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Monday, March 31, 2003

Good luck, Mr. Mankiw

In an article titled "Advice to a fledgling economic adviser", Jeffrey Frankel cautions the incoming chair of the Bush Council of Economic Advisers, N, Gregory Mankiw, about what to do when the president inevitably does something that he disagrees with:

the press seldom asks persistent or sophisticated questions. So one can usually formulate a careful sentence that appears to be consistent with the White House line and yet is not literally false, and get away with it. His immediate predecessor, Glenn Hubbard, signed on to the White House statement "interest rates don't move in lockstep with budget deficits". He, like Mr Mankiw, has a textbook with the standard model linking interest rates to budget deficit.

But because the sentence is true as written, Mr Hubbard has nothing to fear from his colleagues when he returns to university life. The press did not ask the follow-ups: "While budget deficits are not the only factor that determine interest rates, doesn't a budget deficit cause interest rates to be higher than they otherwise would be? And regardless whether that increase is small, doesn't the deficit crowd out investment?" In the current national mood this president is getting an easier ride than his predecessors, so this is probably Mr Mankiw's best bet.

That's all? To rely upon obsfucation and the fecklessness of Beltway reporters? I think Rubin-worship is going a bit too far. Also, Frankel is writing in the FT, not on personal stationery; what about an adviser's role to the public? Writing about treasury secretaries, Stephen Kirchner (scroll down) notes:

[I]t’s always bemusing when the financial press argues in favour of less transparency from officials. The media pilloried O’Neill for his supposed lack of sophistication on exchange rate policy, when all he was trying to do was inject some reality into discussion of the dollar. As the old saying goes, politicians only get into trouble when they tell the truth. Unfortunately, the media are often complicit in this process.

It's a strange day when op-ed writers want public officials to be unclear (to put it mildly) to the general public.