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Douglas Elmendorf

From Wikipedia, the free encyclopedia

Doug Elmendorf
Dean of the John F. Kennedy School of Government
Assumed office
January 1, 2016
Preceded byDavid T. Ellwood
Director of the Congressional Budget Office
In office
January 22, 2009 – March 31, 2015
Preceded byRobert A. Sunshine (Acting)
Succeeded byKeith Hall
Personal details
Born
Douglas William Elmendorf

(1962-04-16) April 16, 1962 (age 56)
Poughkeepsie, New York, U.S.
Political partyDemocratic
EducationPrinceton University (BA)
Harvard University (MA, PhD)
Academic career
Doctoral
advisor
Martin Feldstein

Douglas William Elmendorf (born April 16, 1962)[1] is an American economist who is the dean and Don K. Price Professor of Public Policy at Harvard Kennedy School. He previously served as the Director of the Congressional Budget Office (CBO) from 2009 to 2015.[2] He was a Brookings Institution senior fellow from 2007 to 2009, and briefly in 2015 following his time at the CBO, and was a director of the Hamilton Project at Brookings.[3]

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  • ✪ Radcliffe Day 2016 | Building an Economy for Prosperity and Equality || Radcliffe Institute
  • ✪ Science and Diplomacy for Solving Humanity's Big Issues- Iran, HEU and Climate
  • ✪ President Trump’s Economic Policy

