That Must Be Required to Write an Economics Opinion in the WSJ
The Editorial and Opinion pages of the Wall Street Journal are graced (?) every couple of days by the writings of supposedly intelligent and highly educated Economists, all of whom set forth positions and recommendations that are in total contradiction to basic economic theory. Apparently to write an opinion column in the WSJ, an Economist does not need to sell one’s soul, but one does need to temporarily renounce all of their basic learning about economics.
Mr. Meltzer, a professor of public policy at the Tepper School, Carnegie Mellon University and a visiting scholar at the American Enterprise Institute, is the author of "A History of the Federal Reserve" (
, 2003 and 2009). University of Chicago Press
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Do They Know about
but from his writings one gets the impression he knows nothing at all about the field of economics.
The main effect would be a further devaluation of the dollar against competing currencies and gold, followed by a rise in the price of oil and other imports
No Mr. Meltzer, this is exactly what we do want. A weaker dollar will make
exports more competitive, and increasing exports is exactly what you say you want to happen later in your article. An increase in the price of imports will make domestic goods more competitive here in the U. S. That is a good thing. U. S.
Mr. Meltzer advocates policy that is exactly the opposite of what is needed.
Increased domestic saving and slow consumption growth will help the transition to an export-led economy by reducing foreign borrowing.
Low consumption is what has deprived the economy of economic growth. We need higher consumption, not lower. And even if there is higher savings, that in no way leads to an export boom, particular if the
has a strong dollar which is what you just recommended. U.S.
And for policy prescriptions, Mr. Meltzer says this
• Reducing corporate tax rates permanently to encourage investment (paid for by closing loopholes).
• Agreeing on long-term reductions in entitlement spending.
• An explicit inflation target between zero and 2% to force the Fed to pay more attention to the medium term and to increase public confidence that we will not experience runaway inflation
Ah yes, it finally comes out, the requisite Conservative position that cutting taxes will encourage investment. Econ 101 Mr. Meltzer, high consumption encourages investment, the opposite of what you just supported. And who exactly is afraid of runaway inflation? Really, who, other than Mr. Meltzer. And do you really want to end new bank regulations given what the lax regulation of banks during the Bush administration did to the world economy?
And of course we have the Pollyanna bromide
What we need most is confidence in our future