Out of Control Policy Blog

Clueless at Harvard

I'm not sure what is scarier: the fact the following passage was written by faculty members at Harvard, or that the faculty members were in the business school. Apparently, the Bush Administration's economic policies are so terrible, a four month transition between presidential administration's is too short. They want Bush to resign immediately after the election so that the new president (probably Obama) can get to work.

Writing in the Boston Globe, Richard Tedlow and David Ruben claim:

THE NEXT PRESIDENT will be elected on Nov. 4, but will not take office until Jan. 20. Normally, this lag time is not an issue. But with the financial system in meltdown, the "real" economy threatening to follow, and a feckless, lame-duck administration unable to lead, this yawning interval is a problem. If history is any guide, a very big problem.

What history is their guide? One data point: the Great Depression. Apparently, the Gret Depression really became GREAT because of the lag between Hoover to FDR transition.

Meanwhile, the federal government was paralyzed. Hoover and Roosevelt could not agree on a joint course of action. The economy continued its historic plunge, and ever more Americans lost not only their incomes but their hope. However, bold responses such as a national banking holiday - not to mention the psychological boost of an inspiring new leader declaring that "the only thing we have to fear is fear itself" - would have to wait for March.

So, to solve this, Bush should do the noble thing and take their advice and resign:

But there is a way out - if our political leaders are smart, courageous, and public-spirited enough to take it.

Assume that Barack Obama wins the election, as polls show is increasingly likely. The following day, Vice President Cheney should be prevailed upon to resign. Using his powers to designate a successor under the 25th Amendment, President Bush should then appoint, and Congress should confirm, Obama as vice president (just as Richard Nixon appointed Gerald Ford vice president in 1973 when Spiro Agnew resigned). Bush himself should then resign, elevating Obama to the presidency - as Ford became president when Nixon resigned. Obama should then appoint Joe Biden as vice president.

The presumptiousness of this position is truly astounding. It doesn't seem to matter that the economy is no where close to a depression. A recession? Probably, but even this is not certain. A depression? Hardly. Apparently, these Harvard business professors have figured something out that most professional economists haven't. (At least not enough to come close to a consensus.)

But, this isn't the worst of it, in my view. The second part of this analysis is the hubris of thinking they have, or Obama has, the plan to right the economic ship. The economy is far more complex and diverse now than in 1932, yet there is no acknowledgement about how this complexity alters our policy choices, let alone our ability to influence the macroeconomy.

If anything, the huge swings in the stock market over the past three weeks should send a cautionary signal to the macroeconomists, not embolden their plans to federally manage the economy.

Samuel Staley is Research Fellow


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