Economic abstractions make poor party conversation. Movie buddies don’t want to hear how demand policies and supply chain trade asymmetries create liquidity traps. Economists consider markets a reasonably fair game, but most people think they’re rigged or unfathomable. So when my son took a high school economics class, I felt lucky, finally able to show off new knowledge. I took to reading the Economist in the kitchen. That’s how he ended up reading “Taxing the Rich”, the Economist magazine’s November 16, 2011 cover story, over my shoulder. We reached the article’s conclusion, which states “a 1% tax increase causes a 3% drop in GDP.” He asked me “is that true?”. I was stumped. The Economist was quoting research by Christina and David Romer, reliable centrist economists. Yet common sense spoke louder: a 3% GDP drop was depression-level, a 1% tax hike incidental. I told him I’d look into it.It turns out the Economist, that dignified weekly, misrepresented the Romer’s study, to a US circulation of 700,000 – and with presidential campaigns that turn on so many voters’ tax opinions soon underway. The Romer’s paper, online at “Macroeconomic Effects of Tax Changes,” claims a tax change equivalent to 1% of GDP causes a cumulative three year 3% GDP change in the opposite direction (in limited situations). To change tax revenue enough to reach 1% GDP requires everyone’s rate goes up 8% or more.
For example, the 1981 big tax cut’s first phase lowered top rates from 70% to 50%, and other rates fell 5 to 10%, too. That tax revenue loss was equivalent to about 1% of the US GDP. The Romers claim a tax hike of this scale causes GDP to drop about 1% to 1.5% for three years. But not, they add, if the taxes reduce a deficit, enable increased spending, or counter recessions. What does count? Only tax increases for purely philosophical reasons. Is there an economic philosophy that recommends raising tax rates by 10% or 20% to boost the economy?
To my query, the Economist article’s editor admitted, at most, minor errors. He claimed that if his numbers erred, the Romers nevertheless implied that any tax increase could result in dramatic macroeconomic damage.
In fact, the Romers explained their result with unusual logic, which let this mischievous editor blow readers into an economic Bermuda Triangle. U.S. post-war tax cuts inversely correlate (trend together in mirror opposite) with GDP growth. This isn’t a surprise, if you remember how statistics work. GDP consistently trended up over the last 60 years, while in that period taxes started exceedingly high and dropped periodically lower. It’s like saying ski injuries correlate with going down a mountain. Occasional recessions reduced GDP briefly, and occasionally taxes increased. But these don’t correlate.
So how do the Romers claim tax increases cause GDP to fall? Tax cuts occurred while GDP grew, while there were few tax hikes to analyze. It would be like finding lots of big elephants killed for ivory tusks, in a world with few small elephants, but lots of big ones. Even if hunters aren’t picky, statistical confidence supports the idea that they target big elephants.
Now comes the funny logic, called counterfactual: if A causes B, then not-A causes not-B. If big elephants attract hunters, then in a counterfactual world of small and big elephants, small ones get ignored. Since tax cuts seem to go with rising GDP… then in a world where taxes got raised a lot (the counterfactual world) … tax hikes would go with falling GDP.
Correlation isn’t causation. Tax cuts and GDP inversely correlate, which means they trend together in opposite directions. But do tax cuts cause this? What if aging voters demand lower taxes, and technology change grows the economy? Aging does not improve technology. If technology change stops, the aging population won’t get younger. Or maybe GDP causes tax policy, but taxes don’t change GDP. Larger, better educated populations grow the economy. As GDP increases and these voters get wealthier, they elect politicians to lower taxes. If GDP falls, voters get poorer, and they may want higher taxes. Thus GDP may cause tax change, not the other way around.
Since most tax changes since 1947 have been decreases, and most GDP changes increases, the Romers conclude that whatever direction taxes move in, GDP goes in the opposite direction. They deduce that after a tax hike equivalent to 1% of GDP, over the next three years a cumulative 3% GDP decrease will occur. Yet between 1947 and 2008, there was never a three year period that had a negative GDP change, much less minus 3%!
