Fantastic: Mankiw (tpp hawk) Mendacity and Morality and his League of Failed Economists

GREAT piece

I met N. Gregory Mankiw for the first and only time in 1993 when he was a discussant for George Akerlof and Paul Romer’s paper on “Looting: The Economic Underworld of Bankruptcy for Profit.” The meeting was at Brookings, so it was attended by a wide range of economists. Brooking was by that time working closely with AEI on an anti-regulatory agenda, particularly in finance. Those of us old enough to recall when Brookings was referred to under Republican administrations as “the Democratic Party in exile” are very old. I attended as Akerlof and Romer’s specially invited guest because of my contributions to their article. The meeting taught me a great deal about Mankiw and the state of the economics academy.

Mankiw was generally dismissive of the importance of the paper because it refuted his dogmas. But the show stopper for someone outside the academy like me (I was a financial regulator in 1993) was this line: “it would be irrational for savings and loans [CEOs] not to loot.” I dubbed this “Mankiw morality.” The show stopper for me was not that Mankiw would say it, but that none of the economists present even blinked when he said it. To that point I had seen many failed economists like Alan Greenspan and George Benston and the law and economics specialists like Daniel Fischel and Judge Frank Easterbrook embarrass themselves in the context of the savings and loan fraud epidemics, but I had not understood until Mankiw’s pronouncement how successfully academic economists had driven even the most fundamental concepts of morality out of their departments.

Mankiw has gone on to be the author of the leading economic textbooks, chairman of the economics department at Harvard, and a Republican activist who attaches himself to Republicans whose campaigns for the presidential nomination he feels have the best prospects for success. In that role he continues to proclaim his anti-regulatory agendas that, when he was in government, made him one of the architects of the criminogenic environment that produced the three great epidemics of accounting control fraud that drove the financial crisis and the Great Recession. There is no evidence that he ever learns from the disasters he creates.

Mankiw’s latest role is as a cheerleader for the Trans-Pacific Partnership. His two recent efforts in that role are helping to organize an open letter by fellow economists who served as Chairs of the President’s Council of Economic Advisers – a rogues’ gallery that includes the leading architects of the criminogenic environments that produced our recurrent, intensifying financial crises – and writing a column in the New York Times claiming that economists have reached “near unanimity” on the need for the TPP. The rogues’ gallery includes Mankiw, Alan Greenspan and Ben Bernanke, so it is self-refuting.

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The actual purpose of his column, however, was to smear any member of Congress (and he singled out Senator Elizabeth Warren as his example) who opposes TPP as not simply economically ignorant, “failing” a “no brainer” exam, but also engaged in “mendacity.” Given that mendacity is Mankiw’s primary area of expertise – and that President Obama soon joined Mankiw in claiming that Warren was lying in her criticisms of TPP – I thought someone should respond to Mankiw.

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http://neweconomicperspectives.org/2015/04/mankiw-mendacity-and-morality-and-his-league-of-failed-economists.html