Economics

Nobel-Winning Economist Gary Becker on the Stimulus, Bailouts, and Why It's No Time to Concede to Big Government

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The Wall Street Journal's Mary Anastasia O'Grady recently interviewed Nobel Prize winner Gary Becker:

Becker is underwhelmed by the stimulus package: "Much of it doesn't have any short-term stimulus. If you raise research and development, I don't see how it's going to short-run stimulate the economy. You don't have excess unemployed labor in the scientific community, in the research community, or in the wind power creation community, or in the health sector. So I don't see that this will stimulate the economy, but it will raise the debt and lead to inefficient spending and a lot of problems."

There is also the more fundamental question of whether one dollar of government spending can produce one and a half dollars of economic output, as the administration claims. Mr. Becker is more than skeptical. "Keynesianism was out of fashion for so long that we stopped investigating variables the Keynesians would look at such as the multiplier, and there is almost no evidence on what the multiplier would be." He thinks that the paper by Christina Romer, chairman of the Council of Economic Advisors, "saying that the multiplier is about one and a half [is] based on very weak, even nonexistent evidence." His guess? "I think it is a lot less than one. It gets higher in recessions and depressions so it's above zero now but significantly below one."

Here's Becker on Bear Stearns and Lehman Brothers:

Mr. Becker says that he opposed the "implicit protection" that the government gave to Bear Stearns bondholders to the tune of "$30 billion or so." So I wonder if letting Lehman Brothers go belly up was a good idea. "I'm not sure it was a bad idea, aside from the inconsistency." He points out that "the good assets were bought by Nomura and a number of other banks," and he refers to a paper by Stanford economics professor John Taylor showing that the market initially digested the Lehman failure with calm. It was only days later, Mr. Taylor maintains, that the market panicked when it saw more uncertainty from the Treasury. Mr. Becker says Mr. Taylor's work is "not 100% persuasive but it sort of suggest[s] that maybe the Lehman collapse wasn't the cause of the eventual collapse" of the credit markets.

Here's some optimism about the possibility of political change:

As a young academic in 1956, Mr. Becker wrote an important paper against conscription. He was discouraged from publishing it because, at the time, the popular view was that the military draft could never be abolished. Of course it was, and looking back, he says, "that taught me a lesson." Today as Washington appears unstoppable in its quest for more power and lovers of liberty are accused of tilting at windmills, he says it is no time to concede.

Whole thing, well worth reading, here.

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  1. “Mr. Becker says Mr. Taylor’s work is “not 100% persuasive but it sort of suggest[s] that maybe the Lehman collapse wasn’t the cause of the eventual collapse” of the credit markets.”

    Just let me give Mr. Becker less than 100% praise for making a not entirely unqualified statement that did not absolutely deny that there may have been, or perhaps could be, some merit to Mr. Taylor’s work, at least at the present time.

  2. Here’s some more Becker. I actually like the headline more than the body of the article.

    http://www.ft.com/cms/s/0/009e1e8c-14ef-11de-8cd1-0000779fd2ac.html?nclick_check=1

  3. popular view was that the military draft could never be abolished. Of course it was,

    BULLSHIT ! Until and unless the draft is declared to be the unconstitutional rape of basic human rights that it most certainly is it can not be considered to be “abolished.” We still have a military draft – it just isn’t being used at present. The Selective Servitude system is still in place ready to be put to use anytime our “masters” deem it “necessary.” Don’t kid yourself.

  4. “Today as Washington appears unstoppable in its quest for more power and lovers of liberty are accused of tilting at windmills, he says it is no time to concede.”

    Yeah, well let Mr. Becker try to effect some political change when Libertopia triumphs and everything is run by unaccountable fucking plutocrats.

  5. Just let me give Mr. Becker less than 100% praise for….

    Hey, Vanneman, are you definitely certain about that? 😉

  6. Yeah, well let Mr. Becker try to effect some political change when Libertopia triumphs and everything is run by unaccountable fucking plutocrats.

    As opposed to now, when everything is run by unaccountable fucking democrats.

  7. Nobel-winning economist Paul Krugman said he supports the idea of temporarily nationalizing insolvent banks in order to help unfreeze credit markets and avoid government purchases of toxic assets at inflated prices that would bail out shareholders at the expense of taxpayers. Even “comrade Greenspan” has come around to this notion, Krugman said, a joke referring to former Fed chairman Alan Greenspan’s surprise admission this week that he now believes some banks may have to be nationalized temporarily.

    So much for the nobel-winning economist game, fuckwits.

  8. Are you from the New York Times, Lefiti? Are you Paul Krug? Are you Thomas J Fryedman? Are you Maureen O’Dowd? You a comedian? Are you Sinbad? Are you Pen and Teller?

  9. I’m really running out of reasons not to leave the country. Seriously, I’m thinking about moving to Switzerland.

  10. Switzerland was once my fall back option:

    1. Ive lived there before
    2. I had, at least back in the 90s, a semi-open ended job offer (Im assuming not available any more)
    3. They werent in the EU
    4. They werent in the UN

    2 and 4 no longer apply. Ive decided if worse comes to worse, I will just stand my ground and fight the battle here. I have 3 chunks of land in KY I consider mine to defend.

  11. How’s the new beagle working out, Lefiti?

  12. You don’t have excess unemployed labor in the scientific community,

    What am I, chopped liver? Somebody please hire me. I’m serious. And seriously broke.

  13. Lefiti, you want to know the real reason the credit market is frozen? There’s plenty of money out there floating around, but no one wants to give theirs up because they have NO IDEA what His Highness will do next. How many more trillions are we going to print? How many more ‘fat cats’ are we going to vilify? How many more palms do we have to grease?

    Until the Special Olympics crew up in DC quit fucking around with a system that can’t be fucked with, the credit market will stay frozen.

  14. Stick your head back up your ass, Silentz. Nobody gives a flying fuck what you think, you carping right-wing dignbat.

  15. Lefiti: Why do you hate free markets so much? Did some rich kids pick on you in grade school or something?

    I just can’t understand how someone can get so worked up about other people being allowed to keep their own money and spend it as they please.

  16. Lefiti’s is a woeful tale.

    Lefiti spent all his lunch money on black market kandy korn, in school. Later, when he found out how cheap it was at WalMart, it turned him into a confirmed wage-and-price control freak.

  17. Hazel Meade:

    You fucking moron, I love mixed economies, which is what we have. I loathe fanatic fucks and dogmatic economic determinists who peddle overarching theories they’ve pulled out of their asses. Thank God, you fuckwits aren’t as organized or clever as the commies were.

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