 Thank you all for joining us again. We have a nice live audience here, and we also have untold numbers who are watching remotely. Welcome to all of you. Just to let you know about the format for this afternoon, we are going to have a presentation, a featured presentation by Jeff Madrick, a wonderful conversation and discussion with he, along with Ilan Mui from the Washington Post, as well as Josh Bivens and Brad DeLong. And then we will have, after a period of discussion amongst them, we'll have some time for questions from our audience, both live and viewing remotely. Those of you who are viewing remotely can submit your questions to us one of two ways. You can send an email to events at epi.org. That email address is appearing on your screen. And for everyone, whether you're live or viewing remotely, if you'd like to engage in a conversation about this event, you can do so on Twitter using the hashtag bad econ, bad econ. So again, it's my pleasure to welcome you here this afternoon. My name is Christian Dorsey. I'm the director of external and government affairs here at the Economic Policy Institute. And in conjunction with our partners from the Century Foundation, we are pleased to welcome you to what we think is an incredibly important discussion, not just among economic policy mavens, but for policymakers and really the public writ large. You know, many professions, if we think about it, require continuing education, licensing, have a public record of any missteps you may make, or at the very least have some sort of a mechanism for crowdsourcing of opinions of your worth, value and skill. For economists, not so much. Yet if people of power and influence are actually listening to economists, economic malpractice can have far reaching consequences. Now, given that as EPI is long asserted, many of our economic failures and shortcomings have been in fact the logical and intentional outcomes from misguided policy. This is a long overdue discussion. And in seven bad ideas, how mainstream economists have damaged America and the world, Jeff Magic provides a very useful tool for us to engage in that needed discussion. Today, we are privileged to have Jeff present his book, and the mensch that he is, he is willing to hear from noted economists, Brad DeLong and Josh Bivens, who will comment on the book. And that discussion will be guided by the Washington Post's Ilan Mui. Now, let me tell you a little bit about Jeff, and we can begin with our featured presentation. We have bios for all of our speakers. They were placed on your chairs. All of them are quite accomplished. And to read those bios in total would take a while. So I will summarize briefly. Jeff is a regular contributor to the New York review of books. And he is a longstanding economics columnist, most notably with the New York Times, where I'm sure many of us followed his work quite closely. He is currently a senior fellow at the Century Foundation and the director of their Bernard L. Schwartz rediscovering government initiative. He is a prolific author of many notable, distinguished and best selling books. And he comes to this from a wealth of experience and an incredible amount of passion. And we are pleased that he is joining us today. So without further ado, let me introduce Mr. Jeff Madrick. Christian, thanks so much, especially for the mensch part. Thank you all for coming. Thank the Century Foundation. They are represented here by Lucy Muirhead and Joe Miller. Thank you guys for coming down. Thank EPI. I've known Larry Michele. I think I first interviewed him when I was, remember that Larry? I think an NBC News correspondent. Was NBC born by then? Yeah, in any case. And thank Elon for taking the time out of her busy day. It's delightful to see her and eight months pregnant. I'm not giving away any secrets, I think. Brad DeLong, among the nation's most accomplished economists, who writes that impossibly prolific blog of his that's so useful for all of us. Thank you, Brad, for coming. Really appreciate it. Josh, I knew since he was a kid at the New School. Now I just was commenting. I noticed it looks like a full adult to me. He's done exceptional work for EPI. EPI in general. I see Max formerly with EPI. Thank you all for coming. I got an email from somebody during the publicity phase of that. Well, I'm still in the publicity phase of this book. And he said, you know, if you were really an anti-mainstream economist, you'd be talking about Karl Marx in your first chapter. Well, I do mention a Marxist, Duncan Foley of the New School. But it occurred to me that I'm not necessarily an anti-mainstream economist, I think. I'm not an anti-mainstream advocate, is what I should say. I believe the mainstream has much to tell us. If you define the mainstream as neoclassical, I think there are many brilliant ideas and many brilliant tools to be used. I'd call myself as an economics commentator rather than a practicing PhD economist interested in both in structural economics, a little bit in Marxist economics, and maybe I'm just starting to get a little taste of Buddhist economics through Claire Brown at Berkeley. But I wrote this book because I was deeply disappointed by mainstream economists or economics or what I perceive as most of what they had to say. There were lots of exceptions. I know people will raise the exceptions. But for the most part, they've left us with a set of ideas that are not only theirs, because people have said, my gosh, you overestimate the power of economists. These ideas have seeped into the media, they've seeped into the public consciousness. And I'm always surprised when an economist, especially of the left of center, progressive nature tells me economic ideas don't necessarily matter because one of the most famous things John Maynard Keynes ever said was ideas are almost all that matter. In fact, even Milton Friedman said something similar, though more cynical. He said, throw your economic ideas out there. And when the crisis comes, they may pick yours. I think by and large, that's what happened. But here's as a main, it's hard for me to be a mainstream advocate. When I found that when the mainstream so much so often argued that all the economy needs a little jolt of stimulus, and it'll be back on itself adjusting course. I just don't believe that, that it means markets mostly are almost always work to get fair prices and an equilibrium. I just don't believe that. It means labor is paid what labor deserves. In other words, labor earns its product, as Milton Friedman used to shortcut it. And I think everyone else does labor really earn its product, especially in the last 20 years. I think we've seen that it doesn't. Does it mean that prices are right for financial securities and for currencies and even in many speculative markets for gold or oil are prices actually right most of the time? I just don't believe that. Does it mean that we should mostly worry about unequal opportunity and not unequal outcomes? I find a tendency among the mainstream to keep arguing that inequality of outcomes don't matter. It's only inequality of opportunity. Does it mean maybe most important that the policy rate, the Federal Reserve rate, should be kept especially, should be the only objective and that inflation should only be 2% or less a year. Where the heck does that 2% target come from? Doesn't mean the deficit should be our first or second priority. I don't think so. Does it mean that we shouldn't have a much more committed, pay much more attention to public investment than merely as a necessity for government to undertake because markets fail? I don't think so. In any case, I am describing what I see as what the mainstream consensus was. Prices are right in securities. Prices are right in labor. Prices are right in currencies. Public investment doesn't have its own motivation. It is a gap filler. Government is a gap filler. Now, does this mean these ideas that I talk about in this book are not good ideas? Many of them were once good ideas and my argument is they become highly ideological in the last 30 or 40 years. I will go over them. But the reason I wrote this book is I don't want us to make the same mistakes we have made and I don't think we fully understand why we made those mistakes. I don't think we fully understand that the mainstream by and large swung ideologically to a position where government was less important and where free markets tended to work. And I wanted to isolate each of those ideas and show the damage they did. But if you don't mind, I want to go over my own history because I've been around too long, but I know surprises most of you, but I've been doing this for maybe 40 years now. I go back to when Reg Q was dismantled not merely by Jimmy Carter, regulation Q which kept interest rates on savings deposits fixed. It was