Wednesday, January 04, 2006

Good advice

N. Gregory Mankiw dispenses surprisingly frank and good economic advice:
#1: This year I will be straight about the budget mess. [...]

#2: This year I will be unequivocal in my support of free trade. I am going to stop bashing the Chinese for offering bargains to American consumers. I am going to ask the Bush administration to revoke the textile quotas so Americans will find it easier to clothe their families. I am going to vote to repeal the antidumping laws, which only protect powerful domestic industries from foreign competition. I am going to admit that unilateral disarmament in the trade wars would make the U.S. a richer nation.

#3: This year I will ask farmers to accept the free market. While I believe the government should provide a safety net for the truly needy, taxpayers shouldn't have to finance handouts to farmers, many of whom are wealthy. Farmers should meet the market test as much as anyone else. [...]

#4: This year I will admit that there are some good taxes. Everyone hates taxes, but the government needs to fund its operations, and some taxes can actually do some good in the process. I will tell the American people that a higher tax on gasoline is better at encouraging conservation than are heavy-handed CAFE regulations. [...] I will advocate a carbon tax as the best way to control global warming. [...]

#5: This year I will not be tempted to bash the Fed. [...] I know that the U.S. has an independent central bank for good reason. [...]

#6: This year I will vote to eliminate the penny. [...]

#7: This year I will be modest about what government can do. I know that economic prosperity comes not from government programs but from entrepreneurial inspiration. [...]
It's very hard to disagree with any of that (though the part about the penny is kind of...odd. My new hypothesis is that Mankiw tried to push reasonable economic policy as much as he could while he was in the Bush administration, but that the CEA no longer has any influence in the White House.

UPDATE:Brad Delong agrees:
I have no doubt that Greg made as strong a case within the Bush administration's councils for his seven points of advice that he felt that he could without losing all effectiveness. I would like to know why he appears to have had so little impact on policy...

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