May
08
2013

Between Two Economists Lies the American Center

05cover-sfSpanWhere media define the "center" or the "middle" tells you a lot about the worldview they are promoting. The "center" doesn't usually indicate where most of the public is, but rather where elites have determined an appropriate middle between opposing arguments. Confusing the two concepts is common (and not an accident).

That confusion was one of the main problems with the New York Times Magazine cover story by Adam Davidson (5/5/13), the host of the public radio show Planet Money.

The concept here is to compare the economic advice from two of the most prominent economists who have worked at the highest levels of government and academia: Larry Summers and Glenn Hubbard.

For those who don't know them, Davidson gives some background: Summers has mostly advised Democrats, used to be  president of Harvard and currently works in the private sector, and writes columns. He apparently represents something like the "left" in Davidson's debate, though Davidson acknowledges that Summers is not actually held in high esteem by leftists, nor does he consider himself to be one.

Hubbard is a Republican, advised both Bushes and candidate Mitt Romney, and would have likely been Romney's Treasury Secretary. He is currently the dean of the Columbia Graduate School of Business. 

The divide between the two of them is fairly straightforward: Hubbard sees the country's main economic threat as the  runaway entitlement state. He recommends cutting taxes (mostly for the wealthy) and cutting benefits as the recipe for rebooting the American economy.  Summers thinks a more appropriate focus would be on growing the economy, which would require increased public spending on things like infrastructure in order to create more jobs.

As Davidson summarizes:

The space between their views roughly defines the American center.

But does it really? Hubbard's views are of the political right. And they come amidst plenty of controversy–which readers may have wanted to know more about.

Hubbard does a lot of work consulting for big financial institutions–relationships that came to light in the documentary Inside Job, when Hubbard testily objected to being asked questions about these obvious conflicts of interest. Filmmaker Charles Ferguson recounted the interview here, noting that Hubbard had written an op-ed arguing that the Bush tax cuts would not affect the budget surplus, and that he co-wrote a paper with the chief economist of Goldman Sachs about the beauty of derivatives capital markets.

As Rolling Stone's Matt Taibbi noted (12/20/12), "It was fair to ask how much Goldman's  'Global Markets Institute' had to pay one of the Ivy League's leading minds to endorse the giant daisy chains of credit default swaps and collateralized debt obligations that led to the crisis."  Taibbi also points out that Hubbard was an (extremely well-compensated) adviser to the disgraced mortgage company Countrywide.

So yeah, he's one side of the Times' two-sided debate over how to fix the economy. The other side is represented by someone who supports more spending to create jobs, but also believes that some cuts to so-called "entitlements" are necessary too;  "it is essential but insufficient," as Summers puts it.

Is the middle really between those two points of view? Hubbard wants to cut taxes, especially for the wealthy–even though polls show most people favor raising taxes on the wealthy.  Summers wants to spend money to create jobs–which, according to many polls, is a fairly popular idea. But he also supports cutting Social Security and Medicare spending, which most people do not support. So this debate is not really an attempt to find the center in the sense of the ideas most people can agree on; it's about arbitrarily defining the center of debate as a consensus that includes ideas that are to the right of most Americans.

Davidson, in a closing bit, writes that he had "this little fantasy" that the two would agree to "some sort of grand compromise that both parties might at least consider."  Of course, that wasn't ever going to happen; indeed, one of the more baffling parts of the article is when Davidson spends too much time wondering how well-known economists could have such very different ideas about the world: "For two men who are so smart and analytical, neither could fully articulate how they came to understand their field in such fundamentally different ways."

A bigger problem is this tendency to treat elite economists as if they're impartial scientists, offering considered judgments based entirely on reason and evidence, and not based on their political views or their own self-interest. That becomes an even bigger problem when one decides that the "center" is what exists between two of them.

 

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About Peter Hart

Activism Director and and Co-producer of CounterSpinPeter Hart is the activism director at FAIR. He writes for FAIR's magazine Extra! and is also a co-host and producer of FAIR's syndicated radio show CounterSpin. He is the author of The Oh Really? Factor: Unspinning Fox News Channel's Bill O'Reilly (Seven Stories Press, 2003). Hart has been interviewed by a number of media outlets, including NBC Nightly News, Fox News Channel's O'Reilly Factor, the Los Angeles Times, Newsday and the Associated Press. He has also appeared on Showtime and in the movie Outfoxed. Follow Peter on Twitter at @peterfhart.