really gotten around by Walter Wrist in the head of Citibank who just used a kind of, I wouldn't call it subterfuge, it's not like he hid it, but he used negotiable certificates of deposit and euro dollar deposits. Nobody stopped him from raising a lot of money that had paying higher rates than regulation Q. Regulation Q was a capital control. When we took it off, it changed the nature of the game. The approbation for Paul Volcker, shock therapy, did we need so severe a recession to stop inflation? I was frustrated by this. I was frustrated by the end of regulation Q and other financial controls, not that we shouldn't have ended regulation Q, but that we should have understood a little better what we were doing. I was frustrated when the rational expectation is led by Tom Sargent who explicitly wrote this said the 1982 recession would not be deep. They were wrong. I was frustrated by SNL deregulation, the worst piece of financial regulation ever that let SNLs invest in virtually anything with federally insured money. I was frustrated when the Democrats railed against the Reagan budgets based on what? In many cases, not all cases, based on Sey's law, which most of us on that side of the fence now criticize. I was frustrated when economists kept telling us the Fed can solve just about any question, so any problem, any financial crisis, you don't really worry about financial crises too much, or at least that was the implication. Imagine if the Fed saved Lehman Brothers. Where would we be today? Would we have gotten Dodd-Frank without that severe crisis? Probably not. Consider what happened when long-term capital management went down. The Fed was scared to death. It rounded up a bunch of private investors to save the company. Did we get any new rules or regulations that might stem financial speculation and stop a future crisis? Went at long-term capital management and was saved in 1998? No. What would have happened if we saved Lehman Brothers? Would we have gotten the kinds of rules and regulations we may get from Dodd-Frank? And I don't think Dodd-Frank is adequate. I'm bringing this up because I don't want us to make the same mistakes again. I tried to boil the book down into seven bad ideas, so let me go over them very quickly. Christian, could you give me a little time cue? Absolutely. Because as Brad said, as a lecturer, you can just go on and on. I'm going to try to be quick. Invisible hand, people were surprised that I made that a bad idea. Is it a bad idea? It's actually a beautiful idea, and that's its problem. It's seductive. It seems to explain everything. Did Adam Smith believe in it? I'm not part of that argument to try to discover what Adam Smith really believed. I believe he believed in it to answer the question he was seeing to answer within those limitations. He mentioned it only once. Some commentators make a big deal out of that. But in fact, he talked about it at length. He did believe in the invisible hand. But I think probably he knew, writing at a very different time, that it described how a market might work. It was a metaphor for how a market might work, not how a market does work. Does anybody take the purity of the invisible hand seriously? Yeah. Consider all the antagonism to increases in a minimum wage. A minimum wage is a price. If it goes up, we'll lose jobs. The invisible hand told me that's true. There's still antagonism to increases in the minimum wage. How did we disprove that? Through very good empirical research, and in many minds, it's not sufficiently disproved. There is some empirical research that says we will lose jobs, if only a few. Does the invisible hand explain economies of scale? The more we make, the lower the price. Not the more we make, the higher the price. Increasing returns to scale. Even the so-ho, the so-ho, the so-lo, you can see where I live. The so-lo growth model is based on increasing returns. My second bad idea, Cé's Law. I think it came from the barter economy. A number of people are spasless. But around 1800, very roughly, J.B. Cy, a French economist said, if you make it, people will buy it. The corollary, and I'm trying to be quick here, was if you save, people will invest. Business will invest. What's the best way to get an economy to grow? Save more so there'll be more investment. Well, that was the basis of austerity economics. Unfortunately, I put that in the title of this chapter, Cé's Law and Austerity Economics. The reason it was the basis for austerity economics, as most of you know, is that a federal budget deficit will withdraw savings from an economy. And if you're fairly pure about this thing, you'll say it's going to crowd out private investment and therefore lead to less growth. Well, John Maynard Keynes made that his primary target, Cé's Law, to show that in many, if not most circumstances, it's just not true. If we save more, especially when an economy is weak, it's likely to weaken the economy further because there won't be sufficient demand for goods and services and business won't invest. But here's what Cé's Law is really about. It's the heart of the motherload of the self-adjusting economy assumption. With Cé's Law, you can presume the economy will adjust itself as prices go down, wages go down, interest rates go down, without government help, without government interference. It's a bad idea. I call the third one Friedman's Folly. I pick on Milton Friedman a lot if he could not withstand my criticism, alive or dead. I wouldn't pick on him so much. He's a tower in the economics field, but a tower of strength. But I call Friedman's Folly the argument that the invisible hand, free markets, laissez-faire will not only solve the distribution of material goods, but will help create all kinds of what we would call social goods. Retirement security, adequate healthcare, adequate education, and so on. Indeed, even adequate infrastructure. I think, if I recall, he talked that roads should be built by government, but not highways and turnpikes. I may not remember that precisely correctly, but I think it's true. But more to the point, and this was not so much a Friedman argument. I don't think there's an argument about government in most mainstream economics. The best mainstream economics. Talk about government filling that gap. It's a gap filler for when markets fail. Well, let me ask you this and let me be provocative. How often do markets succeed? What markets do you know where there is in serious oligopoly and monopoly power? Retailing, healthcare, pharmacy, defense, big agriculture. What are we talking about? Where do they have undue market power? Where the definition of when markets fail is an ambiguous one, and I much rather see a much more robust definition of government. One of my bad ideas, maybe my favorite bad idea, is inflation targeting. I use the term loosely. Some nations like New Zealand have precise inflation targets. The US had imprecise, but the idea is all you had to do is keep inflation low and stable. The economy by and large would be fine. Now we talk about 2% inflation rates, and we're not even at 2% inflation, measured by the CPI, but in particular measured by the PCE, which the Fed looks at, and yet some Fed governors and members of the FOMC are talking about how we have to tighten policies sooner than later. Where did 2% come from? Darned if anybody knows, it just kind of happened. Now changing it from 2% is a bigger problem, but there's lots of empirical research. I shouldn't say lots, but a fair amount that suggests 3% and 4% inflation a year will not impede economic growth to any appreciable extent. One of the few justifications for 2% inflation that I saw came from Alan Greenspan, who wanted 0% inflation. He said that the BLS is just measuring inflation wrong. They are overstating inflation because they don't take into account quality changes. If you buy a car now, it might last for 10 years. When I was a kid, if your car really a kid, if your car lasted for four years, you were lucky. So you're really paying less for that car, or at least relatively less than the sticker price would suggest. He said we didn't take that sufficiently account. 