301. A Monetary and Fiscal History of the United States (1)
301. Alan Blinder — A Monetary and Fiscal History of the United States
1 (9s):
You're listening to the Michael Shermer Show.
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Hello everyone, It's Michael Shermer and it's time for another episode of the Michael Shermer Show. This one is brought to you by wonk, a series of college level audio and video courses and documentary films and series produced and distributed by the teaching company. Wadham brings you engaging educational content through short form videos, long form courses, my favorites, tutorials, how to lessons, travel logs, documentaries, and more covering every topic you've ever wondered about and many, many more you've never even thought you'd wonder about. For example, here's one I'm going to take this week.
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1 (2m 44s):
Okay everybody, it's Michael Shermer, and it's time for another episode of the Michael Shermer Show. My guest today is Dr. Allen s Blinder, who is the Gordon s Rancher Memorial Professor of Economics and Public Affairs at Princeton University, a former vice chair of the Federal Reserve Board, and a former member of the President's Council of Economic Advisors, regular columnist for the Wall Street Journal. He is the author of many books, including The New York Times bestseller after the music stopped, the Financial Crisis, the Response, and the Work Ahead, and he lives in Princeton, New Jersey. Alan, welcome to the show. Thanks for coming on. I've been reading your, I've been reading your material material in the Wall Street Journal for many, many years since you describe yourself in the book as a Kanes end.
1 (3m 27s):
Let me start the show with a famous quote from John Maynard Kanes. The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than as commonly understood. Indeed, the world is ruled by little else. Practical men who believe themselves to be quite exempt from any intellectual influence are usually the slaves of some defunct economists. Mad men in authority who hear voices in the air are distilling their frenzy from some academic scribblers of a few years back. Alan Blinder, are you one of those scribblers, Are you one of those economic theorists that Mad Men in Power Consult
2 (4m 9s):
Now and again, I wouldn't call them Mad Men or Mad Women, and I'm not sure how seriously they consult. I mean, I, I wrote a whole book about the failure of politicals and economists to really connect with one another and exchange in ways that could be beneficial to both sides. It doesn't happen much, I'm afraid. Maynard Kane's, in my view, was exaggerating, but you know what he meant. I mean, he was looking back at Marxism and things like that.
1 (4m 42s):
Yeah, indeed. So before we dive into your book, give us a, just kind of a sense of, of who you are, where you came from, how you got interested in economics and, and and macroeconomic policy, and especially what it was like to serve on Bill Clinton's Council of Economic Advisors and to be vice chair of the Federal Reserve Board. I mean, you're one of those guys, you're one of the insiders.
2 (5m 4s):
I was once, I don't think I'm an insider anymore, but I certainly was. My bio, if you just read it briefly, looks pretty boring. I mean, I went to Princeton University, I majored in economics. I then went to graduate school in economics at the London School of Economics and then at mit, which is where my PhD comes from, under Robert M Solo, God bless him, he's still alive. One, a wonderful man. I started teaching in Princeton in, Are you ready for it? 1971, Still on. I've been on a number of sabbaticals and, and stints in government as, as you mentioned, but I'm still a professor of economics at Princeton, so that sounds pretty boring.
2 (5m 52s):
Picking up the last part of your question, I was one of several economic advisors to candidate Bill Clinton in 1992. And then when he went, when he won the election, a bunch of us, not everybody, but a bunch of us went into the Clinton administration. That included me as a member of the Council of Economic Advisors. Now us What was it like? Hectic, frantic, I tell students that are thinking of going into government, This is not about democratic Republican administrations.
2 (6m 35s):
White houses are always frantic and Bill Clinton's was no exception. I think it was frantic in a good way. He used to get, I still remember criticism in the media for having these big rockish rockus meetings with lots of people in them and pizzas and things like that. And I thought it was fantastic. I was one of those people, but that's not the only reason I thought it was fantastic cuz the president of the United States was hearing from multiple voices. I had talked to friends that had been in the Bush administration before him, and they barely ever saw the President. He didn't hear from them. That was not Bill Clinton's way. He wanted to hear, he wanted to distill different opinions and make of his own mind.