Do the Romers really buy this logic? Or were they up to something else? Economists in high political places fall into categories, priests and pragmatists. G. W. Bush’s chief economist, Glenn Hubbard, is a priest. Larry Summers, who served Clinton and Obama, is another.
Though Summers insists he flouts theory if facts don’t agree, his research career moved from hard-nosed empiricism to “don’t worry, be happy” neoclassical assumptions. In 1981 he found 80% of U.S. capital accumulates through family transfers. With implications from tax policy to African-American income stagnation, it was very unpopular. Summers shifted to using General Equilibrium theory, and started to focus to the stock market. He became a Robert Rubin acolyte, devoted to “probabilistic decision-making” theory, not grimy facts. During the Asian financial crisis, and Glass-Steagall’s repeal (the law that prevented FDIC-insured bank accounts from being used by investment banks), Summers and Rubin preached to legislators until they converted to globalization’s dogma.
Pragmatists include Janet Yellen, who served Clinton, and Douglas Holtz-Eakman, under Bush. Yellen describes herself as a “nonideological pragmatist,” and many observers concur. Holtz-Eakman won recognition for pragmatism and honesty running the Congressional Budget Office. The Romers are pragmatists, too. Boston Globe’s headline on Christina Romer’s nomination was “Depression Scholar Has A Reputation For Pragmatism” (the Globe must have thought she was a psychologist.)
Priests and pragmatists share a dislike for fringe economists, right wing or left. G.H.W. Bush, the father, trained at Yale in an era when Keynes was revered. In 1980 he blurted out that his Republican primary challenger, Ronald Reagan, believed in voodoo economics. Bush thought the nation’s economic policies should be directed by high priests of economic orthodoxy, not anti-tax fundamentalists or deregulatory witch-doctors. He got cursed by the ghost of Reagonomics 12 years later, when supply-side cultists let him lose the 1992 election.
While the Romers are reformists, Bush 41 adhered to economic orthodoxy. He was so obedient, he let economic advisers dictate policy. In 1991 he addressed the deficit as they recommended, with tax hikes and spending cuts. Afterward, his economists told him to “laissez faire,” which literally translates as “let it be,” because the 1992 recession would be temporary. James Cargill, Bill Clinton’s campaign director, pounced. Clinton wouldn’t “take his eye off the ball” like Bush. Nothing else was as important as “the economy, stupid.” This was Clinton pragmatism, taken as craftiness. It defines the Romers, too.
According to William James, pragmatists are like curious Protestants, while people like Hubbard and Summers have a “papal mind”, obedient to dogma that’s imbued with authority. Among economists, Mount Olympus is the Chicago School, its Nobel laureates pontificating laws. The Romers went to MIT, where tradition is neither patrician nor reactionary. Charles S. Pierce, the great pragmatist philosopher, held that scientific models, though logically conceived, should not dictate public policy. Rather than obey scientist’s ideas, legislators should pay attention to evidence. It was better to let practical experience guide decisions that impact lots of people, until scientific understanding was so thoroughly demonstrated it became common-sense.
During a policy talk, Christina Romer said the Federal Reserve’s many staff economists do a fine job collecting and analyzing data. But the Federal Open Market Committee, which sets monetary policy and interest rates, is more than an arbiter of staff reports. No staff analysis is “necessarily objectively right.” Policy, according to the pragmatic Romer, is “a value judgment that should be made by people who have been appointed and confirmed through the democratic process.”
Christina Romer knows the confirmation process is far from democratic. She also knows the Fed’s economists strengths and weaknesses. She and her husband examined Federal Reserve staff economists forecasting accuracy between 1981 and 2001. With their usual diplomacy, the Romers lauded staff for predicting inflation. Staff also anticipated unemployment with reasonable success. The Romer study’s take-away: Fed staff economists are better economic predictors than their bosses on the Governing Board. But the Romers also report staff economists do an abysmal job of predicting GDP, booms and busts that the public, policy makers, and investors worry about. For the period 1991 to 2001, one did better to assume the opposite of what staff predicted about this.
