I still get a kick out of the morons that think the Keynesian multiplier is a real thing. Cracks me up every time. If it worked, you could just print money until the cows came home and everybody would be rich.
The Keynesians vs. Kudlow
Trump needs some pro-growth voices in the White House.
ENLARGE
Larry Kudlow, a CNBC commentator, speaks about the economy during a panel discussion at the Heritage Foundation on December 18, 2014 in Washington, DC. PHOTO: AFP/GETTY IMAGES
Updated Dec. 21, 2016 6:54 p.m. ET
254 COMMENTS
Fear and loathing are the media watchwords for most of Donald Trump’s cabinet appointments, but one of the more amusing campaigns is the progressive assault on the prospect that Larry Kudlow could lead the White House Council of Economic Advisers. Can there be a more compelling endorsement?
Start with the complaint that Mr. Kudlow lacks a doctorate in economics. This is true. After taking graduate courses at Princeton, he worked as an economist at the Federal Reserve Bank of New York, the Reagan budget office and various financial firms. He has since worked mainly as a TV commentator on economics.
This doesn’t pass muster with the economics guild, who have come to view the White House job as their own political preserve. But an academic degree is no guarantee of economic wisdom, as Administrations from Nixon’s to President Obama’s have shown. Mr. Kudlow is conversant enough with economic literature to do the job.
Another rap is that Mr. Kudlow failed to predict the 2008 financial panic. Well, so did most people, including Timothy Geithner when he was president of the New York Federal Reserve and Ben Bernanke while he was Fed chairman. Despite his Ph.D. from MIT, Mr. Bernanke now stars in one of YouTube’s finest collections of clueless commentary from the pre-crisis era. At a March 2008 meeting of the Federal Open Market Committee, Mr. Geithner strenuously objected when a colleague said financial institutions were undercapitalized. Like all market panics, the 2008 crisis was so severe in part because the financial and political establishments didn’t expect it.
The real reason the Keynesian tong dislikes Mr. Kudlow is that he disagrees with their assumptions. He thinks tax cuts that change incentives produce more growth than do government transfer payments. He thinks the Keynesian “multiplier” model that $1 in spending produces $1.70 in growth is nonsense, as do most people who didn’t get a Ph.D. at MIT or Princeton.
This is precisely why Mr. Trump could use Mr. Kudlow on his economic team. So far the President-elect has chosen economic and financial advisers who are blank policy slates or best known for their ardent anti-trade and immigration views. His selection Wednesday of economist Peter Navarro to run a new White House National Trade Council puts another protectionist in the senior ranks. Mr. Kudlow is a free trader, and it would be useful to have at least one inside the White House.
Mr. Trump’s liberal critics don’t mind appointees who agree with them on trade and spending. They dislike Mr. Kudlow because they fear his pro-growth policies, like Reagan’s, will succeed too well.
The Keynesians vs. Kudlow
Trump needs some pro-growth voices in the White House.
Larry Kudlow, a CNBC commentator, speaks about the economy during a panel discussion at the Heritage Foundation on December 18, 2014 in Washington, DC. PHOTO: AFP/GETTY IMAGES
Updated Dec. 21, 2016 6:54 p.m. ET
254 COMMENTS
Fear and loathing are the media watchwords for most of Donald Trump’s cabinet appointments, but one of the more amusing campaigns is the progressive assault on the prospect that Larry Kudlow could lead the White House Council of Economic Advisers. Can there be a more compelling endorsement?
Start with the complaint that Mr. Kudlow lacks a doctorate in economics. This is true. After taking graduate courses at Princeton, he worked as an economist at the Federal Reserve Bank of New York, the Reagan budget office and various financial firms. He has since worked mainly as a TV commentator on economics.
This doesn’t pass muster with the economics guild, who have come to view the White House job as their own political preserve. But an academic degree is no guarantee of economic wisdom, as Administrations from Nixon’s to President Obama’s have shown. Mr. Kudlow is conversant enough with economic literature to do the job.
Another rap is that Mr. Kudlow failed to predict the 2008 financial panic. Well, so did most people, including Timothy Geithner when he was president of the New York Federal Reserve and Ben Bernanke while he was Fed chairman. Despite his Ph.D. from MIT, Mr. Bernanke now stars in one of YouTube’s finest collections of clueless commentary from the pre-crisis era. At a March 2008 meeting of the Federal Open Market Committee, Mr. Geithner strenuously objected when a colleague said financial institutions were undercapitalized. Like all market panics, the 2008 crisis was so severe in part because the financial and political establishments didn’t expect it.
The real reason the Keynesian tong dislikes Mr. Kudlow is that he disagrees with their assumptions. He thinks tax cuts that change incentives produce more growth than do government transfer payments. He thinks the Keynesian “multiplier” model that $1 in spending produces $1.70 in growth is nonsense, as do most people who didn’t get a Ph.D. at MIT or Princeton.
This is precisely why Mr. Trump could use Mr. Kudlow on his economic team. So far the President-elect has chosen economic and financial advisers who are blank policy slates or best known for their ardent anti-trade and immigration views. His selection Wednesday of economist Peter Navarro to run a new White House National Trade Council puts another protectionist in the senior ranks. Mr. Kudlow is a free trader, and it would be useful to have at least one inside the White House.
Mr. Trump’s liberal critics don’t mind appointees who agree with them on trade and spending. They dislike Mr. Kudlow because they fear his pro-growth policies, like Reagan’s, will succeed too well.