Transcription

-Good morning. Welcome to Radcliffe Day 2016. This is a day to celebrate Radcliffe's past, present and future. I'm Liz Cohen, I'm Dean of the Radcliffe Institute for Advanced Study. Being here among so many of you who are celebrating reunions has reminded me that I mark a milestone of my own-- my fifth year as Radcliffe dean. And what a whirlwind these five years have been. I've enjoyed watching our three core programs grow. Our very competitive fellowship program, our exciting public lectures and conferences through academic ventures, and our renowned Schlesinger Library on the history of women in America. I've also taken great pleasure in expanding the Radcliffe professorship program to help Harvard schools recruit new diverse faculty talent, deepening the institute's integration of the arts in its programming, and creating new opportunities for students to partake in advanced study beyond the standard curriculum. A high point of this year, as other years in the recent past, is honoring an inspiring woman with the Radcliffe medal. We lauded Supreme Court Justice Ruth Bader Ginsburg last year, and Harvard president Drew Faust in 2014, just to name two. Today we are delighted that our Radcliffe medalist Janet Yellen, Chair of the Federal Reserve Board of the United States. It is our tradition to begin Radcliffe Day with a panel discussion on a topic close to our honoree's head and heart. At lunch, we will celebrate Janet Yellen's achievements, but now we will pay her the honor of digging into the subject she cares deeply about. That topic is how to build an American economy for prosperity and equality. How to promote vigorous economic growth that is broadly shared. In many ways, this past century has brought remarkable advances. In 1916, average life expectancy hovered around age 50, for both men and women in the United States. Now, it is well above 70. Today, most citizens' working lives involve shorter hours and fewer life-threatening hazards than our forebears faced. Roughly 63% of us own our own homes, compared to less than half of Americans in 1916, even if today's rate is slightly lower than it was a decade ago. We all enjoy recreational and entertainment opportunities beyond our grandparents' imaginations. For many of you sitting in the audience today, and the ability to travel to Cambridge to enjoy this panel would have been far out of reach. And watching it online would have been unfathomable. While we mark enormous societal progress, Americans' equal access to a better economic standard of living is shrinking. We live in an era notable for stunning growth in inequality. Right now, the world's wealthiest 62 individuals own more wealth than the bottom 50 percent of the entire world population. Just since 2010, the fortunes of those 62 individuals have increased by more than half a trillion dollars. While the wealth of the bottom 50% percent has fallen by a full trillion dollars, which constitutes a drop of 38%. The United States is by no means insulated from this global trend. According to a report by the Economic Policy Institute, since the 1970s real wages for the top 1% have risen 362%, while real wages for most workers have stagnated. The predictable result has been increased wealth concentration at the top. In 2014, the wealthiest 20% of Americans owned more than 80% of all American wealth. In contrast, the wealth of the poorest 20% was negative, meaning that they owed more money than the value of all of their assets put together. Despite the tendency of a whopping 87% of Americans to identify themselves as middle class, the Pew Research Center issued a report at the end of 2015, with its main finding stated clearly in the title. The report was called, The American Middle Class is Losing Ground-- No Longer The Majority and Falling Behind Financially. Scholars and commentators of all political persuasions have expressed alarm. Alan Greenspan, former chair of the Federal Reserve Board-- appointed by President Ronald Reagan-- has said publicly that current levels of inequality are, and I quote him, "not the type of thing which a democratic society, a capitalist democratic society, can really accept without addressing." Elsewhere on the political spectrum, economists and public policy experts-- like Paul Krugman, Joseph Stiglitz, and Robert Putnam-- likewise worried that the growing chasm between haves and have nots threatens the very foundation of American democracy. At the beginning of this year, officials from the World Bank at the International Monetary Fund, along with former Secretary of State Madeleine Albright, all issued statements within days of each other. Identifying inequality as a chief impediment to sustained economic growth. It wasn't always this way. Even as recently as the three decades following World War II. Wearing my other hat as a 20th century US historian, I wrote a book entitled A Consumer's Republic, The Politics of Mass Consumption in Post-war America. There I showed that the post-war order, that I labeled a consumer's republic, was built upon an assumption that was widely shared by labor, , business and government officials. That broad based economic prosperity would benefit individuals and the nation at the same time, as mass consumers protected the jobs and purchasing power of their fellow citizens. President Harry Truman made this point often. To quote directly from one of his speeches in 1950, Truman said, "raising the standards of our poorest families will not be at the expense of anybody else. We will all benefit from doing it, for the incomes of the rest of us will rise at the same time." End quote. Moreover, Truman and subsequent presidents believed that an economically secure, more equitable citizenry was capitalism's best defense against communism in the raging Cold War. So how did we get from then to now? And what can we do about it? These are the questions that our esteemed panel will consider today. The panel be moderated by Cecilia Rouse, the dean of the Woodrow Wilson School of Public Policy at Princeton University, where she is also the Lawrence and Shirley Katzman and Lewis and Anna Ernst Professor in the Economics of Education, and a Professor of Economics and Public Affairs. She served on President Bill Clinton's National Economic Council, and as a member of the White House Council of Economic Advisers under President Barack Obama. She earned her A.B. in Economics in 1986, and her PhD in Economics in 1992, both here at Harvard. Dean Rouse will introduce the other panelists. Please join me in warmly welcoming Dean Cecilia Rouse. -So, good morning. It's an absolute pleasure to introduce this morning's panel, Building an Economy for Prosperity and Equality. It's quite a fitting topic for a panel convened in honor of Janet Yellen's selection as this year's Radcliffe medalist. As you'll hear throughout the day, Janet's professional life has been devoted to studying critical issues facing the macroeconomy, both through her writings as an academic scholar and through her public service, particularly in the Federal Reserve System. She's been a key player in maintaining and promoting the economic health of our country, primarily by working to find ways to maximize employment, stabilize prices, and moderate long term interest rates through monetary policy. However, in recent years that task has gotten just a wee bit trickier. For decades, economists promoted overall economic growth with the belief that a rising tide lifts all boats. That is, that the fruits and gains from economic growth would be shared by all. This view is perhaps not surprising, since between about 1910 and 1950, wage inequality actually narrowed, and then remained relatively stable until about 1980. It is pretty clear, however, that today all boats are not rising together. The past 35 years has seen tremendous economic growth, but also an incredible rise in income and wealth inequality. From 1973 to 2005, the top 1/5 of real family income increased by about 1.6% annually, while the bottom fifth of families experienced almost no gains. In 1978, the top 0.1% of families held 7% of all wealth, while they held three times that much-- 22%-- in 2012. In fact, today we have levels of inequality that have not been seen since the times of the robber barons over a century ago, with rather dire consequences for our economic, political, and social fabric. So the speakers on today's panel will help illuminate what we know and don't know about economic growth over the past century, and how it has been shared or not. They will also highlight some of the causes for the increased inequality, and perhaps-- just perhaps-- offer a way to address it. After giving each of our panelists a few minutes to discuss an important dimension of this issue, the panel will have a short conversation before we open it up to your questions. So let me introduce our illustrious panel. First up is David Autor, a professor and associate department chair at the MIT Department of Economics. David is a faculty research associate of the National Bureau of Economic Research, and a former Editor-in-Chief of the Journal of Economic Perspectives. His current fields of specialization include human capital and earnings inequality, labor market impact of technological change and globalization, disability insurance, and labor supply, and temporary help and other intermediated work arrangements. He received his Bachelor's Degree in Psychology from Tufts University, and a PhD In Public Policy from the Harvard Kennedy School of Government. Next to speak will be Louise Sheiner, a senior fellow in Economic Studies, and policy director for the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution. Prior to joining Brookings, Louise served as an economist with the board of governors at the Federal Reserve System. Most recently, as the senior economist in the Fiscal Analysis section for the Research and Statistics Division. That said, she's also served in the Treasury Department, and on the White House's Council of Economic Advisers. Louise's research focuses on health spending and other fiscal issues. She is Harvard squared, having received her PhD in Economics from Harvard, as well as an undergraduate degree in Biology from Harvard. Third, we have Claudia Goldin, the Henry Lee professor of Economics at Harvard, and director of the National Bureau of Economic Research's Development of the American Economy program. Claudia is an economic historian and a labor economist. She has received many honors and awards that are just far too numerous to name here, so you can look up on Google. Her research has covered a wide array of topics, including slavery, the economic impact of war, the female labor force, immigration, New Deal policies, income inequality, technological change, education, and the gender gap in pay. Most of her research interprets the present through the lens of the past, and explores the origins of current issues of concern. Claudia earned her Bachelor's Degree from Cornell University, and a PhD from the University of Chicago. Last, but not least, I'm pleased to introduce Douglas Elmendorf, the dean of the school that I shall name here, Harvard Kennedy School of Government. Where he also serves as the Don K. Price professor of Public Policy. Doug served as director of the Congressional Budget Office from January 2009 through March 2015. Prior to joining CBO, he served in many positions in Washington, including at the Brookings Institution, the Council of Economic Advisers, the Treasury Department, and the Federal Reserve Board. He has worked on important issues, such as budget policy, health care, the macroeconomic effects of fiscal policy, social security income security programs, financial markets, and macroeconomic analysis. Doug earned his Bachelor's Degree from Princeton University, and his PhD from Harvard. So David, I will turn things over to you. -Thank you. It's an honor to be here. It's an honor to be honoring Chair Yellen, and to be participating in the Radcliffe Institute events. I want to just frame this discussion a bit. First, I want to talk about