Since inflation and unemployment between 1981 and 2001 were low, except in the beginning, accurate prediction said next year will be like this one. What really matters is predicting upheavals and downturns, warning of danger, so the Fed and policy makers can prevent economic damage. The Romers don’t emphasize it, but Fed staff were dismal at this.
When they conclude Federal Reserve board should leave forecasting inflation and unemployment to its staff (at least when both are low), they open the door to the Board’s forecasting of more serious stuff. “You’re confronted with a supply shock. Do you take it on inflation? Do you take it on output?” These decisions are not what staff economists can handle. “Someone’s got to make the judgment call,” the Romers write, and that should be board members, not staff. This is the pragmatic approach with unproven science theory. Christina Romer can’t afford to be labeled heterodox, an economist who rejects mainstream theory. It would condemn her to irrelevance, and prohibit high-level government roles. Instead, she commends economic approaches that correlate with reality, and sticks to facts when they don’t.
As the “papal mind” has an attitude, so does the pragmatist — for whom it’s outcome that matters, even if the outcome is process. Christina Romer’s ultimate goal is to affect the Federal Reserve, and as a pragmatist her work is its consequences. To ignore Fed staff predictions that are probably wrong, she recommends board members slavishly follow all accurate staff predictions. It’s counterfactual logic, again: if Fed Governors adhere to staff when accurate, they should ignore staff when not.
But my son distrusts my assumptions about other people’s hidden strategies. If the Romers really craft papers for a practical purpose, and not just for economic debates, there must be a strong reason why. For example, how bad can the the Fed’s staff really be, at predicting the economy’s future growth or recession?
Each Federal Reserve regional bank has 20 or more macroeconomists who predict future trends. I reviewed eight such banks, over 200 economic studies from the previous 12 years, and only two intimated economic danger lay in the future. None predicted a Great Recession outright. Much research dismissed risks of economic slow-down. As one claimed, “little evidence supports the existence of a national home price bubble.” And the great majority made their predictions using a single theory, “General Equilibrium”.
As if the exception proves the rule, a single “General Equilibrium” study almost provoked concern among regulators. A 2005 Fed paper determined financial firms were overvalued by 25%. But a regulator complained. The “agencies that implement measures” to prevent financial speculation found the theoretical jargon impenetrable, and couldn’t use it.
The two studies that almost predicted the financial melt-down used less doctrinaire approaches. The first was an accurate demographic model of national economies. It plotted the past, but made no prediction. Baby Boomers drove US economic dynamics for a quarter century. They flooded companies as inexperienced workers in the 1970s, to stall productivity growth. They gained know-how in the 1980s, inherited Greatest Generation wealth that spawned entrepreneurs, and by the late 1990s were peak consumers, eager for credit. Trends like these occurred in other countries, with comparable results. But Baby Boomers now retire, with too few Generation Xers to fill in, and Generation Y inexperienced. Inheritances from the Greatest Generation attenuate, while Boomer capital is tied in retirement. Productivity falters, and capital isn’t passing to entrepreneurial hands. We’re in the doldrums.
The second study used economic history, along the lines Christina Romer has, to review past economic crises. One resonated with current conditions. Ellis Tallman, at the Atlanta Fed, found Panic of 1907 was caused by unregulated trusts, whose hidden liabilities exposed banks unaware of wide-spread risk. Likewise, by 2007 unregulated firms disguised over-leveraged balance sheets in a web of mainstream bank commitments. When risk surfaced in 1907, J.P. Morgan, serving as a central bank, determined which banks were too big to fail. The U.S. economy fell, recovered anemically for a few years, then fell again. Tallman determined this was the type of crisis to worry about, after 1990s financial deregulation.
That two very different approaches had similar results may be coincidence, or beg more research. They may even represent consilience, where similar results from different orientations counts as strong evidence.
