Categories Uncategorized Jason Furman at IIEA Post author By Philip Lane Post date May 2, 2014 23 Comments on Jason Furman at IIEA The chair of the CEA will speak at the IIEA next Wednesday: details here. Related ← Scots should recall the poverty of the Irish Free State → IMF: Ireland—Concluding Statement of the First Post-Program Monitoring Discussion 23 replies on “Jason Furman at IIEA” I’ll be there. I’ll post here if he says anything interesting. People who are wondering who Mr Furman is should click the link. Not my area, but the Obama administration’s record on income inequality seems quite appalling. Is Furman coming over to lecture on how to do it or how not to do it? Hi Gregory, What’s the most reputable stat. for that in case I decide to lob him a question? I was thinking of asking for his impression of the President’s interest in and knowledge of economics. Suggestions welcome. See, Saez (2013) here: http://eml.berkeley.edu/~saez/saez-UStopincomes-2012.pdf as discussed for example here http://www.cbsnews.com/news/income-gains-for-1-break-records/ quote: “The income gap between the richest 1 percent and the rest of America last year  reached the widest point since the Roaring Twenties, an academic study shows. The top 1 percent of U.S. earners collected 19.3 percent of household income in 2012, their largest share since 1928. Last year, the incomes of the top 1 percent rose nearly 20 percent, compared with a 1 percent increase for the remaining 99 percent. The share held by the top 10 percent of earners last year reached a record 48.2 percent. “ woo hoo. I got an exit visa from the Midlands. See you there Gavin.. s Off topic but… http://www.independent.ie/irish-news/patrick-neary-tees-off-as-banking-probe-finalised-30246199.html “It is believed that 48 staff will be hired, and members will be assured of more resources if necessary.” Okay, myself and Sarah Carey attended the presentation by Jason Furman, Chairman of the Council of Economic Advisors to President Obama, on ‘Global Lessons on Inclusive Growth’. This was organised Institute of International and European Affairs which is on North Great Georges Street, Dublin Central. The presentation took place in a large double Georgian room with an audience largely composed of men in suits. Mr Furman himself is youthful and preppy but formidably confident and grounded. He was said to be coming back from an OECD meeting (for Ministers?) on the same subject, I think, and was also noted to have been at Harvard which may or may not be significant with regard to the whole saltwater/freshwater thing. If you click the links the slides are already up and the format is that the main speech is recorded and for the public (and should be on the website later) but the Q&A comes under Chatham House rules: ie it would be bad form for me to blog them here. My take is that Gregory’s point is exactly what he was talking about and currently working on as policy in the USA and internationally. Overall I would have him as progressive centrist, but in no way revolutionary. Indeed, deepening and extending markets is part of his world-view. A point of departure for him was Picketty (health warning, I haven’t read), but where Picketty proposes wealth taxes, he proposes that if growth is sufficient and the numbers work out (which he thinks they can), then growth can help reduce inequality. More pie and more of the pie going to labour. He put out a robust argument that more equal societies may do better than less equal ones or at least do not do worse. He was also pretty bullish about the USA response to the Financial crisis (fiscal, monetary and regulatory), with the implicit criticism of EU response hanging there unsaid. But he was definitely talking about spreading equality in conditions of growth globally. The kinds of interventions he was talking about were tax credits for low paid, better pre-school and inclusive education, research and development and structural investment (public and private), sensible immigration policy. Sadly he didn’t mention improving trade union membership (and I didn’t get a chance to ask), but he certainly showed how the decline in trade union membership mirrors the loss of share of capital to labour. But, as I say, this within a framework of making markets work better. On corporation tax (where I actually took some notes) he talked about BEPS (which you can read about on finfacts (thanks Michael)). He was clear that he was looking at tax on companies in the USA for “stateless income”, and he was looking to disinsentivise low corporation tax competition worldwide: the race to the bottom which he felt was ultimately helping no one: misallocation of capital and corporations not paying their way. He referred to ‘our partners in Ireland’ on this and seemed to think it would benefit all, but, perhaps imaginatively I felt a bit of a shudder go through the room. He’s looking at USA corp tax being cut from 35% to 28% (approx.) and broadening the base. I think, typical of my feel of it, was his graph on pre-school education. All very good but that queasy sense that even at the age of four people are being seen as good little economic units and that their education has value because 20 years down the line, GDP will have grown by .x%. Also worth squinting to the right of that slides to some classy countries that don’t do so much preschool. An area that mr quigley might have thoughts about. But he’s an economist making a short speech about economics. Perhaps Mr Woods Snr might have thoughts about his basic paradigm – grow your way to victory. With regard to the above, some of these points were brought up in the Q&A but I can’t go in to them here. What do you reckon Sarah? What did you take away? http://www.finfacts.ie/irishfinancenews/article_1027560.shtml HI Gavin I think you captured it quite well so I’ll just give the Counsellor Troy version. Ooooh I know this type. So fabulously nerdy! So articulate. So confident but smart enough to suppress it. No Krugman-like arrogance and showmanship required here. He’s on the inside. He can be modest and nuanced and careful and doesn’t need us to believe that he’s