why should we even care about inequality. I don't think it's self evident that we should. Then I want to talk about some of the challenges that have made shared prosperity a harder goal to achieve in the last 40 years, than in the three decades that proceed it. And then the other panelists will fill in a much more historical detail. And also, I set the stage for how we address these issues. So first, let me make the case about, why should we care about inequality at all? We should start off by agreeing that we need some inequality in a market economy. If we don't have inequality, we don't have incentives. If we want people to go spend 10 years in medical school, or two years pursuing a PhD In computer science, we'd better reward them when they're done. And so inequality is not by itself evil. In fact, it can be quite productive. The question is, can we have too much of it? And in the short run, you could argue no, it just makes the economy dynamic. But I think in the long run, the answers is possible to be yes. And the reason the answer might be yes is because we have overlapping generations of parents and children and families. And dynamism, in the short run, can give rise to dynasticism in the long run. If we have so much concentration of income and wealth among a small group of adults, then the next generation of kids don't have the same opportunities to succeed. In other words, equality of opportunity is one of our greatest shared values in America. Something we deeply believe that people should have a good start, and the opportunity to succeed, on the basis of their talent and hard work. And if we make the race too unequal at the outset, it's harder and harder to achieve that equality of opportunity over the long run. And that's what concerns me, when I think about inequality, that we can reach a point where the economic rewards of today and the incentives are so great, that the prizes are so large that pretty soon inequality becomes the enemy of opportunity, rather than the force that propels it. So now let me talk about, what are the forces that have given rise to so much inequality? As was mentioned by Ceci, from the end of the second World War through the early 1970s, we had a period of extremely rapid productivity growth and shared prosperity. That period is anomalous in history. People like to say that's the way it should always be, but they're probably the only three decades in all of human history that were quite like that. So I'm all in favor for that, if we can make that happen again. But that was a remarkable postwar period. We'd had huge technological advances, huge advances in skills and education. And, of course, the US had a leadership role in the world, where it was the driver of so much of what else was going on. Since that time, one of the first challenges we faced is actually slowing productivity growth. Productivity growth is the thing that ultimately creates wealth that we can distribute. When that growth slows, there's less to go around. And even our huge rise of inequality wouldn't seem so awful if all the boats were rising. But to have some people getting so rich, when productivity growth is so slow, means the other boats are stagnant or sinking. And you can even see that, if you look at the period from 1995 to around 2000, during the internet productivity surge. That was actually a period of shared prosperity in America. That was a period when everyone's raise wages were rising, when employment to population rates were growing, crime rates were falling. Many, many good things come from that. From rapid productivity growth, and also tight labor markets that pull wages up at the bottom. Harder to accomplish, but something very much desired. A second issue that we have faced is actually slowing attainment of higher education. Education has been one of the keys to American prosperity for more than a century. Professor Goldin will speak about that. But since the early 1970s, and up until recently, college attainment rates slowed. For men, actually fell. And not only did that mean that there were fewer people benefiting from getting a higher education-- and the earnings associated with that-- but that slowing supply of higher education actually led to rising wage inequality. Caused this premium to education to rise a lot. So there are actually three benefits to sending people to college. One is it makes them better off. Two is that it actually reduces inequality, because as you increase the supply of more educated workers, their wages actually come down a bit. Third, it actually benefits the workers who don't go to college, because it makes them scarcer. Employers have to fight harder to get high school educated labor to do those jobs. So investment in education is one of the areas where the US has fallen short. Maybe not expenditure, we spend a lot. But in actually getting people to succeed in going through college. A third important factor is the forces of technological change in globalization. There's been a lot written about that. me just catch summarize it in a sentence or two. What those two forces collectively have done is, on the one hand, amplify the value of scarce talents. People who have great ideas, people who can run large corporations, people who are fantastic athletes and entertainers. They become so much more valuable in a world market where their skills can be delivered electronically, or through their products worldwide. So on the one hand, it amplifies talent. On the other hand, it can also commodify labor. If you're not someone who has a scarce talent, if you make shoes or you sew clothes, well, you're suddenly in much fiercer competition with people throughout the rest of the world. With whom we can trade and transport, or even with technologies that are beginning to erode or being able to accomplish that skill set. So those factors really do amplify and contribute to the growth of inequality. And then I would say the final factor is a certain resignation. A view that, well, this is the market. That's what the market says, we do what the market says. Or the view that actually it's good, all that inequality-- the more the better-- just creates incentives. And I've already made the argument that, in fact, you can have too much inequality. It can actually be the enemy of meritocracy, not always the friend. And the view that we have no control over it is simply incorrect. Because we can look around us, and look at many other advanced economies-- throughout Europe for example, or Singapore-- that have lower levels of inequality. Not Singapore in this case. But have lower levels of inequality, high social cohesion, and the same productivity growth that we have. In other words, they have not suffered terribly for their burden of shared prosperity. And we may not either. So it is within our control. The economic forces are fundamental. We can't ignore them. Simultaneously, we actually have a lot of institutional and social and public and political choice about how we want to organize, how we want to share the benefits of our productivity and our ideas and our creativity and our hard work. So there are challenges, but there's opportunity. And there's, in no sense, inevitable-- not something that is beyond our ability to address and correct and improve. Thanks very much. -Good morning. First of all, let me say what an honor it is for me to be part of such an esteemed panel. And also to celebrate Janet Yellen, who I've long admired as an extremely dedicated, brilliant, and caring academic and public servant. OK, so Cece and David have talked a lot about income inequality, which is something that we have known for a long time is a problem, and has been an area of great concern. But it's only in the last few years that we've begun to recognize an additional source of growing inequality, and that's inequality in life expectancy. So it's long been the case here throughout history, in the United States and everywhere, that people who are richer live longer. So that's nothing new. We've always known that. But what we used to think was that as the economy would grow, then that growth would help to narrow the gap. So if you had improved public sanitation, and public education, those things would help everybody live longer, but particularly the poor. And you expect the gap to be narrowing. But what it turns out is, in the United States at least, that gap has actually been widening. OK so the first study that looked at this came from the Social Security Administration. And they took their Social Security records, and they divided the population of men in two. And they looked at life expectancy and changes over time. So they started with people who were born in 1912. In people who were born in 1912, the top half of the income distribution lived about less than a year, almost a year longer than the bottom half. So the bottom half of the income distribution at 65 could to expect to live almost until 80, and the top half until 80 and 1/2. Now, fast forward 30 years later. We're talking about the cohorts who were born in 1940, and that gap in life expectancy had widened to over five years. So now there was an over five year difference at age 65 and how long the top half of the income distribution lived, relative to the bottom. And that came because the bottom half of the income distribution did have increases in life expectancy, but only about 1 and 1/2 years. Whereas the top half of the income distribution had increases in the life expectancy of about six years. Now many other recent studies-- you might have heard about a study from Raj Chetty and coauthors using incredibly rich tax data-- have found the same thing recently, which is that those in the bottom of the income distribution had gained very little in life expectancy. While those at the top have experienced major improvements. A study that came out from a panel that I was on at the National Academy of Sciences said, well, what happens if these trends continue? So if these trends continue, we take the cohort born in 1960-- basically my cohort-- and say, let's now compare. We used quintiles, so let's compare 20% of the population. So let's compare the bottom 20% to the top 20% of the population, and see what changes in life expectancy will be. And what we found is that if these trends continue, we can expect the bottom 20% to live 13 years less, from age on, than the top 20%. So an extremely big difference in how many years people are living. So think about it, not only have we had income inequality, wage stagnation at the bottom, but also changes in life expectancy. And when we talk about life expectancy, that's because it's easy to measure. We know when people die. But it's not just that we're all equally healthy and just sort of die at different ages. We know that if life expectancy is so widely different, then so is health. In fact, health economists think the better measure of your age is not how many years since your birth, but before you die. That's going to tell you how healthy you are. So people at the bottom have had little income, little improvement in health, little improvement in life expectancy. No wonder there's so much anger out there. Very big difference. You've probably heard about a recent study by Ann Case and Angus Deaton, who won the Nobel Prize in Economics. They looked at something quite similar, they looked at death rates from 2000 to 2014, for people 45 to 55. And usually, we think that over time death rates decline, life expectancy increases because we're all getting richer, and we have better medicine and better technology. But what they found was actually an increase in death rates for 45 to 55-year-Olds, particularly those white males without a high school education. And where did those death rates come from? They could look at the causes. Well, they came from things like increased suicide, alcoholism, and drug addiction. So it's a very concrete example of the despair that's out there. Now, how does this relate to income inequality? The truth is, we're not really sure. Is it the same thing? Is it just another manifestation? So some people