Fed economists ignored both studies. Demographics and most history deviate from current economic thought. Population studies don’t include price, interest rate, or savings. And unless the economic history concerns the Great Depression, it’s almost irrelevant. So many high-level economists cut their teeth reanalyzing the Great Depression – from Milton Friedman to Ben Bernanke –it’s now the only history graduate economists usually study. The Panic of 1907 is a barely a footnote, even in Friedman’s multi-century opus, A Monetary History of the United States, the Monetarist bible.
Christina Romer made her reputation by reexamining the Great Depression, too. But unlike Monetarists, for whom money supply trumps all, or Keynesians, who emphasize employment and consumption, Romer surveyed all through the lens of historical psychology. The Great Depression was depressing; people’s attitudes slumped, sinking expectations, inhibiting investment, credit, and enterprise. Instead of being baptized in a dogmatic creed by a Great Depression genesis story (it’s the origin of modern macroeconomics, after all), she retained a flexible voice.
The second Clinton and both G.W. Bush administrations favored “papal minded” economists. Perhaps no one exemplifies their perspective better than a towering figure of the late 1990s, ex-Senator Phil Gramm. He once crowed “Wall Street … to me that’s a holy place.” Originally an economics professor who preferred obtuse libertarians to Texas A&M’s standard curriculum, Gramm switched to Texas politics in 1978, at the time a Democratic affair. He switched parties after Reagan’s 1984 landslide, and soon became the Senate Banking Committee’s chairman. His doctrinaire beliefs led one Speaker of the House to quip that Gramm would have sent Moses packing, and substituted his own commandments, so religiously did he hold economic beliefs. Politics makes strange bedfellows, but the unity of Democrats Rubin and Summers, and right-wing Republicans Greenspan and Gramm, who together deregulated financial institutions, demonstrates how “papal minds” think alike.
The Romers’ paper on post-war taxes and GDP, in this light, is like Galileo’s “Dialogue”. That scientist’s 16th century book puts both Catholic dogma and solar science in the mouths of his characters, a publicity stunt to prevent his own Inquisition. Galileo’s fictitious religious proponent came off as a simpleton, and the scientist barely escaped the rack. The Romers’ “Macroeconomic Effects of Tax Changes,” does better. It’s a factual, historical document, ideal for “papal minds”. Yet it turns on a speculative notion fit only as an academic exercise. Nowhere do the Romers claim their study is anything else, yet its data rich overview of the past 60 years simulated something ready for prime-time politics. Those that control confirmation are only human, ready to applaud something that validates their own opinions. Broadcast by the Economist helped.
Though not an Inquisition, the US Senate has a confirmation gauntlet high level economic advisers must get through. A year after her tax study, President Obama nominated Christina Romer as Chief Economic Adviser. She survived the gauntlet shielded by her study’s zombie-like conclusions. The committee’s ranking Republican, Senator Richard Shelby, gave her a green light after Christina Romer agreed she would impress on President Obama the results of her research on taxes. The Congressional Record recorded their interaction.
Senator Shelby:”Professor Romer … You note that tax increases can have, quoting your words, ‘Have a large, rapid, and highly statistically significant negative effect on output.’ Those are your words … I hope you continue to voice `these opinions when giving economic advice to the President. And I agree with you on that basic philosophy. Have you changed any? Do you still believe that? Or have you compromised those principles?
Ms. Romer: “I absolutely stand by them.”
So I now understand why the Economist story appeared, but my son found the explanation unsatisfactory. The damage caused by the Romers’ study, which persuaded casual readers that tax hikes slow the economy, made Christina’s confirmation hardly worthwhile. Why should progress always be two steps forward, one step back?
I went back. Who are these enemies, so necessary for moderate economists to get past?