right about everything. He has a world view and because of his position, that is THE world view. And yes, he’s attractive. I read he lost weight. Good job done there. Good hair. Great suit. Does all that matter? Yes when your job is to influence. Perhaps this is why Krugman finds himself on the outside. Too short. Too cranky. Too crinkly in his clothes. Too unable to hide his impatience with his detractors. Too eager to insist HE WAS RIGHT ALL THE TIME. It’s not endearing. If the job of politics is to persuade it helps to be a Furman not a Kruggie. And God help us: he’s only 43. Inadequacy attack!!! aaaaagh. Superficialities aside I detected – just a hint, but just enough, of a patronising tone towards Piketty. I thought it was clever how he set it up. So yes, his presentation was entirely within the Piketty framework. The data is credited. The slides honour the fashionable narrative. An aside was made to the Amazon no. 1 book. But very casually, he remarked on Piketty’s confidence in predicting 100 years ahead. Our Jason would not consider himself qualified or confident enough to do likewise. How can we know what lies ahead – for example; what technological inventions – might change our future? And so with this excessive modesty, I felt a little swipe was made towards the upstart Frenchman. [and indeed, perhaps deserved….] – another hint – which Gavin picks up on – more than a whiff of judgement about the “race to the bottom” on corporate taxation. In fairness, he explicitly acknowledged that part of the problem lies with US tax laws (Seamus Coffey take note) and that they are trying to reform them beginning with a reduction from 35% to 28%. But I think its fair to say we were left with a clear impression of his moral stance on the issue. – perhaps finally, I agree with Gavin in identifying him as a progressive. I would depart from Gavin on the pre-school issue. For me, good pre-school is an imperative in the drive to close the inequality gap. I was glad he identified this as a measure of inequality. So he knows what sensible things must be done. But perhaps – and honestly, this is based on gut and nothing in particular he said – he, like Obama, has pre-accepted the political limitations of what can be achieved. It’s the idealist vs pragmatist paradigm. I suppose it raises the larger question: are people who come to the table with their pre-packed compromises the best we can hope for? Maybe it is. I’ll have to reflect on that. I’m not judging him. I liked his optimism. What the hell – I like him. I think he has a moral centre. But so does Obama. At what point does that become irrelevant if you give up too early in the process? Or is that the only way? Conclusion: Definitely felt like I’ve just watched The West Wing whose core message always was: It’s ok! Sometimes it seems like we do bad things, but we’re good people acting for the right reasons. Trust us! Am I being harsh on him Gavin in that last bit? He’s trying. He’s one of the Good Guys. Is that enough? @Gavin Kostick A point of departure for him was Picketty (health warning, I haven’t read), but where Picketty proposes wealth taxes, he proposes that if growth is sufficient and the numbers work out (which he thinks they can), then growth can help reduce inequality. More pie and more of the pie going to labour…..The kinds of interventions he was talking about were tax credits for low paid, better pre-school and inclusive education, research and development and structural investment (public and private), sensible immigration policy. Yet to read C21C myself either but Furman, progressive as he is in US terms, seems to be blowing some smoke in our faces here – one of the results of Picketty’s work is that absent redistribution via taxation (or the destruction of capital) inequality is bound to increase and democracy is guaranteed to suffer. This is not forecasting, it’s history. Education and improved growth might reduce the rate of increase of inequality but they will not reverse it and it is already at critical levels. It is of course good that he mentions early schooling and structural investment but you would have to ask where was the money coming from? Is it through extra capital expenditure or is it just a reallocation of resources – twiddling with the budgetary dials and nudging the markets? I would also say that, a la Ha-Joon Chang, expansion of third level education is not a significant benefit for growth or decreasing inequality as it mainly serves to “grade” applicants for limited job opportunities. Not that third level education is not a good in itself, just that qualification inflation is a waste of resources with few economic benefits (other than to third level institutions). Now you can wave your hands about and say the future is going to be different from the past in such a way that the trends of the last forty years are going to be reversed somehow (robots! biotechnology! magic ponies! the black plague!) but the apparently self effacing Mr Furman is actually asking for more faith based policy making than Picketty is. Smart guy obviously, and decent as far as centrists (ie: the soft right) go, but trapped by neoliberal instincts. Too radical for the European Commission but too timid to really confront the problems with modern capitalism. It is worth reading his wikipedia entry as well. @Sarah Carey Conclusion: Definitely felt like I’ve just watched The West Wing whose core message always was: It’s ok! Sometimes it seems like we do bad things, but we’re good people acting for the right reasons. Trust us! Hell yeah. Always felt that any lefty who followed the West Wing had their spine weakened and their intellect softened. As a self declared rural blue-shirt you are safe from this kind of thing. If you have some time to amuse yourself here is a compilation video “Sorkinisms – A Supercut” which shows just how repetitive the West Wing’s writer was – did Furman walk as he talked?. Off topic but significant! Putin blinks. http://www.theguardian.com/world/2014/may/07/ukraine-crisis-putin-referendum-autonomy-postponed As to Piketty, I came across a reference to him as the “economist du jour”. A bit