2 (7m 20s):
So I mean, I thought that was a fantastic strength of Bill Clinton. Anyway, to finish answering your question, Clinton then nominated me to the Federal Reserve Board and the Senate confirmed me. Wasn't that difficult? It's getting more difficult these days. Wasn't that difficult in those days and it couldn't have been more different. The Federal Reserve is placid, quiet, well mannered, orderly. There's no pizza boxes lying around in the, in the boardroom, nothing like that.
2 (8m 1s):
And unlike working in the Clinton White House or any White House, which is inherently political, that as we economists were not the politicals, we weren't doing politics, but politics was all around you. And that's again, true in every White House, Republican or Democrats at the Federal Reserve, there was no such thing. If anybody around the board table said anything that sounded political in a partisan sense, you could see the other faces around sort of scowling like, that guy just spilled soup on a shirt. That was so ill mannered.
2 (8m 44s):
There was, it was an incredibly different environment. And the other way it was very different for me, I mean everybody has different experiences, is that the Federal Reserve really is an economist organization. It's not like everybody there is an economist. They have lawyers and all kinds of other skills. But at that time, the leader of the Fed, Allen Greenspan was an economist. And there were three, yeah, three of the seven governors in Washington were PhD economists, sorry, three others besides Greenspan were.
2 (9m 28s):
And so if, if you came from that kind of background environment, you were sort of at home again in, in a White House. Again, any White House, not a partisan remark, an economist always feels a little bit like a duck out of water. This is not what I do for a living. But at the Fed, that's not, that's the opposite. You're, you're analyzing things on their economic merits, you're making recommend, you're making recommendations, which then, and then this is the other thing, which lead to decisions, as you know, the Fed decides on what it's gonna do with interest rates and then it just happens.
2 (10m 8s):
It doesn't call up the chairman of some congressional committee or the White House or anybody else and ask what they think about it. They just do it. If you're making a quote decision in the White House, and again, any White House, that's just the first step. Then the decision meets the Congress and usually gets changed in many, many ways. So the contrast was quite sharp.
1 (10m 39s):
You write in your book that you write on like page two, that you are a left leaning liberal and that you wanted to put that up front. Yeah, I have a lot of scientists on the show. They never say anything like, I'm a left leaning physicist or you know, whatever. What, what kind of sciences, economics, where, where that would matter at all.
2 (11m 1s):
Simple. It's a policy science. It's making recommended. It's analyzing events, historical events, current events. It's often, if you're involved in the policy part of economics, not everybody is, but I have been for decades. If you're involved in that, you're making decisions that often involve value judgements. I give you very simple and very obvious example. What should we do with the tax code? If we're cutting taxes, who should get the benefits? Rich people, poor people, middle people, What should we do with unemployment benefits and.dot, it goes on and on and on.
2 (11m 46s):
And all of those things have political aspects. And if you're involved in the, actually in the policy formulation, either as an outsider or an insider, you are going to be involved in some way with politicians. They'll be asking for your advice or they'll not be asking for your advice. And frankly, in my case, in in my lifetime for decades, many, many Democratic politicians have asked for my advice. I can't remember a single Republican. There might have been one, but they don't ask.
1 (12m 26s):
Interesting. So would it be correct to say something like Clinton and Obama would pick a certain kind of economists to be on their advisory board, whereas a Bush or Trump would pick a different, I don't know what, Free market economist or more leaning toward, Yeah, okay.
2 (12m 44s):
Yeah. More more EZ Fair economist. Somebody who doesn't, believes less in supporting the poor, for example, than more left leaning economists do. So a absolutely,
1 (12m 59s):
So, you know, we think about like David Humes is a barrier there in a way. You're saying that we know how to, the effects of raising taxes or lowering taxes or progressive tax or regressive taxe supply and demand and so on, These are pretty hardcore economic principles that have mathematical reasoning behind them and so on. But how, what ACI society decides to do, like, well, we think the poor should be helped more, or we think the rich should get tax breaks. That, that's not a scientific question. That's more of a political question.