Today’s Senators treat nominees like unwanted children. Judges are most abused. In 2010 Obama nominated Edward DuMont for the Federal Circuit. DuMont is gay, but right-wing law professor Eugene Volokh said “Ed won’t run into the usual buzzsaw”, because of his “apolitical, quality factors.” The Judiciary Committee never even scheduled Dumont a hearing. The Senate confirmed Gina Groh as West Virginia’s Northern District Judge by the overwhelming vote of 95-2 … after letting her wait ten months. Walter Fitzgerald became California’s Central District Judge, 91-6 … after eight.
Once confirmed, judges may serve for life. Economists sit on the Federal Reserve for 14 years; advisers serve administrations for only two or three. The Senate Banking Committee uses delay tactics, but it also plays hardball. When the Obama administration entered office it faced an unfolding economic crisis. Someone on the Committee delayed White House Council of Economic Advisers confirmations for a month, using a “secret hold”. Maybe it was politics; G.W. Bush’s CEA nominees stalled in hearings for a year, apparently in retaliation for interminable holds placed on Clinton-era nominees. Or maybe it was a warning.
Wall Street has a dominant role in today’s economy and in political finance. Investment institutions use the Banking Committee as their fight club. They pour money to Committee members for special interests. Often insurance companies face off against commercial banks, hedge funds against investment banks, mortgage lenders against private equity. Senators on the committee reap the benefits.
When too-big-to-fail institutions all agree, the heavens move. This was the lesson of the repeal of Glass-Steagall. Commercial banks liked how it kept investment banks and insurers from using ordinary deposits. Wall Street hated it, for the same reason. Economist Thomas Stratmann showed how one side would lobby the Senate Banking Committee, and members would go through the motions of changing law. Then the other side would lobby and members would change their position. Only when Sandy Weil’s Travelers Insurance bought the equally huge, but perennially troubled Citibank, did Glass-Steagall fall. With the biggest insurance company and commercial bank united, lobbying went in the same direction.
The same Committee that deregulated finance, which arguably helped cause 2008’s financial chaos, confirms economists for top jobs in the administration and the Federal Reserve. The holds and delays Senators cause, their votes or damning aspersions that block confirmations, are due to lobby influence. Yet lobbyists crowding Senate hallways are themselves hired guns for companies and wealthy power brokers. Their strings get pulled in boardrooms, during golf or in private jets. The economist who yearns to serve power has to send signals to this hidden audience.
According to Charles Ferguson, many top-flight economists have been “cognitively captured” by right-wing ideas. Glenn Hubbard, G.W. Bush’s chief economists and current Columbia University Business School Dean, got vast sums from financial firms for advice tailored to their interests. “Cognitive capture” seems apt for his example, as if Professor Hubbard’s mind is a prisoner of finance interests, in chains of money.
Christina Romer is a trooper. She crossed the withering fire of the Senate committee’s gauntlet protected by an academic publication. Decisions may be bought by the highest bidder, but a legislator has to administer that decision in public contests. If an economist nominee is to be stopped at committee, so it must be, but the Senator pleads to referees of acceptable opinion that he or she deserved it. Romer, because of her tax research, was hard to bring down.
The committee’s current enforcer is its ranking Republican, Senator Richard Shelby. If an economist’s research skews anywhere but right-wing, Shelby calls for a yellow card of objection. If an economist supports center-left opinion, Shelby reaches for his red card of ejection. Then his Senate Republican colleagues rally to block a floor vote, and kill the nomination. No prisoners taken.
In 2010 Harvard’s Peter Diamond won a Nobel Prize for his economic research on unemployment. That year he was also nominated by President Obama to the Federal Reserve’s board. Diamond apparently frightened Wall Street, as he focused on labor rather than capital. His research can’t be twisted to appear pro-industry. Through Shelby, financial firms signaled to Diamond and the administration that he was unacceptable. Shelby announced the economist was “an old-fashioned, big government Keynesian,” who wanted to regulate financial markets. The word Keynes is the red card.
Diamond withdrew his nomination in a New York Times Op-Ed article. “Don’t worry about me,” he wrote, since he basked in a Nobel laureate’s glow. “But we should all worry about how distorted the confirmation process has become,” as Congress allows Wall Street to “politicize monetary policy and to limit the Fed’s ability to regulate financial firms.”
