TW: Much is made of economists quarreling especially these days relative to the stimulus and bank bailouts. But as Mankiw points out there are actually many areas where economists are in general agreement. Frequently, however, politicians (reflecting the will of the people) are unable or unwilling to execute policies consistent with the agreed economic rationale.
From Greg Mankiw (former Bush economic advisor):
"1)A ceiling on rents reduces the quantity and quality of housing available. (93%)
TW: Rent controls are thankfully rare but for NYC. Although some proposals meant to address the "housing" crisis may start to adopt some of these characteristics.
2) Tariffs and import quotas usually reduce general economic welfare. (93%)
TW: Protectionism is a looming threat here and abroad amidst the economic contraction. I hope it is resisted.
3) Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)
TW: Flexible rates have been a huge contributor to post WWII world economic growth, but they will be under intense scrutiny now. The Chinese yuan and US $ in particular are under a microscope, will one or both fold?
4) Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)
TW: Okay there is consensus amongst the economists on the need for stimulus but certainly the Republicans favor tax cuts while Dems the spending. BUT, those Republicans demagoguing about "spending our grand children's future" are acting contrary to this consensus or merely playing politics. One has to go into deficit during contractions else one contributes to the downturn cycle. John McCain has been one of the chief demagogues during the recent debate.
5) The United States should not restrict employers from outsourcing work to foreign countries. (90%)
6) The United States should eliminate agricultural subsidies. (85%)
TW: Strongly agree but the tyranny of the minority dominates here. Non-proportional representation (i.e. Louisiana having as many senators as CA or NY or TX) leads to minority interests such as sugar growers having disproportionate and irrational sway over policy.
7) Local and state governments should eliminate subsidies to professional sports franchises. (85%)
TW: Agree. This is one of those game theory situations, if no one did it society would be better off, but someone always does it.
8) If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)
TW: Yes!! Which is why the Republian demagoguery re "spending our grand children's money" is just that. The time to have been balancing the budget was 2001 to 2006 (and recall it was balanced through 2000).
9) The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)
10) Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)
11) A large federal budget deficit has an adverse effect on the economy. (83%)
12) A minimum wage increases unemployment among young and unskilled workers. (79%)
13) The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
14) Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)
TW: Carbon taxation is the answer!!
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