I found so many things memorable in Casey B. Mulligan’s recent book, You’re Hired: Untold Successes and Failures of a Populist President. I noted many of them in my Hoover article 2 months ago but didn’t have space for the following story. Here’s Casey:
The conventional wisdom is that @realdonaldtrump is a window into the “presidential id.” In other words, the person and the Twitter persona are in essence the same. That’s a nice theory, but how well does it fit the evidence? Let’s compare personal interactions between two 2016 Presidential candidates and look at President Trump’s use of nicknames for his staff.
Stanford’s Hoover Institution got involved with the 2016 Presidential campaign. The senior economists there invited me to join a small roundtable to discuss economic policy ideas with the leading candidate at the time. Eagerly introducing me, they asked that I tell the candidate a bit about my findings related to President Obama’s economic policies as reported in my 2012 and 2015 books. Explaining how the Obama Administration, with the intention of helping the poor and unemployed, had created and expanded more than a dozen programs that subsidized them, I said, “When you subsidize something, you get more of it.”
The candidate had little to bring to the conversation, so he mocked me instead. Why would anyone write two books to say something so obvious? The candidate was wrong: the Obama Administration was full of smart people who had yet to realize these “obvious” points. More important, the candidate was bullying the youngest person in the room in front of more senior economists. (In my profession, gatherings like that have real money at stake because someday the senior economists would decide whether and how I could be affiliated with Hoover.)
If all we had were representations of the candidates provided by the major news outlets, we would conclude that this arrogant and egotistical candidate was named Trump. Instead, the July 2015 Hoover roundtable was for John Ellis “Jeb” Bush. It was said by the New York Times, and Jeb Bush himself, that he was suffering a regrettable campaign handicap. In contrast to a purported[ly] mean-spirited Mr. Trump, Mr. Bush was brought up to be polite and kind. Why then was I slinking down in my chair, desperately wishing for the roundtable to end?
I’ve actually read this passage a few times. Part of the reason is that I like to prepare myself if I’m in similar situations. The main reason to be a Monday morning quarterback is to prepare for next Sunday.
I think I would have answered to Jeb’s face the way Casey answered in his book, something like the following:
There are two main reasons to point out what you claim is obvious. First, it’s not obvious to a bunch of smart people in the Obama administration, in the media, and even in academic economics.
Second, I was summarizing it for you. But I put empirical meat on the bones, showing, for example, that at least half, and probably more, of the drop in aggregate hours worked since 2007 would not have occurred, or at worst would have been short-lived, if the safety net had been constant. I’m guessing you didn’t know that, Governor.
I adapted the second last sentence above from his 2012 book, The Redistribution Recession, which I reviewed here. I’m not sure if I really would have used the last sentence. It would have been awfully tempting though.
READER COMMENTS
Rob Rawlings
Dec 21 2020 at 8:29pm
Casey Mulligan appears to claiming that if you subsidize the poor you will get more poor people in the same was as if you subsidized grain production you would get more grain.
I would agree that as a long (or even medium) term effect redistribution that discourages economic growth (and redistribution that makes people better off receiving a benefit rather than working seem very likely to have that effect) will eventually make the poor poorer than they otherwise would have been. Perhaps that’s all he means ?
But I share Jeb Bush’s skepticism on Mulligan’s claim – it has clear ‘sound bite’ value but in my view does not stand up to closer examination. In the short term redistributing from the rest of society to the poor clearly has the potential to reduce the number of people defined as ‘poor’ . And while I am not in favor of redistribution I am reasonably sure there are forms of “subsidizing the poor” that would have have a neutral or small effect on future economic growth and so will produce less ‘poor people’ even long term.
David Henderson
Dec 21 2020 at 8:37pm
You misread the quote.
Jeb wasn’t skeptical. He just thought it was obvious.
I recommend that you read my review of Casey’s 2012 book.
Rob Rawlings
Dec 21 2020 at 9:09pm
Oh, I see now that it is indeed stated (twice!) that the the claim was thought to be obvious by Bush. However it is still not obvious to me that his claim holds up to scrutiny even after taking a look at your review of his book and being fairly sure I would actually agree in the main with the case he makes.
Zeke5123
Dec 22 2020 at 10:25am
I’m not sure it is only macro economic impacts but kind of a learned helplessness. There is something very destructive about being on the dole to human’s ability to fend for themselves.
Thomas Hutcheson
Dec 22 2020 at 7:55am
I doubt that anyone does not realize that few polices have exactly zero deadweight losses. So “When you subsidize something you get more of it” IS obvious, but not obviously important in all cases.
David Henderson
Dec 22 2020 at 10:45am
You wrote:
Exactly. Which is why Jeb shouldn’t have jumped the gun and should have asked for details. As you can see if you read my review of Casey’s book, Casey could have supplied the details that say that the insight is important in this case.
Knut P. Heen
Dec 23 2020 at 7:09am
This has been obvious to me since I was 12 years old. Mulligan should have emphasized the quantitative effect. It is not obvious to anyone that half of the drop in hours worked is a direct result of Obama’s decisions.
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