My son isn’t convinced. Republicans can filibuster a labor economist, but why did the Romers go to the extreme of pandering to anti-tax radicals? What did other progressive economists do, say during the Clinton administration?
The Romer’s Berkeley colleague Janet Yellen served as chair of President Clinton’s Council of Economic Advisers. She studied “efficiency wage theory,” which says unemployment is necessary, to keep workers from “shirking”. While it helps so-called “New Keynesians” reintegrate with the “Neoclassical” mainstream, a story that interests only academics, “efficiency wage theory” also lets liberal economists sound conservative.
Joseph Stiglitz, Nobel-prize gadfly and critic of economic orthodoxy, developed “efficiency wage theory”. Long before serving President Clinton or the World Bank as their Chief Economists, Stiglitz defended unions getting blamed for recession in Reagan’s first term. According to neoclassical economics, wages should have fallen so businesses would hire again (four workers for the price of three). Stiglitz said “efficiency wages” don’t fall enough to “clear the market,” because employers are afraid of sneaky workers. Unless wages and unemployment stay high, workers slack off. It wasn’t unions’ fault. But that does seem to condemn workers.
Little evidence supports efficiency wage logic. But in economics’ rarefied realm, that doesn’t falsify anything. In 1994 Stiglitz was easily confirmed by a Democrat controlled Senate, his tough-minded theories just what centrists wanted to hear. Once in office, Stiglitz was an advocate for progressive policies.
Since then times have changed, and “efficiency wages” don’t satisfy. Senator Shelby faces a fat carrot and fears a big stick that make him much tougher on nominees. The stick was manifested in his home state of Alabama in 2004. The carrot was demonstrated by his banking committee predecessor, Senator Gramm, in 2002.
Between 2005 and 2010, Shelby got more money from the finance industry than any other committee member. Finance companies, particularly pay-day loan firms, invest in a distant Alabama Senator because they can whip ass if necessary. ‘Bama politics are one-sided and mean. National Democrats have no chance of turning the state blue, but they serve an example. The state’s last Democrat governor, Don Siegelman, was elected in 1999. In 2002 the Bush administration’s political director, Karl Rove, targeted him as too charismatic. In 2003 Siegelman lost reelection by 3,000 votes, the result of a single, rural county voting machine counted by only Republican officials.
But Siegelman remained a popular Democrat. So in 2004 Rove arranged with the Justice Department to indict him for corruption. A court found Siegelman innocent. A year later Rove initiated a second, secret federal case, channeled to federal judge Mark Fuller in Montgomery. Bush Jr. had nominated Fuller to the bench in 2002, knowing Fuller “hated” Siegelman and would “hang” him in any trial. Governor Siegelman had investigated a defense contractor whose hidden owner was Mark Fuller.
Three weeks before the 2006 governor’s election, in which Siegelman ran, Fuller sentenced him to seven years in prison. Siegelman’s crime: awarding a non-paying state hospital board seat to a competent, experienced person who was also a campaign donor. During the trial, Judge Fuller’s defense company got a secret $178 million no-bid federal contract. The married judge was having sex with a court staffer at night, while blasting Siegelman’s ethics during the day. Siegelman lost the election in prison, and currently serves out the final years of his full sentence, a broken man.
It must impress Shelby that in his state, a reasonable politician can be crushed by people thoroughly corrupted by important interests. If Shelby doesn’t follow the piper, he too can be sacrificed. If he plays ball, outside interests provide a wealth spigot.
But the golden carrot that encourages a Senator like Shelby to fire at economists like Chistina Romer glitters more than lobbyist money. Large financial institutions wield more than contribution influence. They offer legislators future careers with easy wealth.
