Pubdate: Sun, 13 Jul 2008
Source: New York Times (NY)
Copyright: 2008 The New York Times Company
Contact:  http://www.nytimes.com/
Details: http://www.mapinc.org/media/298
Author: N. Gregory Mankiw
Note: N. Gregory Mankiw is a professor of economics at Harvard. He 
was an adviser to President Bush and advised Mitt Romney in his 
campaign for the Republican presidential nomination.
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WHAT IF THE CANDIDATES PANDERED TO ECONOMISTS?

IN the months to come, John McCain and Barack Obama will be vying for 
the support of various voting blocs. It is safe to say, however, that 
one group won't get much attention: economists.

The American Economic Association represents only a small fraction of 
1 percent of the electorate. In every election season, we economists 
expect to be largely ignored, and, unlike many of our other 
forecasts, that one often turns out to be right.

But suppose it were otherwise. Imagine that those running for office 
tailored their economic positions to attract the experts in the 
field. What would it take to put the nation's economists solidly 
behind a candidate?

On many issues, from universal health insurance to increased taxes on 
the rich, economists do not speak with a single voice. But on some 
issues we do. Here is an eight-plank platform designed to attract a 
majority of economists. It is based on discussions I have had with my 
colleagues -- call them focus groups, if you'd like -- and polls of 
my profession:

Support Free Trade

Economists are nearly unanimous in their support of an unfettered 
system of world trade. Here, Senator Obama lags behind Senator 
McCain. Senator Obama's bad-mouthing of Nafta and his opposition to 
free-trade pacts with Colombia and South Korea make most economists cringe.

Many economists would go even further than Senator McCain has 
suggested by, for example, repealing antidumping laws. The ostensible 
purpose of these laws is to prevent foreign companies from selling in 
the United States at prices below fair value, but the law's notion of 
"fair" rarely makes sense. In practice, these laws are little more 
than an excuse for special interests to shield themselves from competition.

Oppose Farm Subsidies

Economists like free markets, a principle that applies to agriculture 
as much as any good or service. Again, Senator McCain has the lead. 
Senator Obama's endorsement of the recent $300 billion farm bill, his 
support for domestic ethanol subsidies and his opposition to imported 
sugar ethanol may bring votes from farmers, but economists view these 
policies as a burden on taxpayers and consumers.

Leave Oil Companies and Speculators Alone

With the stunning rise in oil prices, both presidential candidates 
have been tempted to demonize market participants. Senator McCain has 
complained about the "obscene profits" of oil companies and called 
for a "thorough and complete investigation of speculators." By 
contrast, most economists see nothing more sinister than the forces 
of global supply and demand at work. There is little benefit, and 
potentially much harm, in the candidates' populist finger-pointing.

Tax the Use of Energy

Senator Obama wins a point by opposing a summer gas tax holiday, a 
McCain proposal that economists greeted with derision. Most 
economists advocate increased taxes on energy products. The recent 
response of consumers to higher gas prices -- including the increased 
use of mass transit and greater purchases of small cars, scooters, 
and even bicycles -- demonstrates that the price mechanism is the 
most reliable way to reduce energy consumption and to curtail a 
variety of driving-related problems.

Raise the Retirement Age

Like both presidential candidates, most economists recognize that 
Social Security faces a long-term problem. Senator Obama says he 
wants to fix it by extending the payroll tax to high incomes. Senator 
McCain opposes tax increases and wants the Social Security system to 
include personal accounts, but he has avoided proposing specific 
benefit cuts needed to make the numbers add up.

Some economists endorse Senator Obama's tax hike, and some endorse 
Senator McCain's personal accounts, but a much greater number would 
increase the age of eligibility for benefits. As Americans live 
longer, we need to redefine old age -- a theme that should resonate 
with Mr. McCain, who is 71.

Invite More Skilled Immigrants

As part of their embrace of globalization, economists are more open 
to immigration than is the general public. Admittedly, unskilled 
immigrants raise some potential problems: They may depress wages for 
Americans at the bottom of the economic ladder, exacerbating the rise 
in inequality, and they may overburden the social safety net. By 
contrast, skilled immigrants promote economic growth, especially 
among poorer Americans, and pay more in taxes than they get in 
government benefits. The more, the merrier.

On this issue, economists very clearly practice what they preach. 
Many of the best economists at top American universities were born abroad.

Liberalize Drug Policy

Many economists marry their support of economic freedom with a 
similar support of personal freedom. Drug policy is a case in point. 
A 2006 poll of professional economists asked whether the United 
States should legalize marijuana. Those in favor outnumbered those 
opposed more than three to one.

Raise Funds for Economic Research

The government subsidizes economic research through an arm of the 
National Science Foundation. The amount of money is relatively small 
- -- measured in the millions, not billions -- and spending has been 
about flat in inflation-adjusted terms over the last decade. If 
Senator McCain or Senator Obama wants to endear himself to 
economists, there is no easier way than by promising an extra few 
million dollars to improve our understanding of how the economy works.

You might view this policy as nothing more than a way to buy a few 
votes. Perhaps you view economists as mere mortals, as tempted as 
anyone else by special interests. Maybe you would regard more funding 
for economic research as not very different from the billions thrown 
every year at farmers.

If you are that cynical, I won't try to dissuade you.
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MAP posted-by: Richard Lake