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Interesting Interview with Economist, Robert Lucas

By JLP | September 26, 2011

If you have time, check out this interview with University of Chicago Economist, Robert Lucas that was in this weekend’s WSJ. Some interesting tidbits from the piece:

Mr. Lucas is visiting NYU for a few days in early September to teach a mini-course, so I dash over to pick his brain. He obligingly tilts his computer screen toward me. Two things are on his mind and they’re connected. One is the failure of the European and Japanese economies, after their brisk growth in the early postwar years, to catch up with the U.S. in per capita gross domestic product. The GDP gap, which once seemed destined to close, mysteriously stopped narrowing after about 1970.

The other issue on his mind is our own stumbling recovery from the 2008 recession.

For the best explanation of what happened in Europe and Japan, he points to research by fellow Nobelist Ed Prescott. In Europe, governments typically commandeer 50% of GDP. The burden to pay for all this largess falls on workers in the form of high marginal tax rates, and in particular on married women who might otherwise think of going to work as second earners in their households. “The welfare state is so expensive, it just breaks the link between work effort and what you get out of it, your living standard,” says Mr. Lucas. “And it’s really hurting them.”

Turning to the U.S., he says, “A healthy economy that falls into recession has higher than average growth for a while and gets back to the old trend line. We haven’t done that. I have plenty of suspicions but little evidence. I think people are concerned about high tax rates, about trying to stick business corporations with the failure of ObamaCare, which is going to emerge, the fact that it’s not going to add up. But none of this has happened yet. You can’t look at evidence. The taxes haven’t really been raised yet.”

On why he voted for President Obaman:

I ask about a report that he voted for Barack Obama in 2008, supposedly only the second time he had voted for a Democrat for president. “Yeah, I did. My parents are dead for a long time, but my sister says, ‘You have to vote for Obama, for what it would have meant for Mom and Dad.’ I felt that too. It’s a huge thing. This [history of racism] has been the worst blot on this country. All of a sudden this charming, intelligent guy just blows it away. It was great.”

Guilt isn’t a very good reason to vote someone into office.

Topics: Economics | 19 Comments »


19 Responses to “Interesting Interview with Economist, Robert Lucas”

  1. Jon Says:
    September 26th, 2011 at 1:21 pm

    My wife has a lot of friends that voted for Obama just because he is black. What would you call that? Affirmative racism?

  2. BG Says:
    September 26th, 2011 at 2:16 pm

    Was that “[history of racism]” added by the interview-er? I hate quotes that include the brackets. Perhaps the interview-ee meant:

    “This [wasteful spending by Bush] has been the worst blot on this country.”

    or

    “This [massive credit/housing bubble] has been the worst blot on this country.”

    or

    [fill in your own opinion to slant context]

    Reading the rest of the article, it seems as if he held the same opinion as the majority: Obama was the better choice between two candidates:

    “A complementary consideration was John McCain’s inability to say anything cogent about the financial crisis then engulfing the nation. “He didn’t have a clue about the economy….”

    Not too surprising that a Nobel Prize winning Economist votes against a candidate who he thinks is ‘clueless about the economy’.

  3. Jon Says:
    September 26th, 2011 at 3:35 pm

    @BG,

    There were more than two candidates running for president.

  4. BG Says:
    September 26th, 2011 at 9:17 pm

    Jon) Thats right, I forgot about Ralf Nader who got 0.55% of the popular vote, and then questioned whether Obama would be “Uncle Tom” for the corporations.

  5. Jack Says:
    September 27th, 2011 at 5:12 am

    Then one must ask, what “cogent” things did 0bama have to say about the economy?

  6. BG Says:
    September 27th, 2011 at 7:45 am

    I can only speak for my votes. I voted -against- the person who vowed to keep us in Iraq and Afghanistan for 100 years (Mccain). I never said Obama was an economics scholar, nobody is claiming that.

    For me, Obama was the ‘ less bad ‘ choice. And in one year, I will again vote for the less-bad candidate. Obama winning tells you more about the quality of Republican candidates, than about Obama himself.

  7. Jon Says:
    September 27th, 2011 at 9:33 am

    @BG,

    The forces that be say that either candidate will keep us in Afghanistan and Iraq for the next 100 years. You do know that we are still in Iraq don’t you? Obama promised us he would get us out before then but it still hasn’t happened, neither will it, these things were planned far in advance. Don’t believe the propaganda being fed to you.

    If you truly don’t want war and want freedom then you wouldn’t vote for either candidate since they are both wings of the same predatory bird.

  8. BG Says:
    September 27th, 2011 at 10:41 am

    Jon) Yes I know that, and it will heavily influence my vote next year. If the republicans nominate a Libertarian, they will get my vote.