think it's actually the income inequality that is creating the life expectancy inequality. That could come because people at the top of the distribution, they're still at the top 20%, but they have so much more money than they used to, relative to the bottom. And maybe they're able to use that money to buy things that increase their lifespan. It's possible that just living in such an unequal society creates a lot of stresses and strains that affect health. And it's possible that now income can now buy things that it couldn't buy, that will help increase your life expectancy. So it's possible. The causality could also be the reverse. It could be that we've had health inequality, maybe coming from different things in childhood. And the health inequality leads to income inequality, because people who are not in good health-- particularly mental health-- are not going to end up working and making a lot of money. So that's a possibility. And it's also possible that's all coming from some other factor. Something like education, the quality of education, or the skills that people are learning when they're young. There are skills like perseverance and self control and discipline that can help affect both your income and your health. So we don't really know. One thing that we do know is part of the changes is smoking. So we know that the high income people started smoking first and quit smoking first. But researchers say that could explain maybe 20%-30% of the widening gap in life expectancy. So this is a clearly huge issue, and we need to know more about it, and understand more about it. But in any case, it seems like any measures that we can take that would likely reduce income inequality would probably have a benefit on life expectancy inequality as well. Typically things that are, like, investment in children, improvements in education, because we know that education and health are actually quite correlated. And there's evidence that actually calls that more educated people take measures that improve their health. So let me just say, the gap life expectancy is something that we need to deal with. It affects how we think about society in general, and also how we think about programs like Social Security and Medicare. Because we think of those programs as progressive programs, because the people at the lower end of the income distribution get a better deal from Social Security and Medicare than the people at the top. But these programs are programs that pay out for every year that you're alive. So widening disparity and life expectancy is also meaning there's widening disparity in the returns that people are getting from programs like Social Security and Medicare. And so, when we start to think about how to reform those programs, which we will be doing over the next 10 to 15 years, it's something to keep in mind. But I think that's actually second order. I mean, the way I think about the increase in life expectancy is it's a really concrete example of what's happening to our society. We can argue about what's happening to wages, the bottom, and whether or not we're measuring it right. But we know we're measuring life expectancy, and so I think it should serve as a clarion call to say, we really need to do something about that. Thank you. -Greetings. So one of the many nice things about being a historian and an economist is that I can do really great back casting. And I get it right almost every time. So, I want to tell you a story. And it's a story about a bold investment that the US made in the early part of the 20th century. And the investment was made locally and at the state level, and not nationally by and large. And it reflected a commitment on the part of most Americans to provide education to its youth, although the south and African Americans in many regions are sad exceptions to my story. So it was this investment that led to a great narrowing of the income distribution, and it is the slowing down of these educational investments-- and David remarked about that-- that produce much of the widening of the income distribution. So I'm going to have a few caveats at the end of my remarks about the top 1%, but right now let's say that my remarks are going to be about the bottom 99%. that is a pretty big group. So from the end of World War II to around the late 1970s, America grew together. Economic growth, as we've heard from others, was largely shared. And it was, moreover, rather strong in an exceptional period. The bottom fifth of families in that period experienced income growth that was actually a bit greater than that of the top fifth, and the middle group had growth in-- believe it or not-- the 2.5% range average annually. So everyone was doing better, and they were doing better in each part of the distribution. But after the late 1970s, America began to grow out apart, and growth was fairly anemic. The top 5% grew, yes, at more than 2% average annually. But the lowest fifth hardly grew at all. So how did the US once manage to have economic growth with equity? And the answer must be sought, actually, in the late 19th century, when incomes had become extremely unequal. America, in even earlier times, was known by de Tocqueville and others as the best poor man's country. If you were poor in Europe, and you came here, you would do much better. But it had become a place of robber barons in the Gilded Age, and the land of rising and high inequality. Discontent was intense, and it gave rise to many third party movements-- populists, socialists, and rampant anti-immigration sentiment. Sound familiar? The returns to a high school degree in 1900 were very high. And even an ordinary clerks and bookkeepers made substantial incomes. Part of rising inequality came from an increased demand for skills that could be provided in schools. That is what we now term skill-biased technical change. In community after community in the US, it was a groundswell for publicly funded high schools, and thus was born what we historians call the High School Movement. In 1910, as this movement began to take off, European visitors scoffed at the American notion of educating its masses, and they maintained an elite-- but actually quite excellent-- education that admitted only the brightest at 11 years old. Americans were far more egalitarian. By the eve of World War II, the median 18-year-old male in the US was a high school graduate poised to go to college. The US GI Bill in 1944 guaranteed a college education to returning GIs, but a similar bill in Britain could guarantee only schooling to age 15. The US had made a bold move, later copied by most others. The US did the right thing in expanding high schools at that period, and then college. Mistakes were made along the way that we live with now, regarding standards and excellence. But this isn't the time to discuss those. The question before us is how we know when major investments are worth undertaking, when many of the returns accrue much, much later, if at all. In the early years of the High School Movement, the returns to a year of school were very high. It was palpable. It was known, even for that marginal student. Employers were searching for workers with the skills that high school educated youths had. Even without any of the other benefits that accrue with more education-- such as benefits regarding health, for example-- the investment seemed worth the foregone income and the direct costs. The same can be said of college today. Well identified estimates indicate that even the marginal student has significant gains to most types of post-secondary education. When I first wrote that, I said, to post-secondary education, and then I remembered my own work on for-profit higher education. So I said, most types of post-secondary education. So, I will conclude. But before I do, I need to go back and say something about that top 1%. Growth for the top 1% has been enormous in the past 35 years, increasing their total income from 10% to 21% in that 35 year period. But in terms of annual income, the increased value of a college education is about three times larger. And that is a very complicated calculation that I cannot say, because I don't have time, and you don't want to hear it. So, in conclusion, can we have growth with equity again? The issue of growth is the hardest part. Equity may be easier. Thanks. -Thank you. I am delighted to be here for Radcliffe Day, and honored to be included in this celebration of Janet Yellen. I will use my few minutes to draw out some implications of the other panelists' remarks for fiscal policy and monetary policy, two areas in which Janet has, of course, played very important roles. Also, as it turns out, two areas in which I have had the privilege of working for Janet. I was a staff economist at the Federal Reserve Board in the mid 1990s, when she was the governor. And then I was on the staff of the President's Council of Economic Advisers in the late 1990s, when Janet was the Chair. And if I were really smart, I would've kept following her around after that, because I would have kept learning a lot more. But other jobs intruded. But what I want to do now is to highlight three areas of fiscal policy. And I'll focus on federal fiscal policy, where I think fiscal policy can play an important role in helping to generate inclusive economic growth. And then I'll highlight one recommendation for monetary policy. For fiscal policy, first and foremost, we should increase investments in education and training. Under the current caps on annual appropriations, federal investments all sorts-- for infrastructure, for research and development, and for education and training-- will soon fall to their smallest share of GDP in at least 50 years. That is not forward-looking, growth-oriented economic policy. And it is particularly unfortunate for people who are growing up in poor families, or in areas with low average income, because those people cannot rely on their families, or their communities, to provide high quality education and training. Federal support, directed in the right way, can make a substantial difference. Now, the money is not a panacea. As David noted, we don't spend all of our education dollars wisely-- current location excepted. But studies show that when additional money is given to poor school districts, for example, the students in those districts do better. So there are a lot of steps to making our education and training in this country more effective. But a simple starting point is to increase federal support for those issues, not to cut it. Increasing federal investment is especially inappropriate now, because market interest rates that the Treasury pays are so low, and will probably stay low for some time. And in research that Louise and I are doing together, we show that low interest rates generally imply-- as one might expect-- that the federal government should, in fact, issue more debt, and undertake more investment, than it would under other conditions. A second way in which federal fiscal policy should help to generate inclusive economic growth is to maintain benefits for lower and middle income people, rather than cutting them as part of some deficit reduction effort, or for other purposes. Federal benefits, transfer benefits in general, play two crucial roles. One role is to help children growing up in families of modest means get a stronger start. A small but growing body of evidence shows that federal subsidies-- for health care, for housing, for education, and for other things-- helps children earn higher incomes later in their lives. So in many respects, those federal benefits are a true investment. But benefits also matter because they protect people, to some extent, from the vicissitudes of market forces. As a number of the panelists have said, incomes for people on the lower and middle parts of the distribution have grown very slowly over the past few decades. But those are market incomes. If one then incorporates the effects of transfers and taxes, incomes in the lower and middle parts of the distribution have done much better. Not super well, but much better than