Think of a stereotypical economist. That prompt most likely evoked an image similar to Alan Greenspan speaking what might as well be a foreign language (or for Tea Partiers, out-of-touch old men who have no real understanding of how business works). I had the privilege Monday of listening to Alan Krueger talk at the Institute for Policy Research and he was refreshingly straightforward and understanding of the implementation process for economic policy. The chairman of President Barack Obama’s Council of Economic Advisers admitted that he, like many economists, overlooks simplicity, and that learning to work in teams was perhaps the most important aspect of getting his policy passed. Nevertheless, his body of work (and believe me, his resume is impressive) underlies his nuanced understanding of how economies grow and, more importantly, his passion for making policy work for as many people as possible.
As a moderate conservative, I don’t always agree with some of the things Krueger says. For instance, he seemed to imply that the recovery has been caused in large part due to fiscal policies that he and some of his predecessors under the Obama administration have pushed through, while I am more inclined to give credit of the amelioration of economic conditions to Ben Bernanke and the easy monetary policy of the Federal Reserve. As a New York Times columnist, Krueger also proposed imposing a national 5-percent sales tax in two years’ time to push forward consumption and raise revenue to reduce the deficit. While there are very good reasons to lower the deficit — to reduce interest payments and lower bond rates, for instance — a quick “eye test” tells me that lowered economic activity is not worth the benefits of imposing the tax. Finally, and perhaps most significant to an economic discussion, he talks about a “wedge” between wages and production, implying that workers are compensated too little for their work. While the latter statement is certainly true, wages generally tend to track labor productivity (that is, the additional output that workers put in), with those with just a high school degree earning slightly less than their productivity and those with post-graduate degrees slightly more than their productivity. In my view (one certainly less experienced than his), the greatest driver of inequality has been the varied ability to take advantage of an increasingly globalized world and its associated changes. As a result, I believe in slightly different economic medicine than he does, such as temporary increases in capital gains taxes rather than income taxes on the highest class of income earners and a larger share of investment dollars from restructuring of the entitlement system.
Despite the differences, I enormously respect his intellectual and research ability, and if I decide that engineering isn’t for me and instead turn to public policy economics, a career half as decorated as his would be a wonderful accomplishment. Most importantly, I greatly admire his passion for opening up post-secondary education to the most disadvantaged students. Krueger and I share the conviction that a better-educated workforce is the key to improving our economic position and relieving income inequality. We both believe that this means more than just increased enrollment in four-year university programs, especially in the oft-mentioned STEM fields. It also means more accessible community colleges (and better support so that students graduate), stronger vocational programs and better coordination between various government job-training programs. As Krueger adroitly pointed out, as long as the returns to education stay strong, costs should be no issue to students and policy makers; rather, it is making sure that each and every dollar spent on education is spent wisely and in the right areas. I hope that whatever Krueger decides to do next, he continues to push our elected leaders for more education reform.
If Mitt Romney wins in November (and I hope he does), he would be wise to keep advisers like Krueger on his economic council, or at least on his email list. To be sure, Romney’s advisers include other economists that I have a lot of respect for, like John Taylor and Greg Mankiw. However, I would be sad to see Krueger go. I was pleasantly surprised by his conversation yesterday, and it is easy to see how his easygoing communication and intellectual brilliance has landed him the highest laurels in both academia and government. Perhaps his next move can be turning around the auto industry for a change.
Jan Jaro is a McCormick sophomore. He can be reached at [email protected]. If you would like to respond publicly to this column, email a Letter to the Editor to [email protected].
