’s John Taylor and AEI’s Kevin Hassett, defending his economic plan, and in particular his tax plan, in the wake of the damning Tax Policy Center study on it. Like most such documents, the white paper references a lot of outside research. But does it take all the relevant studies into account?
One of the many ways in which the Tax Policy Center’s analysis of the Romney tax plan went out of its way to be fair to the candidate was its inclusion of “dynamic scoring.” And when analysts used this method — where, as Suzy explained, any economic growth caused by a tax change is considered when estimating its cost — found that the plan would cause $53 billion in increased revenue.
“Today, as some wonder about the way forward out of economic recession and fiscal crisis, the answer once again is ‘Look to Poland,’ ” Mitt Romney declared in a speech in Warsaw yesterday. And, sure enough, Poland has weathered the financial crisis considerably better than the United States has.
Its economy grew by 1.6 percent in 2009, as the U.S.’s shrunk by 3.5 percent. But the secret to Poland’s success, as Matt O’Brien and Matt Yglesias have noted, is aggressive currency debasement. Here, via O’Brien, is how the Polish currency, the zloty, has fared against the Euro since the crisis hit:
Yesterday I pointed out that top Romney policy adviser Glenn Hubbard’s support for a less valuable dollar flies in the face of Republican conventional wisdom on the matter. And that’s hardly the only issue where Hubbard, Harvard professor Greg Mankiw, former representative Vin Weber and former senator Jim Talent — who together make up Romney’s economic brain trust — diverge from commonly held Republican positions.
There are a lot of interesting tidbits in this morning’s op-ed by Glenn Hubbard, a Columbia economics professor and one of Mitt Romney’s top advisers. James Pethoukis highlights Hubbard’s endorsement of literature suggesting, against the view of most macroeconomists, that austerity is stimulative in the short-run. But what I found more interesting is the mechanism that Hubbard identifies as the cause of austerity’s allegedly stimulative effect. Here’s Hubbard:
From 2001 to 2003, Glenn Hubbard was chairman of President George W. Bush’s Council of Economic Advisers. Today, he’s the dean of Columbia University’s Graduate School of Business, an economic adviser to Mitt Romney’s presidential campaign and an active commentator on economic affairs. We spoke Friday about where the economy is and where a different set of policies could take it. As a disclaimer, Hubbard, in this interview, is speaking for himself and not as a representative of the Romney campaign. Here’s a lightly edited excerpt.
Ezra Klein: Growth is weak. Unemployment is high. By almost any measure, the recovery has been very, very slow. What’s holding us back?
Glenn Hubbard: Let’s put politics aside. Let’s assume we could fix what we wanted to. The problems we have are grasp and clarity. With the financial factors in the recession, the two tangible grasp points are on the consumer side: Consumers have too much leverage; and on the business side, it’s exactly the opposite: Non-financial corporate America has tons of cash. So with that, the right thing to do would be to quickly de-lever consumers and change the animal spirits of businesspeople. On the consumer side, that could mean a big housing push, and on the business side, a big change to corporate tax rates or something else that increases the return on investment.