I am not a fan of Chicago economist Robert Lucas, not least because he defends Eugene Fama’s “efficient-markets hypothesis”, but this part of a recent interview touched me.
Mr. Lucas describes his parents as intelligent, reading people, neither of whom finished college—he suspects the Great Depression had something to do with it. “They got into left-wing politics in the ’30s, not really to do anything about it, but to talk about. That was our background—me and my siblings—relative to our neighbors and relatives, who were all Republicans.” In a community not noted for its diversity, his parents were especially committed to civil rights, his mother giving talks on the subject.
I ask about a report that he voted for Barack Obama in 2008, supposedly only the second time he had voted for a Democrat for president. “Yeah, I did. My parents are dead for a long time, but my sister says, ‘You have to vote for Obama, for what it would have meant for Mom and Dad.’ I felt that too. It’s a huge thing. This [history of racism] has been the worst blot on this country. All of a sudden this charming, intelligent guy just blows it away. It was great.”
A complementary consideration was John McCain’s inability to say anything cogent about the financial crisis then engulfing the nation. “He didn’t have a clue about the economy. I just assumed the guy [Obama] could do it. I thought he was going to be more Clinton-like in his economics and politics. I was caught by surprise by how far left the guy is ….”
Holman W. Jenkins, Jr., “Chicago Economics on Trial“, Wall Street Journal, 24 September 2011.
Robert Lucas (born 1937) was awarded the Nobel Prize in economics in 1995 “for having developed and applied the hypothesis of rational expectations, and thereby having transformed macroeconomic analysis and deepened our understanding of economic policy”. I agree that Lucas transformed macroeconomic analysis, but do not think it was for the better.
Lucas approves of Fed Chairman Ben Bernanke’s efforts to prop up the economy and does not find fault with President Obama’s first stimulus plan: “It’s not an inappropriate thing in a recession to push money out there and trying to keep spending from falling too much, and we did that.” Lucas thinks that Obama should now move away from temporary spending increases and tax cuts, and focus instead on permanent reduction of taxes on capital. Lucas assumes that low taxes on the income of capitalists will encourage them to invest in plant and equipment, and eventually to hire more workers.
The interview appears to be ungated. The link worked for me, and I do not subscribe to the WSJ.
HT Greg Mankiw.
[...] Mark Thoma, here is a European response to the Wall Street Journal‘s weekend interview of Nobel Laureate Robert Lucas. When he [Lucas] is asked about Europe, he talks about the cost of high taxes. From the interview: [...]