“If you think Bernanke did a great job tossing out a trillion dollars, why is it a bad idea for the executive to toss out a trillion dollars? 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.” Robert E. Lucas, The Wall Street Journal, September 24, 2011
One would expect such fallacious remarks to emanate from East Coast Nobel Prize winning economists such as Paul Krugman and Joseph Stiglitz. When the words pour out over the forked tongue of a Chicago, Freshwater economist like Bob Lucas, one knows that the disease has metastasized and is now spreading out of all control.
We’re all Keynesians now’ crowed Richard Nixon in 1968, just at the moment when the profession was waking up to the Keynesian fallacy. Well, it turns out that Tricky Dick was focused on the long term, rather than the short, and that he had Nobel Prize winner Robert Lucas firmly in his sights.
There may be some residual hope for Chicago Economics. Lucas has now turned 74 and has moved into retirement, at least from undergraduate teaching. So the minds of the young will not be exposed to the economic mis-perceptions that Helman W. Watkins Jr. met when he interviewed the Nobelist for his WSJ column. Unfortunately, there is yet another Benedict Arnold – in the form of Richard A. Posner – still wandering the hallowed corridors of that once great program. And it must be remembered that Barack Obama was allowed ten totally unproductive years in the Chicago Law School, learning from Judge and Senior Lecturer Richard Posner, while awaiting his opportunity for a Liberal-Democrat bid for the White House.
In any event, and for whatever reason, it turns out that Bob Lucas was an early advocate for Obamanomics:
“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.’ ” Holman W. Jenkins, Jr., ‘Chicago Economics on Trial’, The Wall Street Journal, September 24, 2011
Well, it was a momentous shift to the left for the United States. And President Obama really did help to blow the United States economy downwards on its free fall into Second World status. Just as Bob Lucas (and Richard Posner) have done their level best respectively to blow Chicago Economics and Chicago Law downwards from Freshwater to Saltwater status in one generation.
Let us hope and pray that Bob Lucas’s loss of focus is a monetary mis-perception that triggers just a real, Pareto-optimal economic cycle and not a permanent prisoners’ dilemma downshift in real economic performance.
If not, then there is a great deal of ruin in this particular Nobel Prize in Economics. And let us keep our fingers firmly crossed lest another Nobel Prize might be under consideration for the second Benedict Arnold on the Chicago faculty! Or even, once Barack Obama is ejected from the White House, for the newly-returned Third Man. After all it is the Swedish Academy that awards the Nobel Prize in Economics.
Tags: Barack Obama, from freshwater to saltwater in one generation, history of racism, joseph stiglitz, Keynesian economist Chicago economics in Keynesian free fall, nobel prize winners, Paul Krugman, Richard A. Posner, Robert Lucas, spend and spend-elect and elect