2% inflation was basically pretty close to zero inflation. I'm going to come back to that, and I'm going to come back to the Great Moderation. Let me talk about my fifth bad idea, which I call there are no speculative bubbles. In some sense, this is very interesting. Because this idea, efficient markets theory, was a very good idea for quite a long time. It's the thing I studied most closely, so I feel particularly fond of it. It fooled me. But what it said at the beginning was stock prices and investors are so rational that the stock price will be a lot closer to a true reflection of the information out there. Then we really realized, and good empirical research and good theory was established, yes, by Eugene Fama, who says now basically there are no speculative bubbles. But good empirical research was created. My favorite guy was Bill Sharp. It's not a Berkeley, is he? He's of Stanford. Well, he's one of the good guys at Stanford then. He did the capital asset pricing model along with, wow, this guy I had as a professor also at Harvard, and it was, I think, a very successful idea. It had its limitations, which have been shown. But basically, why was this a good idea? Because it showed us you couldn't beat the market very easily, that it didn't make sense for investors to go with mutual funds. It made sense for them to put their money in index funds. Now, did that turn out totally to be true? I think it turned out to be true enough, but then the efficient markets theory was taken much farther. And pretty soon it argued that speculative bubbles really didn't exist, or if they existed they were temporary. We couldn't anticipate them, and we shouldn't worry about them. We shouldn't worry about them very much. Bob Schiller did a lot of good work to show that wasn't true. I'm collapsing everything as best I can. But in any case, that was a prevailing idea. It was also an idea that stock prices reflected the future value of the company. So why not give managers stock options, and then they will be compensated according to how well they manage the company, because the markets are so rational that they will reward them properly and fairly with a higher stock price. The result is CEOs make 300 times what the average worker is or so compared to 40 times in the good old days back in the day. And there's no evidence that the relationship of their pay to the quality of their management is a positive one. In other words, that the quality of their management is reflected in their pay. Finally, I talk about globalization and economics. There was a rush to globalization and it amounted to a one size fits all strategy. I am not against fair trade again, free trade, but I think it has to be much more carefully done. There has to be a lot of space for individual countries to have individual policies. I talk about some in the book. And I argue that economics is not a natural science. The evidence is the constant fighting we have over economic policy by smart, similarly educated people. That's not the only evidence. It's too ambiguous a field and my argument basically is that economics has to be practiced on a dirty basis, not a clean basis. The beauty of the invisible hand is that it's so clean that it gives you an answer that you can build quantitative models on it. And in fact, our economic problems are specific and I think the current winner of the Nobel Prize I was delighted to see talks in those terms. Talks in terms of monopoly and oligopoly power and how every problem is a different problem. So let me return finally to why I think, you know, sometimes you don't quite know you're going to write a book and then you have to think about six months after you finished it why you really did. But I think I'm very worried that this ideology will persist. Let me go back to what's been called the Great Moderation and then inflation targeting. The Great Moderation was hailed by Ben Bernanke, it was hailed by Olivier Blanchard as the proof that the new economic policies were working well. The Great Moderation said stability in GDP suggests we really have this under control. The fluctuations in GDP were less than they once were. Now GDP wasn't growing faster at an average pace. Now over that period inequality of incomes from the early 80s to the present rose rapidly. Now over that time period income stagnated for men and grew only slowly for women. What was so great about this period? Over that time we had one financial crisis after another and I'm going to list the years even though I have 42 seconds left. 1982 is the Mexican crash. 1990 roughly the SNL crash and the SNL bailout due to deregulation. 1994 another Mexican crisis and a derivatives crisis. People forget about the guy in Orange County where San Diego went to jail I think the treasurer or the financial officer there. 1997 the East Asian financial crisis. 1998 the Russian and long-term capital management crisis. 2000 the high tech crisis and those monstrous fraudulent accounting at Enron and Worldcom. How the heck did this happen? Deregulation was part of it and deregulation also is an outgrowth of the efficient markets idea. You don't have to worry about what finance is doing. Competition will balance it out. So here we had this great moderation on the one hand and we had inflation targeting on the other. If we just keep inflation low what's going to happen? Well we'll remove uncertainty from the economy. So quickly what is the underlying assumption beneath both of these? That the economy is self-adjusting that what's called the Pareto optimality as economists call it will be achieved without much government interference. If we get the economy stable that's what counts. If we get inflation out of the system so there's much less uncertainty in decision making that's what counts. And then the self-adjusting properties of the market the general equilibrium idea the expansion of the invisible hand to the whole will take over. I am worried that assumption will continue and will make bad decisions as a consequence. What I think we have to do is think a lot and I'm going to wrap up now Christian. It's always the famous Galbraith quote. When you're about halfway through tell him you're just finishing. But I am going to wrap up now. I think we've got to think a lot about how to make the pre-social policy and pre-tax economy work better through equalization. I think we should have a higher inflation target significantly higher than two percent. I think we should be talking about three and four percent. Not only because we keep our powder dry the powder dry theorem we don't reach the lower bound but I think in the old Phillips curve since we'll probably get lower unemployment and faster job growth and wage growth in the long run. I think we need a very robust idea about a commitment to public investment big deficits or not. I think the deficit fear of big deficits that remains with us even though some austerity. More people realize austerity has been a disaster and calling for fiscal stimulus and we really need to control Wall Street in a serious way. Dodd Frank is not doing it. It's not enough to worry only about stopping the next crisis which Dodd Frank is dedicated to. It's about channeling our precious savings into productive investment and we can do that. Private equity doesn't do that. The hedge funds don't do that. Given our tax laws, given the exemption on lots of borrowing for interest we're misdirecting funds into the wrong places and back into speculation. I believe Wall Street is by and large a monopoly oligopoly that's at very high fees that should be looked into and I believe probably the level of manipulation inside information and so forth in trading is monstrous and we're only beginning to get at that. If we have to be able to attain that to put Wall Street in its place and have it do what is fundamentally needed for an economy like ours, channel our savings to productive investment in the most efficient way. Thanks very much and thank you all for coming and commenting. And never fear Jeff, I'm sure Elon and Brad and Josh will say things that will elicit further comment so that was not your last crack at the apple. We are going to move to the discussion portion and some comments from the economists on the panel. I wanted to note for everyone that on Twitter there's some conversation being generated about Jeff tying Sey's law to disastrous austerity policies as well as the notion of really questioning when in fact we can think about when markets succeed as opposed to the inverse. I'm sure we're going to get into some more issues for discussion and guiding us through that is a distinguished reporter at the Washington Post, Elon Mui, who's been at the Post for over a decade and is a shining star in the field of economics reporting with extensive expertise in our coverage at the Federal Reserve but in addition she's covered consumer finance, subprime lending and numerous other national disasters and major stories that have affected the country during her period at the Post. She comes to Washington being a lifelong I guess born and raised in New Orleans, Louisiana where she got her start at the Times Picayune but we are happy that she brought her talents north and eastward so to guide us please welcome Elon Mui. I'd like to introduce our panelists who will be offering their thoughts and commentary on Jeff's book Seven Bad Ideas. On my far left we have Josh Bivens who joined the Economic Policy Institute in 2002 and he's written