In 2002 Phil Gramm turned the Banking Committee over to Shelby, left the Senate, and became Vice Chairman of the Investment Bank division of UBS, the Swiss Bank giant. His undisclosed income soared into the stratosphere. Though Gramm may have been offered a quid-pro-quo from UBS as a Senator, it wasn’t necessary. Today’s Senators understand signals, busy as they are intercepting nominee signals to lobby groups, and transmitting others back. As UBS lobbyists met then-Senator Gramm, perhaps they dropped hints about “an interesting business model in the Caribbean,” that would “protect American entrepreneurs’ hard-earned wealth.” Maybe a lobbyist asked Gramm “to provide guidance to UBS” in retirement. Even if secretly taped, no egregious acts of bribery occurred. Gramm’s response could be equally prosaic.
As Gramm feasted, Shelby watched. He had followed Gramm’s trajectory: a Dixicrat who got Republican religion after a GOP electoral sweep, able to subdue populism by attacking liberal culture, forging an alliance of suburban and rural whites with the wealthy. Both frame finance support as opposition to big government.
Gramm, called Dr. No by Senate colleagues because he always blocked finance regulations, became Goldfinger in retirement. His UBS division profited by setting up hidden fortresses for Americans to hide wealth from taxes. Like most of Bond’s enemies, Gramm had an evil plot that flourished. When still in the Senate, Gramm blocked a law that cracked down on offshore tax havens. After moving to UBS, its offshore tax schemes blossomed.
They appeared on Justice Department radars in two years. When Democrat Carl Levin became Permanent Subcommittee on Investigations chair in 2008, UBS’s crimes went public. Levin apologized for “spinning James Bond-like tales of secret codes, smuggled diamonds, and sudden betrayals.” But the “offshore tax haven world reads like the stuff of a novel. It involves billions of dollars in hidden assets, secret documents, clandestine meetings, and scheming,” depriving the US Treasury of $100 billion annually.
Gramm, now worth many millions, escaped unscathed, ready for a sequel at UBS. Does his apprentice Shelby wait his turn to become , in a sequel perhaps? If so, he’ll take down any silly economist who stands in the way.
So Christina Romer’s enemy is a bad guy, whom she vanquished with research that seemed to oppose taxes. When conservatives like Richard Posner criticize her confirmation, they sound like ‘s son, furious after dad botches yet another elaborate execution. This is also the evidence that made my son reconsider. James Bond, after all, gets hands dirty to get jobs done. He stooped into a confessional in “For Your Eyes Only,” just to get fancy equipment from master scientist Q. Bond mumbles, “I have sinned,” and Q quips “that’s putting it mildly.” But in the story’s grand game, 007 prevents nuclear war, the only thing that matters.
Pragmatic and papal minds have long been competing to advise leaders, some losing their heads. To paraphrase Humphrey Bogart, the problems of progressive economists don’t amount to a hill of beans compared to 15th or 17th century advisers. Henry VIII executed his inflexible Catholic adviser Thomas More in the 15th . Henry’s first daughter went Catholic in the 16th, and her adviser, Simon Renard, earned her the name “Bloody Mary” — for slaughtered Protestants, not vodka and tomato juice. Elizabeth came next, with adviser William Cecil, whose “Religious Settlement” restored peace and Protestantism. Cecil’s son advised James, the next monarch, and uncovered Catholic Guy Fawkes before he blew up Parliament. But then Charles took the throne, reverted to ecclesiastic advisers, and bad ones. By the 17th century they precipitated the English Civil Wars, which cost their lives and many more.
In the 21st century Christina Romer managed three steps forward when she authored Obama’s stimulus plan, against doctrinaire administration rivals like Larry Summers. The anti-tax study took two steps back, preemptively. It was a risk, but paid off. Had she not been nominated or confirmed, the Economist’s story would have been a bitter pill, though not quite a “Bloody Christina”.
This is something my son comprehends, analytically, if not in this gut. Youth idealism shouldn’t die easily, because it pushes humanity forward. But in messy democracy, humanity’s imperfection compels idealists to admire pragmatists, even those that pretend to kneel in a confessional, or before the Senate Banking Committee.