they would have. So that the tax and transfer system has limited the extent of widening in standards of living, in the face of this very sharp widening in pre-tax, pre-transfer incomes. Moreover, tax and transfer system pays plays a very important role during economic downturns. In this last downturn, market incomes for people in the lower and middle parts of the distribution fell markedly. But their incomes after tax and transfers were incorporated were much more stable. So these benefits play absolutely crucial roles, both in laying the groundwork for future, more equal growth in market incomes, and for protecting people from a diversion, so marketing comes in economic downturns or even over a period of several decades. A third way in which federal fiscal policy should be used to help generate inclusive economic growth is to keep the total demand for goods and services high enough that we achieve full employment. Full employment is tremendously important, for both economic and social reasons. Tight labor markets draw people into the labor force, and they push up the growth of wages. And those factors are especially important for lower income people who are more likely to lose their jobs when labor demand is weak, and who have less resources to fall back on when they do lose their jobs. So full employment allows for more income for people who need it. It also fulfills our social commitment to have an economy in which willing workers can find work. Unfortunately, maintaining full employment is likely to be quite difficult in the coming years. In each of the past three recessions, the Federal Reserve has cut the federal funds rate by more than five percentage points. But with market interest rates so low, they are very unlikely to have that much room to cut when the next recession arrives. That means that counter cyclical fiscal policy-- cuts in taxes or increases in federal spending when the economy weakens-- will be more important in the coming decades than it was the 1970s and 1980s and 1990s. We should be strengthening our automatic fiscal stabilizers, and developing a set of policies, additionally, that we could put into place if needed. A rush to reduce budget deficits after 2010 was the biggest error in economic policy in this downturn, in this country, and we should not make that mistake again. My last and shortest point is about monetary policy. To help generate inclusive economic growth, the Federal Reserve should continue to focus on both maximum employment and on stable prices, the two parts of its so-called dual mandate. To be sure, monetary policy cannot achieve full employment on its own in most cases, because of both the longstanding reason-- that structural problems can be important in labor markets-- and for the new reason, that the Federal Reserve will have less scope to cut rates in the future. But saying that the Reserve cannot achieve full employment on its own, or cannot achieve it just by reducing the federal funds rate, does not let the Federal Reserve off the hook in what it needs to do. Since the financial crisis, under the leadership of Ben Bernanke and Janet Yellen, the Federal Reserve has developed creative ways to accomplish the mandates that had been set for it in law of maximum employment and price stability. We should be very grateful that they had the wisdom and the analytic skill to develop these new tools. And we should expect them to use those tools again when future conditions warrant. Thank you very much. -So, I'm going to ask the panel a question or two. But I believe you have cards in your folders, and so you can take this time to write questions. That's what those cards are for. And I think there are individuals here to whom you can pass those cards. And that's how we'll be doing the Q&A. So I wanted to make sure I made that announcement. OK, so one topic that's been fairly hot in the presidential elections so far, the campaign, is international trade, and its responsibility in possibly increasing community quality. None of you mentioned it, I was wondering if anybody-- oh, maybe you did, David-- but I was just wondering if you could say a little bit more of what has been the role of trade. What should be the role of trade, especially as we are becoming a more globalized economy? -Sure. This is something I've worked on a lot, and trade has always been a contentious economic topic. And the debate around trade in the political circle has always been bipolar. On the one hand, you have folks on the left saying, trade is good if we export more than we import, because we win. And otherwise it's bad, if we import more than we export, we lose. And then on the other side, promoters say, trade is good. Everyone benefits. It's a win-win. Neither of those views is accurate. Economists have always understood that trade promotes economic growth, whether you have trade deficits or trade surpluses. But it's also redistributive. In general, it diffuses beneficiaries by lowering the prices of goods and services. And it creates concentrated losses among workers in import-competing sectors. Historically, we've known that, but we haven't seen it so much. In the last 20 years, we've really seen China's rise as an extremely productive, competitive, international manufacturing superpower has been very good for China, very good for most of the world. And good for the US in many ways. But it's also been extremely disruptive for import-competing sectors-- for manufacturers of shoes, and textiles, and leather goods, and toys, and electronic assembly-- literally resulting in the reduction of on the order of about a million US manufacturing jobs during the decade starting around 2001. And we can see that. You can look at places where furniture was made, where shoes were made, where assembly was done. And you can see those jobs-- not only do you see employment decline, but you see broader economic malaise. You don't see workers costlessly reallocating into new activities. And this has been economically painful and also politically consequential. And, in fact, you can see that in the areas we're most impacted by this trade exposure, we see growth of polarized politics. In the more white, non-Hispanic Republican areas, it's led to the rise of the Tea Party. In actually left leaning and minority intensive locations, it's led to more and more strong left wing politicians. I'm sorry, I'm going on too long. Let me just conclude. There actually is an economic origin for this debate is bubbling up in the current presidential election. But I actually think it's healthy in the following sense. There's now greater understanding and recognition on both sides file that trade has benefits and costs. It's not a win-win. We've always known that, as economists. Now we can recognize that as politicians, and hopefully we can have trade policy that both recognizes the benefits of globalization, and spreads those benefits, and compensates the individuals who bear the brunt of it. -I just want to add to David's points. A very simple point, which is that he talked about trades and goods, and immigration is also-- we could say the same things that David said in talking about immigration as well. -So, I didn't fully hear what we should do about it, because in every trade agreement, there is an attempt to compensate the losers. Because everybody worries, sure, we know the losers are those who lose their jobs, but it can't be that all job losses related to the trade agreement. So we tend to write the eligibility rules very tightly, so that a small fraction of people who might ultimately have been affected-- So I'm going to push back with you a little, David. And ask you, really, how should we see this polarization? It is a challenge for whoever is going to be in the White House next. What really should they be doing differently? -Trade is not a bogeyman. There are lots of economic forces that are disruptive. Immigration is one, technological changes. If I'm replaced by machine, as opposed to a foreign worker, I'm out of a job. So I actually don't think we should try to make trade adjustment narrowly tailored. You shouldn't have to prove in a world without trade you wouldn't have lost your job, in a world of technology you would've. We should have adjustment. We should facilitate people whose skills become obsolete, or whose industries closed down, to make investments in skills, or to help them ensure their earnings losses, at least temporarily, as they move across sectors. You don't need trade adjustment for that. We could actually make the Earned Income Tax Credit an Earner's Credit, that wasn't dependent upon having young dependent children to access that, and get higher earnings in not particularly high wage jobs. So I think there's a broader answer to that, that's not trade specific. -OK, fair enough. -Well, yes, I just want to add to that. So I think that that's one of the things that we're finding, is that we've had a policy that worries more about incentives. And we don't want to put bad incentives in, the people won't work, or whatever. And so, we don't do things that would help people. And I think what we're realizing, it does have social consequences. It has consequences for the children, the families. And that maybe just in terms of the weights that we're putting on-- of things that we typically think of pro growth as low taxes and trade-- that there are costs, that maybe we're starting to recognize are bigger than we thought. -I agree with everything that other people have said. I'll just add that I think we tend to talk in this country about the importance of overall economic growth. And for many people, they leave the distributional issues aside. They're somewhat uncomfortable to talk about, they can have a feel of setting people against each other. But that logic, that focus on overall growth, worked best during a period when the rising tide really did lift all boats. And if the rising tide is not going to lift all boats-- and it has not lifted all boats over the past several decades-- then we just need to be more explicit about our distributional concerns, if we have them. And my view is, those concerns are crucially important for sustaining the social cohesion that the country depends on. And that's important for setting future economic policy, it's important for the country's leadership in the world, it's important for the way we tackle social issues in this country. The sense of people that they're not together, but they are apart, is a very big problem for us, and not what I think many of us think of as the American way. But to change that, we really have to do significant things to help people who are being left behind, whether because of trade or because of technological change or something else. -So, many of you have argued for increased assessments in infrastructure. I heard infrastructure, R&D, education. And how do we ensure that those investments are effective? We all worry about investments in the bridge to nowhere. I think there might have been a New York Times article about an infrastructure investment that was [INAUDIBLE]. So if we're going to be increasing these investments, how do we ensure that they're going to the right people, places, things? -Want me to take that? -Please. -So, that's obviously very difficult. I think we have had a move towards evidence-based policy, where people are trying to actually think quite carefully about what investments do make sense, what investments don't make sense. People say, oh, we should have high speed rail, but maybe that doesn't necessarily make sense for the United States. And so, you don't want to just do investments without thinking carefully about it. Now, the political process gets in the way. And that's where the bridge to nowhere problem comes. Because if you're going to spend it in one place, and it makes sense, well, everybody needs theirs. And so then you end up spending in lots of places, and so that's an issue. But if you think about Doug's point about rates of return, and interest rates now, we can afford to make investments that have less than ideal returns. They're not