several books including Everybody Wins except for most of us what economics teaches about globalization. He's also been a commentator on NPR, CNN, CNBC, Waters, BBC and of course in the Washington Post as well. And our next panelist is Brad DeLong. He is a professor of economics at UC Berkeley. He heads the Political Economy of Industrial Society's major. He's a research associate at the National Bureau of Economic Research. He studied at Harvard where he received his PhD in 1987 and he also served as Deputy Assistant Secretary for the Treasury for Economic Policy and the Clinton Administration. Thank you guys both for being here. So I just want to kick it off with a question I guess to you first Josh. One of the things that struck me about this book is that there have been a lot of fingers pointed when it comes to blame for the financial crisis, Wall Street greed, predatory lending, etc. But rarely has the finger been pointed at the economists themselves. Do you think your profession deserves blame? One word answers, yes. But then I think, and I was going to start out with some talk about, you know, we should be very careful to read Jeff's book with the nuance it deserves, but his talk had a lot of that nuance. So this is going to be pretty repetitive. But I think he's entirely right that most of the ideas in his book have indeed been put to damaging use in U.S. policy debates. But I think we should be careful to say a lot of the ideas actually contain some pretty useful nuggets in them. And they're bad and dangerous ideas when they're invoked, when people who invoke them, there's a couple things. When they can't differentiate when the ideas should be taken as description of how the world works versus prescription for how we should make it work. I think that's one big way that they can be put to dangerous use and can say more about that later. But I think even more importantly, I think they're really bad and dangerous when they're mobilized by people. I mean, it's tough to say this nicely with either really weak minds or with ulterior political motivations. And let's get really specific. I mean, the one thing I know something about is macroeconomics and recession fighting. And the big idea described by Jeff in the second chapter of his book in regards to the last five years and why economists are not universally beloved. I mean, I would say any more, but were they ever. But they're especially not universally beloved at this point. The second chapter is about the claim that economies have self-correcting properties that keep recessions short and shallow. We don't have to do too much to worry about fighting recessions. And this is obviously a dangerous idea because if you get really complacent about fighting recessions, you know what happens. We have the past five years. We have millions of people unemployed, underemployed. We have sluggish wage growth. And I think it's really obvious that the DC policymaking class has been way too complacent in fighting the recession. I would say I can go off for a long time about the fiscal policy side. I think work gets interesting in terms of the question about who deserves the blame and what are the channels through which bad ideas infect the policymaking process. It's really kind of more on the monetary policy front. I mean, the actual policymakers with PhDs in charge of monetary policy in the U.S. have done a much better job than almost anybody else in the U.S. scene and responding to the crisis. I mean, Ben Bernanke and Janet Yellen, they have not been excessively complacent about the economic crisis. We may have wished their hair to be even more engulfed in flame than it has been over the past five years, but they've not been complacent. They've been pushing really hard to do something about the economic crisis. But the policymaking sort of backseat drivers, the congressional committees that summon them and then chastise them for setting the conditions for hyperinflation and the regional Federal Reserve Bank presidents who do the same thing, they've been arguing pretty vociferously for more complacency. And so I think this divergence between the actions of actual PhD policymakers and those of the others on this front, they kind of illustrate what is the channel through which these bad ideas actually infect the policymaking process. Have they really hypnotized the minds of professional economists or have they just become an easy cover for the policymakers who then have to take what professional economists tell them and make genuine policy? I wish I could say professional economists were totally off the hook. We're all giving good advice and just Paul Ryan and Ron Paul are sort of perverting it when they actually make policy. You know, it's not the case that there are enough economists to keep the water money. And let me just, I'm filibustering, but I'll end really quickly here. I was asked by a reporter, can we now take, you know, people who deny that fiscal stimulus at zero interest rates helps an economy recover? Can we treat people who deny that like climate change deniers? Can we just say all experts agree and they are completely beyond the pale? Sadly, no. I mean, I think the evidence says we should. I think there's just not a bigger slam dunk that I've seen in actual evidence as a social, but we can. You've got people like Greg Mankiw who defended the Bush tax cuts on purely Keynesian grounds who then in 2009 when the Obama stimulus is being debated, he links to every anti-stimulus argument there is from his blog. He doesn't actually endorse each one specifically, but come on, every day he links to five crazy ideas about why the stimulus is bad. And so I would love to say that Jeff's bad ideas, you know, they really haven't hypnotized the economists. They've just provided a cover. They've just sort of kept that translation from economist wisdom to policymaking. You know, it's not true. They've provided a useful cover for people willing to go to bat for bad policies. And then I'll just last thought. I think part of the missing ingredient here about why economists are not useful actors in policy debates. It's not just about that they've been sort of suckered by the big ideas and the un-nuanced take on the big ideas Jeff was talking about. I think there's just lots of sort of conscious and unconscious class bias among economists and how they enter these policy debates. And that's, I think, a missing ingredient as well. And so I'm sure we can talk more about that later. Policy, the description, or the prescription? Do you want me to talk about monetary policy, about fiscal policy, or about finance? I can do only one of the three. Why don't you start with monetary policy? Well, I'd say that first I see four big gaps between where we should be and where we are. And the first is the gap between what economists should be saying about monetary policy, say, and what I think they do say. The second is the gap between what I think real economists say and what Jeff thinks real economists say. The third is the gap between what Jeff thinks real economists say and what the Washington policymaking and the global policymaking community take economists to be saying. And the fourth is the enormous gap between what the Washington, the global community thinks economic wisdom is and the policies that are actually being followed. And all four of those gaps are large. And I would say the fourth is the largest. And the third is the next largest. And the first two gaps, they're actually not all that huge. It is, we don't know what Milton Friedman would be saying in this particular conjuncture, if he were here with us, that he was an unpredictable guy, very smart, and smart both at finding insights into how the world worked and also finding clever arguments so that he did not have to let evidence about how the world worked to disturb his beliefs. It's an occupational hazard of people who are a little too book smart, a little too Talmudic. We get that way pretty quickly. But when Friedman was confronted with a situation like that of the U.S. today, that of Japan in the late 1990s, his policy prescriptions were very clear. His policy prescription was that further out his life, up until then, he had counted on the velocity of money to be a relatively stable variable, if not greatly disturbed by financial distress of extraordinary one kind or another. And so he'd believed that if you simply kept the money stock of the economy on track, that would keep total spending on track. In Japan in the late 1990s, Friedman said he was faced with a situation in which keeping the money stocks growth on track did not keep spending in Japan on track. And therefore the answer, he said, was to throw overboard the constant money stock growth rule. That what Japan should do, Friedman said in the 1990s, is