  9. Jack Says:
    September 27th, 2011 at 12:40 pm

    “Obama winning tells you more about the quality of Republican candidates, than about Obama himself.”

    Well, I really think that McCain dropped the ball with Palin. McCain’s one trump card was his experience, and he threw it away by picking a running mate with so little experience. (Sure, she had more than 0bama, but that’s like saying she’s smarter than Biden.)

    As for Iraq and Afghanistan, you voted for the candidate who lied to you, not the one who told you the truth.

  10. JLP Says:
    September 27th, 2011 at 12:58 pm

    My theory is Obama was voted president because he was not George Bush. It had very little to do with credability. I mean, what had he done prior to running for president? Let’s face it, black people voted for him simply because he was black (wasn’t that the whole point of the “Yes We Can” slogan?).

    McCain offered little to the American people. He looked like Bob Dole Part 2. He looked tired and worn out next to a young man like Obama.

    Anyway, Obama has proven time and again that he was not ready for the presidency. I would have preferred Hillary over Obama (and I can’t stand Hillary).

  11. BG Says:
    September 27th, 2011 at 1:25 pm

    I wouldn’t say that Obama has lied — more along the lines of being ineffective. I’d rather have an ineffective president trying to change the status quo, than an effective one wanting to keep the status quo.

    Quantanimo and Iraq are some major things influencing Obama’s base…but those are things that Republicans won’t point out as negatives for Obama, because those are issues that Republicans agree with.

    Libertarians agree with Democrats when it comes to foreign policy more than Republicans it seems.

    Also, McCain, or anyone else who thinks we can keep permanent bases in Iraq or Afghanistan is delusional. The people of those countries will always view us as ‘occupiers’.

  12. BG Says:
    September 27th, 2011 at 1:31 pm

    Oops, sorry about my spelling..typing on a phone. Guantanamo. Also, JLP: I thought the ‘yes we can’ meant: yes we can affect hope and change. Not ‘ yes we can vote a black guy into the presidency’.

  13. Jon Says:
    September 27th, 2011 at 1:46 pm

    The huge base they built in Iraq is very permanent and well fortified. I think we were meant to stay in both countries, like the 200+ countries we are currently in, I think they will be permanent bases.

    We were slated to go into Afghanistan even before 9/11, 9/11 was just a good reason to get in there faster. No, there are certain powers that be that make it so it doesn’t matter who is president, things will pretty much continue as they are, Obama is proof of that, if you believed all of Obama’s rhetoric to begin with.

    Even if Ron Paul would win, I don’t think he could do very much, granted, if he did, I don’t think he would be alive very long to do anything substantial.

  14. Jack Says:
    September 27th, 2011 at 2:46 pm

    > I wouldn’t say that Obama has lied — more along
    > the lines of being ineffective.

    He is the Commander-in-Chief. He can pull the military out of Iraq and Afghanistan on his own authority. He does not need Congress to get OUT.

  15. BG Says:
    September 27th, 2011 at 4:08 pm

    “Even if Ron Paul would win, I don’t think he could do very much, granted, if he did, I don’t think he would be alive very long to do anything substantial.”

    If that is what you think, then you can’t blame Obama either…

    Aside from the conspiracy theories, yes we built massive bases in Afghanistan and Iraq — but I don’t think we could hold them. These bases can’t be compared to bases in our Allied countries like Germany. Iraq and Afghanistan will NEVER be our allies (Kuwait, maybe).

  16. BG Says:
    September 27th, 2011 at 4:11 pm

    “He does not need Congress to get OUT.”

    He is ineffective in that he can’t figure out a way to get us out: getting out safely, getting out without destabilizing the region, etc. I don’t know what his reasons are, but I’m sure we will be hearing them before the end of the year (his deadline is Dec 31, 2011 — so he hasn’t renege’d yet).

    And yes, I fault Obama for not cleaning up Bush’s mess as quickly as he probably could have.
    :)

  17. Jon Says:
    September 27th, 2011 at 5:07 pm

    If one is willing to become president one should be willing to give his life and the life of his family for what is right and just. Otherwise that person shouldn’t run for president. It is a very high standard to have that much control. So, yes, I blame every corrupt president and congress person. But I blame more the people of the United States for not understanding what freedom and liberty are, since, if they understood, it wouldn’t matter who was governing us, they wouldn’t be able to control us when they do that which they shouldn’t.

  18. Jack Says:
    September 28th, 2011 at 9:33 am

    I saw a good one on Facebook: “If you voted for 0bama in 2008 to prove you were not a racist, vote for someone else in 2012 to prove you are not an idiot.”

  19. BG Says:
    September 28th, 2011 at 9:57 am

    Better would be: “If you voted for 0bama in 2008 to prove you were not a racist, you’ve already proved you are an idiot.”

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