going to be perfect. It's going to have to go through that political process, and you're going to end up having things that you don't want. On the other hand, interest rates are very low, so we don't need to have huge rates of return to make it matter. And to the extent that these investments now have greater social return than we thought before. We think these problems are bigger than we thought, we realize that social cohesion is really, really important. Then, you're willing to put the money, because we think it has higher returns when it does hit the right places. And so, some of it may not hit the right places. But still, it's the direction that we want to go in. And I say, I think we've had a bias towards thinking that we always want to lower taxes, and taxes clearly raise economic growth, but the evidence on that is pretty murky as well. And so, I think that if we think this is a big problem, we want to try to be smart about how we make the investments. But still realize that we're going to have to keep trying stuff until we get to what works, because we can't just say, well, nothing works, so we're just going to ignore the problem. -Can I just add that as the Dean of a School of Government, and a long time public servant, I think we need to find ways to make public service more attractive, more appealing to more of the best and brightest young people. I've worked-- as Louise has, and Ceci has, and others-- with some terrifically smart, talented, dedicated people in the federal government. But it worries me when I see the survey of Harvard College graduates, and 50-some percent are going in to finance related things. I've nothing against that, but 3%, I think, were going into public service, and that worries me a lot. -We need more public service recruiters here. I think that's part of it. But let me add to this important conversation that at least in higher education, it's not so much increasing the amount, but doing something to stem the fact that our public colleges and universitiess-- community colleges, in particular-- have lost so much. So it's not as if we're adding and building bridges to nowhere. Really important bridges have been taken down. -So I've already got a set of questions. So, I think, why don't we move to some questions. So apparently a few of you have asked, how does gender and working women affect the income distribution? Claudia, I think that would be for you. -A pretty complicated question. Women are the most interesting, quote, "minority", because we are everywhere. We are not segregated by housing, for example. So one way that this affects the income distribution is that we've had greater, what we call positive assortative mating over time. Which is a wonderful term for Harvard graduates, married Harvard graduates. That's fun. So what makes that important, in terms of the income distribution, is that it adds a little bit of a multiplier. That we've seen increases, tremendous increases, to the returns to college. And if you have even more positive assortative mating, it means that it in fact, even to some degree, widens these gaps, so we're thinking about it in the aggregate. That's one way of thinking about it. On the other hand, if we think about women as a separate group, which I said at the beginning is sort of impossible to do, we have a set of important issues that relate to the ones that have been raised about, don't forget the children. OK? The children are very important. And so, having a work environment which is highly inflexible means that women either forgo their careers to give to their children, or their children are left often alone. Being let out of school at 2:30, let out of school in June. We've inherited institutions from a very distant past. So I see two issues here. One concerning aggregate income inequalities, and the other one wrapped up in issues concerning the family, and women's special role in that. -Thank you. David? Louise, I want to ping one to you, because I think this is important. How do we approach disparities in health care in the setting of continued rise in costs? -So, that is clearly a big issue. We have, of course, just passed the Affordable Care Act a few years ago, which is going to make major differences in access to care. It already is. And costs are something that the federal government has to think carefully about. It's actually not such an easy question as well. I mean, one of the things as we do get richer as a society, we tend to value health care a lot more than we used to. And so, although it's a huge budget buster when health care spending keeps going up, and it makes it hard to do the kind of redistribution that we'd like, there's a trade off, which is something that people really like. It used to be, actually, maybe 10 or 15 years ago, you would go to a health care conference on House spending. And they'd say, how many of you would rather have 1980s health care at 1980s prices? And a lot of people would raise their hand. And I think that that's no longer true. People will say they recognize that although it's too expensive, they really want today's health care. And so then the question for policy is whether or not when we can keep doing that or want to do that. At some point, we're going to want to spend our money on something else. Or whether or not-- we don't need to necessarily slow technology, but there's just tremendous waste in the health care system. So the Affordable Care Act actually had a lot of very innovative new payment models, that hopefully will at least slow the growth rate of health over time. But trying to make it more efficient. We don't know exactly what's going to happen. Health care spending has slowed tremendously, actually, in the past few years. At least six years now. And how much of that is this temporary pause, versus how much of that is something that's still a relic of the great recession is still unclear. But the more we spend on health care, the more important it is that we spend our dollars wisely and don't waste it. And so, I think that will be something that public policy continues to work at. -I'm going to combine two questions. So for labor comps we think of these as institutional factors that affect inequality, which is, what are the impact of the minimum wage and unions on the income distribution? Would anybody like to talk about that? -Sure, I'll take that on. Both unions and the minimum wage have been two of our most important labor market institutions for moderating inequality and affecting distribution. Both of them have been in decline. Labor unions, at this point about 7% of the private sector workforce belongs to a union. And that's down from more than 30% on the eve of World War II. The minimum wage is also at a considerably lower real level than it has been in quite some time. It's risen recently, but if we compare to the level, for example, it was in 1977, and we index that to inflation, it would be about $20 an hour right now. I think that we need to seek new labor market institutions, actually, that can address the roles and formally been played. I do not foresee a growth of private sector unionization that will reverse that trend enormously. But that that's not intrinsically a bad thing, because labor unions had positives and negatives. They were exclusive. In some cases, they were not benefiting minority workers, not benefiting women. And you had to belong to a certain company in a certain sector. I would like to see-- and I think we're actually moving this direction-- of a broader set of institutions that affect the quality of work. They affect the quality of economic security. Whether that's through providing health care, not just through employment, but through a public provision. Having labor standards. For example, the change in the overtime rules that the Obama administration has just enacted, making provision for maternal and paternal leave for some degree of ability to leave work for health and family reasons. So I think there's a way we can make these institutions more broadly accessible, and share their benefits more broadly. On the minimum wage specifically, I think most economists are divided. Some would say minimum wage is just fine, others would say it's quite destructive of work. I think all would agree that it's not our favorite way of raising earnings. It's not the best tool we have. Better tools include the Earned Income Tax Credit, that actually incentivizes work without it costing employers. And other things that raise productivity, or even affect the quality of jobs. For example, not allowing employers to schedule people for work two hours before their shift begins. The minimum wage, in moderation it does not appear to have particularly adverse consequences, and clearly has some benefits as well, in the range that we've seen in the last 30 years. If we start raising to $22 an hour, and did so suddenly, I think we would see some of the downside cost as well. So it's one of the arrows in our quiver, but probably not the best arrow. -Would anybody else like to comment? No? OK. So I think many of you have advocated for addressing both increasing growth and inequality with-- let's just put it out there-- more spending. So are you at all concerned about the budget deficit long term? If not, why not? If so, how would you reduce the deficit without further widening the gap and income inequality? -Maybe I should start with that one. -Yes, go ahead, Doug. -So, I do worry about the federal budget deficit and debt in the long term. I worry about it quite a bit. Federal budget is on an unsustainable path, because spending will outpace revenues by increasing amounts over time, pushing up federal debt relative to the size our economy, and that is not sustainable indefinitely. So something must be done. The question is what and how quickly? And my own view about what we should do is informed by the perspective I offered earlier. I think that, given the patterns of income growth in this country over the past several decades, that the primary goal of our economic policy today should be to raise incomes for lower and middle income people. And if you take that perspective, and take it seriously, than that guides you to doing and not doing certain things in pursuit of more sustainable fiscal policy. So from my perspective, given that objective, I would not cut benefits or raise taxes on people of modest means. I would at least focus the changes on people who have done better over the past several decades. So I would cut benefits and Social Security, and I would raise income-related premiums in Medicare, but I would focus those changes on the upper part of the income distribution. And to be clear about upper-- before you applaud-- I don't mean just Bill Gates. Right? So there's a tendency in discussions of this to say, there's always somebody else. So I would say the top third, or maybe even the top half of the income distribution. I would make some changes. Slightly less applause, but that's OK. And on the tax side, I think there's no doubt that the federal government will end up collecting significantly more in tax revenue 10, 20 years from now, than is scheduled under current law. Because I think, in fact, when you get down to specific elements of federal spending that are of any consequence relative to the size of the federal budget, or the size of the economy, most people like most parts of them. Even if in the abstract, they're against high federal spending and would like less. So I think revenue will go up, and I think the trick there is to tax things that we're less worried about discouraging. The problem with higher tax rates is it can discourage work, it can discourage saving. One thing we'd like to discourage is carbon emissions, so we should put a price on carbon through a carbon tax, or a cap and trade system. I never get this, really. This is interesting. Usually, the budget guy gets nothing but boos. And also, in the individual and business tax codes, I would personally sweep out a significant portion of the deductions and credits and so on. And I would not take all the extra revenue gained and plow