print money and keep printing money. And don't care that short term interest rates are low. Don't care that long term interest rates are low. Low interest rates, either at the short term or the long term, don't tell you whether money is properly easy or not. Only the total level of spending tells you where the money is easy or not. And so Friedman's policy advice for Japan in the 1990s was massive quantitative easing. And if that doesn't get spending and employment back to where you want it to be, do some more. And if that doesn't work, do even more. Now it is a fact that there is not one single person on the Board of Governors of the Federal Reserve or a Federal Reserve Bank President job who is as far to the left as Milton Friedman was in monetary policy. They all talk about vague risks of excessive quantitative easing. They talk about the importance of the taper. They talk about how their models show convergence to something like full employment over the next three or four years during which they continue to hit below their 2% inflation target. They talk about the rapid soaking up of excess labor supply through various structural changes in the labor market, which so far does not have one iota of evidence supporting it in wages. If Milton Friedman without his name were nominated to the Board of Governors of the Federal Reserve right now and went in front of a confirmation hearing, I don't think he could get 50 votes. I think he'd be regarded as too much of a crazy left winger. And, you know, that's an extraordinary situation to be in. And one that makes me wake up at night and cold sweats about one day a week or so. So, Jeff, do you have any comments or response to their thoughts? I'm sure Brad has a lot of thoughts about other people besides me. The other night of the week he wakes up in a cold sweat. I always remember, I don't literally remember, but I read James Tobin's criticism of Friedman in Schwartz's book. And he marked, you can't hear? Sorry. He remarked quite clearly, Tobin said, well, it's an odd book that says velocity is one thing during one decade and something totally different in another decade. It's a little bit hard for him to square this constant velocity idea with Friedman's claims about money. I'm also a little bit, I don't remember Brad's writings on this, but I tend to think of money as more endogenously created by business activity than exogenously created. And finally, in terms of Friedman as a left-winger, left-wing is not only about stepping on the interest rate pedal. In other words, lowering interest rates. It's about regulations. And I think Janet Yellen, and I'm very glad to see as Fed chairman, is talking about how interest rates alone, lower interest rates alone might lead to risk, but there are other ways, speculative risk, but there are other ways to deal with speculative risk that under the ideologue Alan Greenspan was neglected badly and to some degree under Bernanke, who I have a lot more respect for than for Greenspan, there are regulatory tools, and I doubt that Friedman would be in favor of these kinds of capital controls. Well, Jeff, this gets to a broader question. This gets to a broader question, which is what exactly are you considering mainstream? Because in your book, you cite Stiglitz, you cite Schiller as people of some people who called it right, who got things right. But certainly I would think that they are part of the mainstream economic consensus. So what exactly, how are you defining this term? And there are plenty of people outside the mainstream who I would suggest that you would disagree with heartily, including those folks at the Keto Institute. Well, the point of the book was to talk about how the preponderance of economists who teach in major universities not only on the right, but on the left came to a consensus on these views, and that in effect was my definition of mainstream. By and large, it's the acceptance of neoclassical economics for the most part with some variation among them. But let me point out that these economists came together about believing in the great moderation, Blanchard, slightly left of center, Bernanke, probably slightly right of center, believe the great moderation. They manufactured a measure of their own success. An economist on the left and the right believed in low stable inflation as the primary policy objective. So that's what I'm talking about when I talk about mainstream economists. There was a very strong consensus on a lot of issues, and I believe that did, while they did not have their hands literally on the policy levers all the time, very few decisions were made by a president or a Fed chairman without talking to the economics department. Now, the economics department might have disagreed, but economists had a lot of control more to the point they seeped through the media and into the general population. We have a question from the audience, which is asking each of the speakers to address the ideal role of government and markets and in national economics. Brad, you want to start with you? Well, let me start by, yeah, I guess first let me put in a parenthesis that in 1992, Larry Summers and I wrote a paper, stood up in front of the Federal Reserve and said that in our judgment reducing the inflation rate below 5% per year as a target did run risks that probably should not be run, as shown by the fact that had the inflation rate been significantly lower than the 4% or so that it had been in the late 1980s, the Federal Reserve would not have been able to do the expansionary policies it needed to do to fight the 1990-92 SNL crisis recession, and that that was a relatively small macroeconomic shock. There are large chunks of the mainstream that did not buy into the 2% per year as the right inflation target, and even though you can interpret Olivier as not dissenting strongly from it before 2008, since he's gotten into his post at the IMF, he's been dissenting from it more strongly than anyone else, right, that Olivier Blanchard and his boss Christine Lagarde are now the leftmost people on monetary policy running any governmental organization today, if there is an equivalent of the 6th and Socialist International here, they are it. Second, on to the question of the proper role of government, well look, we know that there are stringent requirements for market effectiveness, for anything like the invisible hand to actually work well. We've got to have a distribution of wealth we start with to corresponding to fairness and utility, for lots of reasons, straightforward utilitarian reasons, and also that equality of opportunity is a joke without substantial equality of results standing behind it. We need to have aggregate demand match to potential supply, we need to have competition, we need to have calculation that is people need to know what their options are and be able to assess them accurately. Goods and services need to be rival in the sense of no public goods or no increasing returns, so it actually makes sense to charge prices for them because in consuming a good you're using up some scarce resource. Goods and services need to be excludable so that you can actually make price markets function and there need to be no information asymmetries, no situations in which one side of the market knows a great deal more about what they're buying and selling than the other does. And if those requirements aren't all met, well then the invisible hand theorem simply fails. You know, that Jeff talks about, you know, arrow to Bruin Han, building up the enormous edifice of modern general equilibrium theory and talks a little less than I would about how the lesson all three of them drew from it was that these requirements were really extraordinarily stringent and not to be found very much in the real world. Now, if we take a look at the world out there, I think we can see decreasing relevance of the Smithian model. As we live longer, we find that more of our economy has to go in the form of pensions and health care finance in which problems of calculation of myopia on the one hand and of information asymmetries are absolutely enormous. We also are spending a lot more on education. We're spending more on infrastructure as the average lifespan of the goods and services we produce increases and as interdependencies increase. Research and development and information goods more general are kind of the heart of where any kind of Smithian invisible hand theorem will fail. That not only are the requirements for market effectiveness extremely stringent, but they will apply to a smaller share of the economy in the future than they have in the past. So, if we are going to right size the market over the course of the next century, we economists really do need to think very hard. And I think mostly what we need and what other social