Mankiw's Economic Agenda

Greg Mankiw ponders what would happen if candidates pandered to economists. The results lead to an agenda that is about as popular as itchy algae. Sign me up however.


SUPPORT FREE TRADE Economists are nearly unanimous in their support of an unfettered system of world trade. Here, Senator Obama lags behind Senator McCain. Senator Obama’s bad-mouthing of Nafta and his opposition to free-trade pacts with Colombia and South Korea make most economists cringe.

Many economists would go even further than Senator McCain has suggested by, for example, repealing antidumping laws. The ostensible purpose of these laws is to prevent foreign companies from selling in the United States at prices below fair value, but the law’s notion of “fair” rarely makes sense. In practice, these laws are little more than an excuse for special interests to shield themselves from competition.

OPPOSE FARM SUBSIDIES Economists like free markets, a principle that applies to agriculture as much as any good or service. Again, Senator McCain has the lead. Senator Obama’s endorsement of the recent $300 billion farm bill, his support for domestic ethanol subsidies and his opposition to imported sugar ethanol may bring votes from farmers, but economists view these policies as a burden on taxpayers and consumers.

LEAVE OIL COMPANIES AND SPECULATORS ALONE With the stunning rise in oil prices, both presidential candidates have been tempted to demonize market participants. Senator McCain has complained about the “obscene profits” of oil companies and called for a “thorough and complete investigation of speculators.” By contrast, most economists see nothing more sinister than the forces of global supply and demand at work. There is little benefit, and potentially much harm, in the candidates’ populist finger-pointing.

TAX THE USE OF ENERGY Senator Obama wins a point by opposing a summer gas tax holiday, a McCain proposal that economists greeted with derision. Most economists advocate increased taxes on energy products. The recent response of consumers to higher gas prices — including the increased use of mass transit and greater purchases of small cars, scooters, and even bicycles — demonstrates that the price mechanism is the most reliable way to reduce energy consumption and to curtail a variety of driving-related problems.

RAISE THE RETIREMENT AGE Like both presidential candidates, most economists recognize that Social Security faces a long-term problem. Senator Obama says he wants to fix it by extending the payroll tax to high incomes. Senator McCain opposes tax increases and wants the Social Security system to include personal accounts, but he has avoided proposing specific benefit cuts needed to make the numbers add up.

Some economists endorse Senator Obama’s tax hike, and some endorse Senator McCain’s personal accounts, but a much greater number would increase the age of eligibility for benefits. As Americans live longer, we need to redefine old age — a theme that should resonate with Mr. McCain, who is 71.

INVITE MORE SKILLED IMMIGRANTS As part of their embrace of globalization, economists are more open to immigration than is the general public. Admittedly, unskilled immigrants raise some potential problems: They may depress wages for Americans at the bottom of the economic ladder, exacerbating the rise in inequality, and they may overburden the social safety net. By contrast, skilled immigrants promote economic growth, especially among poorer Americans, and pay more in taxes than they get in government benefits. The more, the merrier.

On this issue, economists very clearly practice what they preach. Many of the best economists at top American universities were born abroad.

LIBERALIZE DRUG POLICY Many economists marry their support of economic freedom with a similar support of personal freedom. Drug policy is a case in point. A 2006 poll of professional economists asked whether the United States should legalize marijuana. Those in favor outnumbered those opposed more than three to one.