A seat at the table

First of 2 parts

THANK you for the very high level of likes for last week’s column. Again, I was surprised, and it shows I can’t predict which ones will resonate strongly. I was very busy so decided on the topic and wrote it all in one go the day of deadline versus my preferred habit of coming up with something I preliminarily decide to write about early in the week and pick it up or replace then write it a day or two earlier and refine it. When I sent it, I even told my editor I was worried it was written too quickly. Being given the privilege of writing a column is a great honor and responsibility, so I hope I am and can continue to be deserving of your readership, and thank Dante “Klink” Ang 2nd and The Manila Times for allowing me to do so.

There are two prominent economists I follow and have much respect for. First, because they have a great track record of success in their policy recommendations (ideology has to be backed by results given my empirical outlook); and second, they are very skilled at communicating their ideas and views as their columns and interviews are very well thought out and accessible. Both are acclaimed and multi-awarded center liberal economists — Lawrence Summers and Paul Krugman. They are not like the crackpot right-wing opportunists who are usually wrong, ideologically expedient and politically opportunistic like the truly embarrassing Larry Kudlow, Glenn Hubbard and most caricatured of all Arthur Laffer. His “Laffer Curve” is the most laughable of all and even led to the first President Bush to call Reagan’s advocacy of policies like his “voodoo economics.” This, alas, has taken over what passes for economic theory on the political right in the US. Notice every Republican administration from Reagan except the first President Bush has presided over a stock market crash and left office with a higher annual deficit that Democrat successors fixed. As Bill Clinton said when explaining the better economic performance since the 1980s of Democrats, “If you want to live like a Republican, vote Democrat.”

A bear or bull market is defined as an increase or decrease of over 20 percent from the high or low and a correction is a decrease of 10 percent up to 20 percent. Here are the stock market crashes which means more than a sharp 20 percent drop or more from peak to trough since 1929 (which was also under a Republican Herbert Hoover): 1987 – Reagan; 2001 — G.W. Bush; 2008 — G.W. Bush (very dubious distinction of being the only president to preside over two stock market crashes and recessions in eight years); and 2020 — Trump. Versus none under Clinton or Obama who also left with the annual deficits being reduced substantially. In Clinton’s case, he left with a government surplus which G.W. Bush immediately squandered.

Krugman

Here are Paul Krugman’s credentials. His grandparents emigrated from Belarus and Ukraine. He was a national merit scholar at Yale and got his PhD in a very quick three years from MIT. He taught at Yale, MIT, Stanford and the London School of Economics. In 2000 joined Princeton and retired in 2015 and is now a distinguished professor at City University of New York. He has written 27 books, both scholarly and for the general public, and writes an acclaimed column for the New York Times. I read every one of his columns.

And here are his awards and more as listed by Wikipedia:

– 1991, American Economic Association, John Bates Clark Medal. Since it was awarded to only one person, once every two years (prior to 2009), The Economist has described the Clark Medal as “slightly harder

to get than a Nobel prize.”

– 1992, Fellow of the American Academy of Arts and Sciences (AAAS)

– 1995, Adam Smith Award of the National Association for Business Economics

– 1998, Doctor honoris causa in Economics awarded by Free University of Berlin (Freie Universität Berlin) in Germany

– 2000, H.C. Recktenwald Prize in Economics, awarded by University of Erlangen-Nuremberg in Germany

– 2002, Editor and Publisher, Columnist of the Year

– 2004, Fundación Príncipe de Asturias (Spain), Prince of Asturias Awards in Social Sciences

– 2004, Doctor of Humane Letters honoris causa, Haverford College

– 2008, Nobel Memorial Prize in Economics for Krugman’s contributions to New Trade Theory. He became the twelfth John Bates Clark Medal winner to be awarded the Nobel Memorial Prize.

– 2010, Howland Memorial Prize, awarded by Yale University

– 2011, EPI Distinguished Economist Award

– 2011 Gerald Loeb Award for Commentary

– 2012, Doctor honoris causa from the Universidade de Lisboa, Universidade Técnica de Lisboa and Universidade Nova de Lisboa

– 2013, Doctor of Laws, honoris causa, conferred by the University of Toronto, Toronto, Canada

– 2014, recipient of the Literary and Historical Society’s (University College Dublin) James Joyce Award in recognition of his outstanding contribution to the economic sciences

– 2014, recipient of the Green Templeton College, Oxford’s Sanjaya Lall Visiting Professorship of Business and Development, Trinity Term 2014, in recognition of his outstanding international reputation in scholarship and research in the field of development economics and business.

– 2016, Doctor of Letters, honoris causa, conferred by the University of Oxford, Oxford, UK.

A May 2011 Hamilton College analysis of 26 politicians, journalists and media commentators who made predictions in major newspaper columns or television news shows from September 2007 to December 2008 found that Krugman was the most accurate. Only nine of the prognosticators predicted more accurately than chance, two were significantly less accurate, and the remaining 14 were no better or worse than a coin flip. Krugman was correct in 15 out of 17 predictions, compared to 9 out of 11 for the next most accurate media figure, Maureen Dowd.

When he was awarded the Nobel Prize, the Committee stated that Krugman’s main contribution is his analysis of the effects of economies of scale, combined with the assumption that consumers appreciate diversity, on international trade and on the location of economic activity. The importance of spatial issues in economics has been enhanced by Krugman’s ability to popularize this complicated theory with the help of easyto-read books and state-of-theart syntheses. “Krugman was beyond doubt the key player in ‘placing geographical analysis squarely in the economic mainstream’ ... and in conferring it the central role it now assumes.”

Foreign Policy named Krugman one of its 2012 FP Top 100 Global Thinkers “for wielding his acid pen against austerity.” He also led to the resurgence of Keynesian economics and was very accurate in his predictions on stimulus spending not being inflationary after the 2008 crisis.

Summers

Another real heavyweight is Lawrence Summers who is one year younger than Krugman. The son of two prominent economists and nephew of two Nobel Prize winners, one of whom was Paul Samuelson. Here are his credentials. He entered MIT at 16 and got his PhD from Harvard and in 1983 was made one of the youngest tenured professors at 28. As quoted from Wikipedia, “Summers has made important contributions in many areas of economics, primarily public finance, labor economics, financial economics and macroeconomics. Summers has also worked in international economics, economic demography, economic history and development economics. He received the John Bates Clark Medal in 1993 from the American Economic Association (two years after Krugman got his). In 1987, he was the first social scientist to win the Alan T. Waterman Award from the National Science Foundation. Summers is also a member of the National Academy of Sciences. Some of his popular courses today, as Charles W. Eliot University Professor at Harvard University, include American Economic Policy and The Political Economy of Globalization.https://en.wikipedia. org/wiki/Lawrence_Summers - cite_note-17 Interestingly both Krugman and Summers had short stints in the Reagan administration in 1982-1983 and became prominent liberal economists after that.

Summers became one of the most prominent economists in Democrat administrations and was chief economist in the World Bank from 1991-1993 then returned to Harvard. He joined President Clinton’s treasury administration, rising from assistant treasury secretary to deputy secretary then becoming treasury secretary in 1999. He became president of Harvard. When President Obama won, he became director of the National Economic Council and was a leading candidate to be Federal Reserve chairman but was not chosen. He regularly writes a column and is a commentator on Wall Street Week on Bloomberg which I also watch every week to hear his views.

More on their diverging career paths next week.