Arnold Kling  

The President and Economic Advice

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What is it like trying to advise the President on economics?

Russ Roberts interviews Greg Mankiw, who recently left the Council of Economic Advisers to return to Harvard.


Roberts: What is your perception of the President as a consumer of economic analysis?

Mankiw: I think he's got a great intuition for economics—he doesn't think like an economist in the sense of thinking in terms of equations and graphs.


Jeffrey Frankel, who served on the CEA during the Clinton Administration, writes

Resisting the appeals of such specific interests well enough to safeguard the welfare of the whole requires more than that the president give small-government speeches. It even requires more than that he sincerely believe that he favors small efficient government. It requires hard work, knowledge, ability to absorb and synthesize facts, analysis, ability to communicate, and willingness to trade off issues when constraints make it appropriate while taking unpopular stands when required.

Jeff argues that relative to mainstream economics, recent Democratic Presidents have proven to be pleasant surprises, and Republican Presidents have been the opposite.

The sense I get from Jeff is that a Republican never knows any more economics than what he knew before taking office. If so, then I would not want to be an adviser. I think of myself primarily as a teacher, and I feel better watching a struggling student learn a little bit than watching a stubborn student walk out of a course having gained no knowledge.


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TRACKBACKS (3 to date)
TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/249
The author at Citizen Journal Blog in a related article titled Joe Klein Talks Sense writes:
    Do Democratic presidents absorb economic advice better than Republican presidents do? asks Arnold Kling at EconLog. Clinton, of course, had a record economic conservatives, at least, should love: under Clinton, government spending expanded much less th... [Tracked on May 5, 2005 4:48 PM]
COMMENTS (10 to date)
Shank writes:

How can you think about economics without thinking in terms of graphs? At least the relationship between supply and demand....I have intuition for economics too, and to me that just means I see little graphs in my head all of the time.

The type of student or advisee I can't stand is the one who yawns and looks at his watch, thinking that any information that he doesn't know already must not be worth knowing.

Shank writes:

How can you think about economics without thinking in terms of graphs? At least the relationship between supply and demand....I have intuition for economics too, and to me that just means I see little graphs in my head all of the time.

The type of student or advisee I can't stand is the one who yawns and looks at his watch, thinking that any information that he doesn't know already must not be worth knowing.

awptimus writes:
How can you think about economics without thinking in terms of graphs?
It takes graphs to visually depict a behavior; graphs are useless when trying to understand the reasons for behavior. After all, economists don't argue the validity of Keynesian graphs versus Monetarist graphs, they argue the basis for those graphs. As Walter Williams wrote:
Professor Armen Alchian, a very distinguished economist, used to give me a hard time in class. But one day, we were having a friendly chat during our department's weekly faculty/graduate student coffee hour, and he said, "Williams, the true test of whether someone understands his subject is whether he can explain it to someone who doesn't know a darn thing about it."
So while thinking in terms of graphs allows you to visualize behavior, it does nothing to help you understand the reason for that behavior; I could draw you a demand curve that was upward sloping, but because of the reasons for graph are absurd (people would not demand more when the price is higher) you would know it was useless, but just the graph itself doesn't show that.

So anyone who understands that people demand less when the price is higher, and that people will sell more when the price is higher, already understand the reasons for the supply and demand graph, they don't have to see it.

Randy writes:

It seems to me that President Bush's instincts are pretty good. Unfortunately, he is not an economist, he's a politician. And politicians don't get elected without handing out favors to people who don't give a crap about economics. Perhaps we could say that economics is the art of the optimal - while politics is still the art of the possible.

The only President to have a degree in economics was Reagan, and it showed when, in an interview with Bill Moyers, he said;

Politics is the second oldest profession. And the longer I've been in it, I see that it has quite a bit in common with the oldest

Also, Milton Friedman has some interesting things to say about the differences between Nixon, Reagan, and George Bush I in 'Two Lucky People'.

Jeff argues that relative to mainstream economics, recent Democratic Presidents have proven to be pleasant surprises

There's only been one recent Democrat President. He was lucky rather than good.

Clinton inherited a recovering economy, lost his congressional majority rather quickly--which was good for him, as it restrained his Lester Thurowism--presided over the Y2K investment boom, and delivered a recession to his successor.

The previous Democrat was Jimmy Carter, who still holds the 'misery index' record, and probably always will.

Lancelot Finn writes:

I second everything Patrick R. Sullivan says, except that I guess I'd give Clinton a little more credit, even if only for the dexterity with which he sold out his liberalism after the Republicans took Congress in 1994.

A Democrat can be better on the economy because his partisan label helps to appease some of the people who create the most pressure for bad economic policy. But only if the Democrat is kind of a lightweight, and firmly held down by a Republican majority. The Democrats have turned into such dogmatic dinosaurs of late that it's hard to imagine them being anything other than an albatross around the country's neck for the foreseeable future.

Lawrance George Lux writes:

Presidents always have their own agenda driven by Political issues. The role of Economic advisor will always take second place to Political advisors--who sell particularistic interests for political support. Those interests are invariably economic in nature, and defeat coordinated economic policy planning. An Economic advisor to the President will always wind up a political hack, or quit. lgl

El Presidente writes:

Ya'al are bringin me down. LGL has a good point, albeit fatalistic, that Paul O'neal backed up in his parting shot "The Price of Loyalty". His account of futile attempts to educate the president seemed to be a contrast to his earlier experiences where a president might occasionally be expected to teach him a thing or two. I'm sure it had something to do with his age relative to those around him.

I think there is an important difference between deliberation and deference. Its one thing for a president to say, "I know this action will have some negative consequences but I have to weigh all of them and do what I think is right." Its quite another to say, "What does Ken Lay want me to do?"

I think much of the integrity of the president's decisions with regard to economics depends on his insistence on knowing the facts and then being able to place them in context. It really does depend on who's making the decision. I don't think either Clinton or Carter were blindly flailing around in a policy funhouse. Both of them were deliberative. One got more than his share of good breaks and the other had more courage than we might think healthy. Who else was advocating energy conservation and energy independence in the 70's? Can someone say foresight? Can I get an amen?

I hope our presidents will have the wisdom to know what questions they should ask and the good fortune of having advisers who are willing to give honest answers. I'm not sure your party affiliation has much to do with it except for who you consider your constituency to be. Rising tide, trickle down, etc. ad nauseam.

El Presidente writes:

One more thing. Take heart everybody. There are aspiring politicians who care enough to seek out economic insight on their own. I am case in point. That's why I care what you think. It would be tragic to lose whatever faith you might have left.

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