Sunday, July 13, 2008

Greg Mankiw's Platform: I give it a gentleman's C

Professor Mankiw "gives an 8 plank platform designed to attract a majority of economists."

1. Support free trade. Sounds good, but it's just not that simple. Bilateral FTAs run to 1000s of pages and often just inefficiently divert trade rather than create trade. It's ridiculous to call the proposed pacts with Colombia and Korea free trade. If you really are in favor of free trade you should oppose these pacts.

2. Oppose farm subsidies. Agreed.

3. Leave oil companies and speculators alone. Agreed.

4. Tax the use of energy. Huh? The first sentence of plank #2 reads "Economists like free markets" so why increase taxes on energy (which, since we already have substantial energy taxes is what the plank should have said)? To make this argument, one needs, in my opinion, to (a) show the negative externality that is not already being addressed by current taxation and then (b) show that our government's marginal tax policy would reduce said externality more efficiently than simply assigning property rights and letting the free markets that some of us do actually like do their work.

5. Raise the retirement age. I have to give an incomplete here. Raise it for whom? workers already in their 60s? In their 50s? How old do you have to be before it's too unfair to change the rules in the middle of the game? In my view you can only consider doing this for workers under 30 and those who follow them.

6. Invite more skilled immigrants. Again, incomplete. Why be so stingy? Lets go with the inscription on the statue of liberty.

7. Liberalize drug policy. Agreed. Well said, and courageously said.

8. Raise funds for economic research. (to be fair there is a good change that GM is kidding here but) Wow, the NBER raises social welfare? Sorry sir, but I think abolish funds for economic research would be more to the point. The NBER is welfare for the well to do.


Tom said...

While I agree with each individual assement, I think you need to grade him "on the curve." He's far ahead of actual major party candidates on these issues, so he gets an easy B+.

But wait! Prof. Mankiw neglected to say why he wants more energy taxes. For not mentioning the great bogey man, Anthorpogenic Global Warming, he gets two more points. Final grade: A-

You're a tough grader, Sir Angus. (And it's "Raise it for whom?")

Angus said...

LOL, yes I am a tough grader, but not as tough as Mrs. Angus who has the nickname "Hammer" around our department.

ps. I've edited the post to reflect your grammatical note.

Norman said...

Assuming that there is an unaddressed negative externality from energy use on the likes of air quality and global warming (not that I'm sure these have been established), wouldn't establishing property rights be particularly difficult or impossible here? It seems like a Pigovian tax makes a lot of sense here if your objection in 4(a) is addressed.

What's this? You expect us to have our kids compete with the world's poor people? Where's your compassion? You'll keep America's poor from buying health insurance and cable TV!

Also, I'm pretty sure that in 8 Mankiw was just asserting that one of the best ways to win a group's votes is to offer them money.

br said...

Agree with Angus on #6. Streamlined immigration of low skilled workers could be the next internet boom, but I think it must be coupled with elimination of minimum wage, elimination of free government crap (other than primary education), and legalization of drugs.

Companies would be scrambling to figure out how to make use of the newly available low cost labor (e.g. they'd begin investing again), just like they scrambled to figure out how to use the internet. Huge economic growth potential in my opinion.

Christoph said...

Your problem with #5 is easy to solve: Raise it for everyone, but not by the same amount. For instance, 64 and 63 year olds would have to work 1 month more, 62 and 61 year olds 2 months, 60 and 59 year olds 3 months and so on. This way you avoid the unfairness that one person gets the old retirement age and people born the next day have to work according to the new rule.