scientists need is a grammar of other forms of organization. That markets are not the only way to organize things. We have command, we have bureaucracy, we have charity, we have cooperative, we have Wikipedia, we have regulated monopolies, we have yardstick competition, we have a whole bunch of other things. And if we had a better grammar of where they succeed and where they fail, we'd have a much better discussion. As it is, though, we simply tend to have a bunch of people who yell that government isn't competent and fails always. Some other people who whimper that sources of market failure are relatively strong as well. Some other people who say all you have to do is to cut property rights at the joints in the correct way, the Cossian proper assignment of property rights and everything will be fine. And none of those three positions seem to me to come close to doing the job. Josh, what do you think? Let me focus on just a narrow part of it because I'm narrow-minded and to bring it back to Jeff's... Like a mainstream economist. Yes, to Jeff's second chapter again. I mean, proper role of government, huge question. It seems like the one that should be pretty much non-ideological and non-partisan, we should at least not let the economy founder well below full employment for long periods of time. Like the idea that there's some conservative or liberal case for yes, really high rates of unemployment are somehow good. I mean, the minimum government should do macroeconomic management in some kind of competent way. And you can be a conservative Keynesian. I mean, there's no reason why the response to the big shortfall and demand in 2008 couldn't have been we're going to zero out payroll taxes for three years. It wouldn't have worked, it wouldn't have been the most efficient, but it would have done something to stimulate the economy. And yet, it was really a serious absence of anything like a serious sort of proposal from the right anywhere near the scale of the sort of demand shortfall that led to the five years of just terrible times. And I think that sort of is a little bit of a vindication for Jeff's thesis that... And not from the right. It was Barack Obama who stood up in his 2010 State of the Union address and said that the time for expansionary fiscal policy is over. And just as American households have to cut theft to tighten their belts, so the government has to... Is that a political consideration versus an economic consideration? Even though Christina Romer was out there trying to nail the Obama Administration to the position of no 1937s, no premature withdrawal of expansionary fiscal support from the economy until the recovery is well established. Right now, if you go over to the White House Briefing Room, they're talking about how wonderful it is that the deficit has fallen by so much from a level that was appropriate to the State of the Macro Economy in 2009 to a level that I think everyone would say is at most a third of what it should be. Given the extraordinary shortfall of output below what it ought to be according to any potential and given the extraordinarily good terms on which the government can borrow right now. That is, any private organization, any market organization that could borrow on the terms the U.S. government could borrow right now would be borrowing like mad and investing and making every single long-term capital investment it was going to make over the next 30 years right now. I want to give Jeff a moment to respond, but also I want to let you guys know that if you have questions, if you want to challenge Brad or Josh or Jeff, you can come up to the mic and ask a question as well. Jeff, what's your response? I just think I seriously disagree with Brad on this issue, not that Obama prematurely withdrew in my own writings. I was arguing about that all the time. Christina wrote a very good essay. I wrote about it many times about multipliers over one. It was an excellent piece of work. But the fact is a large proportion of the economics community battled that idea. Many supported the first Obama stimulus. I haven't seen surveys about whether they would have supported a second Obama stimulus or a still bigger one after that, which I think we both agree would have been desirable. I think Brad's talking about an ideal wish list that economists, for the most part, for many economists are not talking about. There's enormous pressure not to increase health care spending, but to control Medicare and Medicaid spending and so forth. There's enormous pressure not to invest in R&D. I went to, you know, let me name names of a major mainstream economist. There's an extraordinary assumption that government R&D was not the significant or even the most significant factor in technology advance in America, even in the post-World War II period. I love Bob Gordon, but he made a talk about how the stagnation of technology and then somebody asked him a question about future technology. He said, well, that's venture capital, not government. That's not government. Well, ain't so. It's been government, all of the major venture capital has gone into areas where government has been the leading investor. So it is not. I think Brad gave a beautiful wish list, but it's a wish list. And there's lots of dissent and regarding, I mean, in my own defense, regarding arrow and so forth. I would never say that arrow defends Pareto optimality. I think he spent his whole career showing how the extreme assumptions made make it highly unlikely. Any questions from the audience? While we wait for someone to be brave enough to ask the first question, I have another one for you, Jeff, which is, you know, you said that part of the reason you wrote the book is because you don't want us to repeat the mistakes of the past. To what extent do you think that mainstream economics has sort of incorporated lessons from the financial crisis and is shifting? I mean, we talk about unemployment now as the problem of our generation, not inflation. The IMF has spoken many times about the need for infrastructure investment, et cetera. So are you seeing some of these ideas start to shift? Yeah, I'm seeing some of it start to shift. That doesn't, and Brad brought this up also. I mentioned very explicitly that Olivier Blanchard changed his mind. But, you know, after you get wounded, you begin to believe in God. He got wounded. He now believes in God. Thank goodness. They did. And, you know, a guy named Daniel Lee, I did a little conference on this long before Blanchard sponsored the research with Daniel Lee on demand-led growth. It was hard to get that stuff out there. And who is knocking heads together? Alessina of Harvard. Not the Chicago guys, but Alessina of, for all I know, he went to Chicago, but he's got a post. He was born in Italy. No, he has a post in Italy. He has the Italian's view of the effectiveness of government, having watched the social. The Christian Democratic Party runs southern Italy like a feudal fiefdom for 40 years. Well, in any case, Alessina was knocking heads together, you know, professing that austerity worked, and he was Osborn said he was... He's only one of the 40 people in the Chicago Business School's panel of economists who agrees with him. Right? But he had the year of George Osborn, 20 LSE economists, 20 LSE economists, wrote in favor of the Osborn budget. There were all, you know, it's not as if the Germans don't have a school of thought. It's, we think, a perverse school of thought, but they have an economic school of thought. They don't represent the mainstream here so much, obviously. But there's been a lot of economic, my point is there's been a lot of economic influence in the wrong direction, and I fear I'm not answering your question. Josh, Josh, what are your thoughts here? I mean, do you feel like there's been a shift in mainstream thinking? It's pretty early to tell. I mean, let me step back on as well. I think, again, this discussion is about sort of where does the breakdown happen between in the policymaking progress process and why do we get so many bad policy outcomes? And is it the problem of economists who sort of generated at the front end of the chain or do they somehow get messed up along the way and it's the policy makers on the ground who garble the ideas and get it wrong? And I think that there's, blame to go around for sure. And Jeff's book I think is mostly about that, that sort of top of the food chain where the ideas come from. I will say, I think Brad does have some points in that we've got a lot of economists saying some sensible things and yet we are doing almost nothing sensible these days in economics. And so I would like as much attention as Jeff has put in his book on how to make sure economists have better ideas and this is really self-serving because I work at a policy