it back into rate reductions. I would keep it to increase overall federal revenues. So I think it is possible to make changes to put the federal budget on a sustainable trajectory, without undermining the goal of inclusive economic growth. Last thing I'll say about timing is, I think the fact that interest rates-- the treasury borrowing rates-- are extraordinarily low now by historical standards, and are very widely expected to stay low for a considerable period of time, makes this less urgent. But it is important to start the policies that we would like to change soon, because almost undoubtedly, we would like those policies to phase in very slowly. So it's not crucial to make next year's deficit smaller, or the following year's deficit smaller, or the year after that's deficit smaller. But it is important to be having policies will have real effect 10 years from now. And many of those are policies that we should be legislating and building in adjustment paths for now. -Does anybody else want to comment? Doug? -Three cheers for tax increases. -Three cheers for tax increases. So I'm going to combine two questions. They may be related, maybe not, but I'm just going to put them together. So one is that it seems technological gains will decrease the need for workers. If that results in fewer jobs than potential employees, how can we, as a society, deal with large numbers of people who do not need to be employed? And how would we put that into a new economy, thinking about the gig economy and other forms of employment relationships? David. -Let me start with the gig economy. The gig economy, I think, actually exemplifies, at least in my thinking, the point I was making earlier about commodification versus amplification. And you see both going on. So let's say you're the software equivalent of a movie star, then the gig economy is a great thing for you, because rather than being insulated inside of one firm, where you get a pretty good salary, you can sell you your services to market. To the highest bidder. And the gig economy makes that easy, easy for people to discover your talent, to contract with you. And so, it amplifies. Your talents are now going to be more richly rewarded. At the same time, if you're a vehicle driver, or you're a plumber, or you're a person who goes to the grocery store to buy groceries for other people, you are now a commodity laborer on tap. And so, for some individuals, that could actually be less attractive, although not an option. So, for example, I was recently at a conference, and I heard people in the trades complaining that rather than them having their own differentiated firms, they were now basically a service provided by Amazon. You tell Amazon what you want, Amazon calls them up, sends them out. You never deal with them again. They weren't happy about that model. So that's the commodification side. And I think we need to recognize that there are both costs and benefits. On the one side, there's flexibility. And if you're a worker, you're an Uber driver, you could turn on your Uber app when you want to, and turn it off when you don't want to use it. And that's great. On the other hand, people also have a need for economic security. And flexibility, when I get to choose, is great. Flexibility meaning I work when the market wants me to, and I don't work if the market doesn't want me to, that's not the kind of flexibility I'm looking for. So I think this ties into this point about, what are the labor market institutions that create economic security, even when there's rapid change? And they are things having to do with health care, good education, and things that provide a basic wraparound set of social services that allow people to prosper even in challenging times. Talking more broadly-- and briefly-- about where will the jobs come from, we don't know. But we have been worried about the effect of automation on employment for more than two centuries. This did not start with Amazon. And any general, we've been impressed by our ability to think of new things to do. So in the beginning of the 20th century, about 38 percent of US workers were employed on farms. If an economist from the 21st century had showed up on the farm and said, hey, guess what you guys? In 100 years, there will only be 2% of you working in agriculture . So what do you think the other 36% will do? They probably wouldn't have said, oh, software, personal services, apps. It's all going to be apps. And yet, we underestimate our own creativity and ingenuity, and also our ability to consume new stuff. People, as we get wealthier, our demand for consumption rises. If people in 2016 want to have the standard of living of people in 1916, they could do so by working about 17 hours a week on average. But most people don't choose to. They would rather continue to work hard, and then play hard, so to speak. So technological change will be disruptive, but remember it's disruption that comes from productivity improvements. That's a good problem to have. Most economic problems are problems of scarcity, not problems of abundance. So if we really are getting that much more productive through technological change, it will create challenges, but also gives us additional wealth to deal with those challenges. -Let me add that we have, in the period that David was talking about, worked far fewer hours per day and per week. So we've taken our gains on several margins, several dimensions. So we have more goods, more services, longer lifetimes, better quality years, and we also work. We do work fewer hours per week then 100 years ago or whatever. I'm reminded as well that there's a large literature. There was a play called R.U,R. in the 1920s, so we have lived in fear that the robots are going to take us over, that the androids are going to be doing everything, that you won't know when you get married whether you married to an Android or not. But this hasn't happened-- -That I know of. -As David has said, these have been concerns for a very long time. -There have been lots of questions about immigration, and how to think about the impact of immigration on both economic growth and on income inequality. And how should we think about that relative to full employment? If -David? -Anybody? Anybody? What you said before about to trade, but just put in immigration. It's the same. -Immigration is an area where actually the theory is not that dissimilar from trade. We understand it should have distributional consequences. It creates growth, and it expands the size of the economy in general. It should be a good thing. It reduces scarcity. The evidence is actually much less conclusive than you would expect. There is realy-- despite strong popular sentiment, and really even firsthand observation-- economists have not found strong evidence that even rapid expansions of low education immigration has greatly depressed wages or employment of low educated Americans. And that's very surprising, because it would be plausible for that to occur. The standard rationalization of that is they complement each other, they don't just substitute each other. Typically, immigrants do slightly different jobs from natives, and you actually see natives moving across the occupational distribution as that occurs. But you can understand why it's contentious, because you are introducing competing groups, especially in the low skill labor market, where labor is much more commodified. I'm in the high skill labor market, I think many of us would feel very strongly that we should be increasing high skilled immigration. That one of the US's greatest strengths is that we attract talented people from all over the world. They come here to be at places just like this, and they tend to stick around. And they produce great ideas, they enrich our culture, and they have been central to our growth and prosperity. And really the fountainhead of so much of greatness has occurred here. I was hoping I'd get one of those. You can make the counter, even, well, don't they compete with high skilled workers America as well? Yes, but high skilled workers in America are doing great. So we can stand the competition, I think. So thank you. -Let me just say one other point, which is that in an economy with an aging population. And fertility levels that are not that-- our fertility levels are pretty high by world standards, for our income level, but they're not that high-- in such a population, immigration is a godsend. We're getting all these individuals, they've already gone through those difficult early years. It's sort of like if you gave birth to a well educated 24-year-old who could take care of you when you're older, and was healthy and likable. So, in fact, the country that is in the worst shape because of all these issues is Japan. So, Japan is doing now a lot of things wrong. Well, they have very low fertility, they don't have immigration, their economy is tanking. And, well, they have people who are living forever. Maybe that's good. But for an economy like that, immigration would actually be real godsend. -So I'm cognizant of the time, and I do have one last question that I would like each of the panelists to respond to. So, if there were a third party-- the Prosperity and Equality Party-- what would or should its political platform be? -I'll go last. Just, everyone choose one plank. -Well, so the plank that I would pick would be government investment in things, and more importantly, in people. -You have to be more specific. I'm sorry, you're going to have to be more specific for our political platform here. -You want me to pick something-- you want a skinnier plank. Too broad a plank. I think that we should increase our investment in young people, particularly lower and middle income young people, by using resources from people who are higher in the income distribution, and have done especially well in the past few decades. -OK. Claudia? -I agree entirely, but as a historian, I can look back and I can see enormous disruption with any third party movements. So I don't want a third party, I certainly don't want the ones that have been emerging. I would like our current parties to think better, are to be that party of Doug Elmendorf. Both of them. One could be a little more to the right of Doug, and one a little more to the left of Doug. That would be a great world. -The Doug Elmendorf party. -Well, I've worked with Doug, so I am going to sign onto his party. That's exactly what I would say, too. I think, to me, that would be the most important thing that we could do. Just investments in kids who will want to make the country great again. I think that's how we do it. -Yes. I agree. -There's so much to choose from. I'm going to take two. The first one is, I would like a party that embraced, as Doug said earlier, an esteemed service, both in leadership in education. I think we live in an era where after 35 years of denigrating public service, we have managed to actually make it somewhat more like the people who initially denigrated it believed. You go into a post office, and it doesn't work, why doesn't it work? Well, because Congress doesn't fund it as punishment for not working well. You know? Why doesn't the IRS answer your phone calls? Well, we've defunded it. So of course you hate the IRS. So I think there's a self-fulfilling prophecy around the quality of governance that needs to be reversed. The other thing I would add to that, that would actually, I think, complement this, would be tax simplification. And this is also going to Doug's point. We have so many tax expenditures that are basically hidden handouts, and we could cap them. There's actually a very simple way to address them. Just limiting the tax expenditure per individual. You could take whatever like. You can do it for charity, you could do if a mortgage interest, you can do it for education. But it's only 0.5% percent of your adjusted gross income. That would be a mind-blowing change. -Agree. All right, except. for Claudia's comment about the wisdom of having a third party, that was very nice. Thank you. -Thank you very much Dean Rouse, and to our panelists.