institute. But I think we need a lot more attention and resources aimed at places to figure out how to make that translation of the good ideas in the academy actually make it unscathed through the policy making process. And I see lots of people who like want to throw a lot of money to change how economists think and that's a worthy goal, that's a really expensive goal but there's also this other really important channel that isn't getting enough attention which is how to make sure that the good ideas that the economists have have good shepherds in the policy making process and I would argue EPI is a pretty good shepherd of such things and there's lots of problems out there. So you're saying the problem is not diversity of thought, it's transmission of thought. It's not the only problem. Transmission is a problem. It's that these council on foreign relations can put on an absolutely a conference on the macro economy in March of 2009 that even in retrospect I can only marvel at the total incompetence and irrelevance of the people chosen to speak. And in fact every March now until as long as I live I suppose at the end of March as part of April Fool's Day on my web log I am going to make fun of them. And while the EPI is a hard time getting stuff out. Question from the audience. Yes, maybe Josh's comments were particularly good I think to set up Josh's comments were particularly good I think to set up the question that I had and that is on the question of currency manipulation of course I'm operating under the disadvantage of not having read your book you mentioned that you have a chapter on globalization my view and I think that the institute has come out itself with the importance of sort of standing on one foot if there's one thing that one could try to change to help set up a better international economic system would be to counteract currency manipulation but we don't see this just a few weeks ago yet again the Treasury Department says no currency manipulation. Question I have for I guess for you Jeff is to what extent maybe you can help us unpack this to what extent is that an economic question policy lag let's say from the point of view of some economists is it a to what extent is it a question of that it's sort of not getting into that area is something that business people whose business model depends on not dealing with that issue how do they perpetuate this what about the politics of this the Hill politics all of that maybe we could sort of get to Josh's question in that particular area how do we move from this stagnation and obviously outdated policies to something better well obviously that was I thought he was directed to Josh but it's directed at me and I guess everybody will speak on that obviously currency manipulation is a major political issue it's the old it's a very old free trade issue we do one thing and they retaliate with some other policy that undermines what we do I would like to see a different valuation for the dollar stop doing that partly they started manipulating the currency when they joined the WTO because they were forbidden from doing some other things that helped their exports so I think it's one of the major problems we face is the in fact I did a little piece where I included this some work in the New York Times worldwide agreements on how to set exchange rate policy and now we a long time ago in the 1970s decided we would just let the market decide and here on probably there were two issues there of course you can manipulate the market but also especially with the dollar the dollar price is trying to settle two different kinds of markets a reserve currency market and a trade market so it seems implausible to me that one price would solve both problems but I don't have an easy answer for that but I do think some economists Peter Teman for example are talking about how there is a priority in dealing with the balancing of trade deficits and trade surpluses in the world can't be forever that the only reasonable growth model is export growth but by and large historically export growth has been the launching pad for most economies so you raise probably which there is not an easy answer Josh yeah I really agree with that lessons I think of all the policy debates in terms of starting from some kind of consensus among economists I don't really think it exists on that issue so much and then all of the barriers to getting anything like a consensus sort of expressed in policy I mean among other things I would bet if I was there are administration officials who worry about in our relationship with China and a lot of the sort of currency managing countries and why does this one go to number one and shouldn't and so to me economically I'm definitely of the mind that if we can convince these countries to stop plowing tons of money into our economy and T bills or T bonds rather than their own that would be a really good way to generate what exactly the breakdown is other ones are a little easier like why are Congress people who have no say over monetary policy having hearings where they scream at Fed officials for priming hyperinflation they think they have a stake in a not very good economy for the time being I think it's pretty much that simple and that crude you don't think they've been listening to the wrong people to the economy and responsible for bad economic outcomes not okay but they would stop talking to them they would be having dinner with Greg Mankiw instead we hope okay Larry Michelle thanks I think it is kind of interesting to think about the problems in the two points of the food chain one is where the a weakness and then what happens even beyond that just getting to the whole issue of the great recession and the inadequate response which kind of shapes this debate one of the things that surprised me so much that may be I follow academics but I was a little shocked about the complete route of Keynesian economics in the academy that there was very little there's a group Brad but outside of Berkeley and you know some people Princeton and you know whatever there's not it was a pretty thin group to support the idea of an active fiscal policy but I guess we also have to think about even given that you know why was there the bad turn in the Obama Administration the giving up of stimulus and part of it is that the whole idea of stimulus was defeated in the public marketplace in part because there was a stimulus and the unemployment rate didn't seem to get to where people wanted it to be it was promised it was promised that was a mistake and but part of that is that we just had a really really deep recession and it's really hard to do almost everything you could to get the unemployment rate back to full employment within a year or two that's just not going to happen if your problem is a disruption of the housing finance credit channel actually doing something to fix the housing finance credit channel might help so anyway I guess I do I'm very sympathetic to the fact that there has been a major defeat in the academic world for some activist fiscal policy that was pretty clear but it's not all our problems that would be true and I guess it'd be maybe useful to even think about what are the range of problems that are confronted even if you were to get the ideas from academia correct I mean part of it what we're not talking about is the incredible power of money and politics and policy and the role of Wall Street in both the Democratic Party and in the Republican Party maybe we should comment a little bit about that as I say I see the academy somewhat differently I see 38 of 40 of the Chicago business schools contributors to their economic panel saying that yes expansionary fiscal policy does produce benefits and even though we're only I think at 32 out of 40 saying the stimulus was a good idea that the other seven plus Alberto Alicina saying that the debt rolled up was too high for the benefits to be worth it the route in the academy was if it was there was extremely short lived was tied to a momentary boom behind Alicina ideas of expansionary austerity because it somehow summoned the confidence fairy coupled with the very smart Ken Rogoff and Carmen Reinhart greatly overselling their evidence about the potential risks run by running up high national debt I think for two reasons first a analytical mistake in terms of choosing the wrong baskets in which to sort their data and second in failing to properly distinguish between sovereigns that have exorbitant privilege and issue reserve currencies and sovereigns that don't Jeff this is a point that you address specifically in your book can you talk a little bit about that looking forward looking forward to being covered to pretty much where it was back in 2007 you know what I was I was always struck by the Christina Romer essay in which he did empirical work or some summarized empirical work on whether there was a multiple multiplier above one and she said specifically like she was defending herself I am not a Keynesian I am simply an empiricist and that to me suggested something that to me suggested something something still made you something of a pariah and I think that's probably still the case at most there's an empirical argument but we're not talking about a simple yes or no on the Obama stimulus most people say yes and these models said yes and he's by and large a Republican we're talking about do we continue with stimulus do we stop worrying about the long-term deficit on which coming from the economics community I believe it's not a simple short term issue which I think the economics community thinks of it as so I think that's I do think Larry's right I think the Keynesian argument was by and large routed it's still an embarrassment some circles to let call yourself a Keynesian and that has to have an impact and we should talk a little bit about EPI but this might be one of the issues which is what caused inequality and do we really and is there really an correct economic consensus about that I don't know if you want to talk about that Larry doesn't want to talk about that actually my question oh good you'll be forced to Josh did you have a point a point you wanted to add about money in politics in Wall Street yeah I mean what do you want to say to inequality called raising America's pay you should check it out on our website I mean I would say yeah I think it's an illustration I think of Jeff's chapter one I think sort of the idea for way too long the conventional wisdom was that labor is just like a commodity the supply and demand for it so if inequality rises something must have shifted those supply and demand curves people glommed on the race and I think there's a lot of evidence that lagging education or increase in technology has been the big driver of inequality and economists need to broaden out and actually look at the policy changes we've undertaken over the past couple of decades that have intentionally shifted bargaining power from low and moderate wage workers to corporate managers and owners and I think the one thing there's sort of a class bias among economists I mean look at the Chicago survey that Brad's been talking about they survey 40 economists at the Chicago business school they asked them you know basically a question do you like Uber and the idea they love Uber they love the idea of shaking up monopolies when the people are going to be hurt by that our taxi drivers they asked them do you think the U.S. software patent system is doing well because there are some really rich people making money off software patents and they're a lot harder to kick than taxi drivers and so I really do think even when it comes to sort of applying the simplistic theory of chapter one and Jeff's book it matters a lot whose ox is being gored and apropos of that I have an email from a student saying I think the evidence is that while there are a lot of good ideas and intellectual scaffolding and economics the freedmenite socialization of economists is one that makes them a epistemologically blindfolded by naive positivism which leads them to believe technocrats that believe themselves above the fray of democratic politics be too willing to believe the great glass bead game of model building and finding natural experiments see too inclined to treat the decisions of capitalists as forces of power. I think that's a good question because it's too slavish to finance in business schools. I always thought Berkeley was a good school. It's not an English major we have we have our last question here. It's a follow up to the issue of inequality Jeff when you opened your remarks you talked about the difference between inequality of opportunity and inequality of outcome and showing that inequality can actually lead to lower growth rather than higher growth. We just had the fed the Boston Fed meeting where the whole idea of the link between inequality of outcome was shown to affect inequality of opportunity. If you don't have any if you don't have a quality of outcome you don't get to the inequality you don't get to the opportunity. This morning one of your other organizations here in town the American Enterprise Institute just blasted Janet Yellen for mentioning the fact that inequality of outcome might be important basically called her a leftist politician. Excuse me a partisan leftist politician do you see any hope here. Thank you for asking that this is another area in which mainstream economists have by and large failed with exceptions by and large they say inequality of outcomes is not our interest William Boiter what's his name I would say that Bernanke said it basically said that in a meeting before he left basically said that inequality of distribution is not really our issue. Yellen final the reason it caused so much cause so grab so much attention is because it's not stated by somebody in Yellen's position and it's about time it should be stated it is not nothing quite piece me as much and it comes from the left and the right. The answer to all our problems is education just get kids make it cheaper to go to college we have so much deeper a problem than education it's not at all obvious that education and skills attainment are identities but the economics profession does regression analysis as if attainment level of schooling is exactly equal to skills identity the OECD did a comprehensive study and found that skills are considerably higher in Europe at a same level of education compared to the level of education in the US but doesn't stop economists from doing these regression analysis it's an area for me I'm not a motherhood what's wrong with you have some apple pie and go home and see your mom educate people it is so much more difficult a problem than that and generally while there are lots of exceptions heckman for example a guy who's cross lines from conservative liberal talks a lot about early childhood education we need interventions that narrow technical definition of what a public good is we know that there's neurological damage for kids from zero to three neurological damage not only from being hit in the head but just from neglect major issues here to face and we're just not doing it we are suppressing with the help of some economists I think many economists suppressing social spending in America and it's going to continue to haunt us when people talk about secular stagnation I say why if this is true I have some dads one can make easy deductions about that but if this is true why would you be surprised our infrastructure stinks our education system stinks we have the highest child poverty rate in the world 25 to 30 percent of kids under five or six lost to the system that's a huge chunk of the population why should we have a glorious future and economists should be asking themselves whether they should devote themselves to that or more let me be kinder about this more fully the interesting thing is that if you actually listen to were read to Janet Yellen's speech it wasn't a partisan speech it wasn't a political speech it was very much the standard just the facts man manner that Janet has adopted since the Clinton Administration picked her to first go on the Fed Board of Governors in 1994 that is the idea is here are the important facts about this situation you analyze them as you like and I think it speaks a great deal about the American Enterprise Institute as an institution that it now thinks that learning about facts and trying to analyze them is itself a leftist partisan political thing as was it John Stuart or was it Stephen Colbert who says the problem is that reality has a liberal bias I think the only way to read the AEI attack on what's very weak T is as confirming that that indeed seems to be the case in America today which makes me a lot less certain that if the Republicans were in power that people who still retain some anchor to reality would have positions of influence can I just say this in agreement with Brad Janet Yellen's strength is that she does stick to the facts now humans are not their imperfect beings bias will always enter somehow somewhere but by and large the reason she's going to succeed is to say she does her homework is an understatement so I always worried about the old boys club my guess is Obama worried about it when he seemed to be resisting Yellen's appointment but she fights it by being by and large the best informed economist among her peers and decision making capacity and Jeff will let you have the last word here thank you so much to you for being here the book is seven bad ideas I think it's going to be for sale outside this room thank you to Josh and to Brad for joining us as well