Contents

Early life and education

Born in Poughkeepsie, New York, Elmendorf attended the Poughkeepsie Day School and graduated from Spackenkill High School.[4][5] He spent his early career as an academic and educator. He went to Princeton University as an undergraduate, studying economics, and then headed to Harvard University to obtain his master's and Ph.D. in the same subject. After graduating in 1989, he stayed at Harvard for four academic years as an assistant professor, working closely with economics professor Martin Feldstein, the director of the Council of Economic Advisers under President Ronald Reagan, to teach introductory economics classes.

Career

In 1993, Elmendorf moved to public life, working for the Congressional Budget Office for the first time. He spent a year as an associate analyst before joining full-time in 1994 as a principal analyst where Elmendorf focused on health-care issues and the economic effects of budget deficits. Working under Director Robert D. Reischauer, Elmendorf worked on a team that concluded President Bill Clinton's health reform package would cost much more than originally thought. This analysis helped cripple Clinton's attempt to reform health care.[6]

Elmendorf only stayed a year at the CBO as a principal analyst before heading to the Federal Reserve Board as an economist while Alan Greenspan headed it. In 1998, his travels through the financial departments of the federal government continued, as Elmendorf moved to the Council of Economic Advisers, working as a senior economist under Director Janet Yellen. After staying at the CEA for a year, Elmendorf then joined the United States Treasury Department as deputy assistant secretary for economic policy, working under Clinton Treasury Secretary of the United States Lawrence Summers. When George W. Bush took office, Elmendorf moved back to the Fed as a senior economist and in 2002, he got a promotion to chief of the macroeconomics analysis team, leading a group of 30 economists and researchers as they forecasted inflation rates and labor markets.[7]

In 2007, Elmendorf began working for the well-known economic think-tank the Brookings Institution, co-editing the twice-yearly publication "Brookings Papers on Economic Activity."[7] In 2008, Jason Furman, the director of the Brookings' group known as the Hamilton Project left to join the Obama campaign. Elmendorf replaced him as director of the Project, a forum for economic policy discussion that was created by Bill Clinton's Treasury Secretary Robert Rubin — an advocate of free trade and a small deficit.[8]

Testifying before the House Budget Committee in June 2011 Director Elmendorf said that "uncertainty about federal policy is diminishing household and business spending and that uncertainty covers a whole set of policies: It covers tax policy, it covers regulatory policy and it covers health policy." He noted that New figures released 30 June 2011 by the CBO show debt rising to 190 percent of the gross domestic product by 2035. Economists have warned that exceeding 90 percent of gross domestic product (GDP) is a prescription for a debt crisis. "The current level of debt is reducing our output, our incomes relative to what would be the case if we had a lower level of debt, leaving aside the effects of this particular recession, which complicate that," Elmendorf said. As of 2011 debt to GDP levels are 70%.[9]

In August 2011 the CBO noted a dismal outlook of the nation's budget and economy, crystallizing the challenges Congress faces this fall in reducing deficits and increasing employment. CBO projects a $1.28 trillion deficit for the fiscal year, and total deficits over the next 10 years of $3.5 trillion. Gross federal debt is expected to rise from $14.8 trillion this year to $21.3 trillion in 2021, CBO said. "A great deal of the pain of this economic downturn still lies ahead of us," Director Elmendorf said at a Wednesday press conference after the report's release. He said the debt-ceiling deal "makes a real difference, so I guess that's good news." He then added: "I think the challenges that remain are very large."[10]

In June 2015, Harvard University President Drew Faust announced that Elmendorf would succeed David T. Ellwood as Dean at Harvard Kennedy School. "Doug Elmendorf is an outstanding public servant, an admired mentor and teacher, and a distinguished economist deeply immersed in the interplay of research and policy — an experienced leader in government who embodies the Harvard Kennedy School's commitment to joining scholarship, education, and practice to serve the public good," Faust said in a press release.[11] Elmendorf assumed office in January 2016.

Personal

Elmendorf is married to Karen Dynan, Professor of the Practice of Economics at Harvard University, and a Non-resident Senior Fellow at the Peterson Institute for International Economics. They live in Cambridge, Massachusetts, with their twin daughters.

References

  1. ^ "Douglas Elmendorf: An economist armed with a grenade". Washington Examiner. September 20, 2009. Retrieved February 18, 2014. Nothing that I had ever said before in my life attracted as much attention as that comment," Elmendorf, 47, said of his testimony on health care costs. "It's not a familiar place for me.
  2. ^ http://www.cbo.gov/about/founding
  3. ^ "Archived copy". Archived from the original on 2009-10-09. Retrieved 2009-07-21.CS1 maint: Archived copy as title (link)
  4. ^ Drew, Jill (February 11, 2010). "Low Profile, High Impact: Congressional Budget Office Director Doug Elmendorf". Fiscal Times. Retrieved February 18, 2014.
  5. ^ Poughkeepsie Day School, The Compass 2013 Archived February 23, 2014, at the Wayback Machine, p. 26.
  6. ^ Montgomery, Lori, "What Would a Health Overhaul Cost? All Eyes on the CBO," The Washington Post, June 11, 2009
  7. ^ a b "Elmendorf's Resume" (PDF).
  8. ^ http://www.whorunsgov.com/Profiles/Douglas_W._Elmendorf
  9. ^ CBO head: Government policies, debt may be slowing growth
  10. ^ CBO estimates show Congress faces huge test on debt, unemployment
  11. ^ https://www.hks.harvard.edu/news-events/news/articles/douglas-elmendorf-named-dean-of-harvard-kennedy-school

External links

Government offices
Preceded by
Peter Orszag
Director of the Congressional Budget Office
2009–2015
Succeeded by
Keith Hall
This page was last edited on 27 December 2018, at 03:27
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