unkind but worth reflecting on in the sense that the sudden interest in what has been blatantly obvious – and well documented – raises a number of questions, not least as to the extent of any serious intention, or capacity in the case of Obama, to do much about it. http://www.oecd.org/newsroom/make-growth-socially-inclusive-for-improved-well-being-and-stronger-economies.htm @Shay OMG – as the kids would say. That’s hilarious. Furman was VERY still: his composure in contrast to Krugman’s propensity to fidget. @DOCM Did you read the Robert Shrimsley on the Piketty Bubble in the FT magazine? It was a hoot. Furman has read the book, which is good because despite the sales no one I personally know has. Is it going to end up like Ulysses – the most important book hardly anyone has ever read? I shall buy my copy of Piketty this morning. I’ve recently worked my way through Hobsbawm’s four part history of the 19th and 20th centuries and after some much needed fiction (Mantel’s ‘Wolf Hall’) am ready to go again. The Furman biog is worth reading. I think he was somewhat distancing himself from Mankiw or ‘Mankiw’ in that he was attacking the notion that any attempts at increasing equality involve ‘trade-offs’ which hamper growth. Also, and this was at the time, I thought never mind Piketty, you seem to be channeling Stiglitz. And he could come round and do you a great kids party and you could ask him if Matt Damon could come over too. He neither banged on about the US fiscal deficit (no doom mongering) but certainly neither did secular stagnation appear to be on his dashboard. I didn’t get the impression that he thought the administration was doing any bad things (as political trade-offs) but more working incrementally in the direction they thought it should go. He was surprisingly sanguine about the power of states, including the USA, to get stuff done. It is true that I left thinking if that’s the President’s economics brain that’s not so bad at all, but your points are well made Shay, and he certainly go down the ‘the future is difficult to predict’ line so one step at a time. Take from the Independent. ‘Fear for thousands of jobs as Obama wants to hit our business tax rates’ Sarah McCabe http://www.independent.ie/irish-news/fear-for-thousands-of-jobs-as-obama-wants-to-hit-our-business-tax-rates-30254873.html And the Irish Times ‘Positive link between reducing inequality and economic growth, adviser says’ Colm Keena http://www.irishtimes.com/business/economy/positive-link-between-reducing-inequality-and-economic-growth-adviser-says-1.1786702 @ SC I had not seen it. Thanks! What commentators in the FT seem to be missing is that Shrimsley is mocking the “must read/have read” brigade, not the book itself which is a major work of scholarship (and unlike the comparisons made with other authors, highly readable from my dipping in to the version available on the Web). The other more important aspect is the popular impact that it, or rather the reporting of it, may be having, notably in Germany. http://www.spiegel.de/spiegel/ Schaeuble is now talking about tax reductions (although this may have more to do with the upcoming European elections than serious intent; an approach that is rather familiar!). It’s useful to get reports from Gavin and Sarah – interesting too that Sarah tells us how well the guest was rigged out on a government salary! Krugman has an important role tossing grenades from the sidelines and too much politeness/ consensus can be as bad as too much negativity. A minimum foreign profits tax above the Irish rate would be bad news for Ireland – Seamus Coffey may agree or not? The problem about elimination of various allowances known as tax expenditures, to pay for a cut in the headline rate is that while the rate cut would benefit firms that are not big exporters such as Wal Mart, tech and pharma companies already have low effective foreign rates and could buy support to lobby against change. On inequality, one of the factors has been a slowing in growth and an outsourcing of manufacturing jobs in the years before the recession. US growth in 1960-2007 was an impressive average of 3.4% and the best year for job creation in the 1990s was in 1994 at 321,000; the best year in the noughties was in 1995 at 208,000. Research by Michael Spence – a Nobel laureate and presumably a clever chap – on job growth over the 18 years from 1990 through 2008 paints an unsettling picture. The US economy added a respectable 27m jobs, but 98% were in the “nontradable” side of the economy. Nontradable refers to sectors generating goods and services that are consumed where they are produced, such as government, health care, construction, retail, and hospitality. Over the same 18 years, growth in the tradable sector, which includes exportable goods and services, was essentially flat — a negligible 600,000 new jobs. Part of the slow growth was a result of labour saving technology advancements, which permanently eliminated jobs. Beyond that, manufacturing jobs held by the middle class moved overseas, offsetting growth in high value-added, tradable service jobs in finance, consulting, and computer design. I have cited the case of Apple v General Motors before – over 600,000 employed in US plants in 1979 in well paid jobs, compared with Apple’s 50,000 today with most of them in retail sales and support who are in poorly paid jobs @ $25,00 pa. Trickle down from high tech does not work in the US and neither would it in Ireland. According to Dani Rodrik, manufacturing is still the route out of poverty and that is a lesson for India to learn @Sarah Carey, Michael Hennigan – Forget about any link between his government salary and how well he was “rigged out”. He is a member of the 0.1-percenters; his father is an extremely successful New York property developer/philanthropist. It would be ad hominen to claim his moneyed background affects Furman’s economic analysis/political view and I am NOT making that claim. On the other hand Sarah reports he was well-dressed with “good hair” — give me a crumpled Krugman-type anytime. Sarah has made an egregious error. It’s Counsellor Troi, not Troy. Who seems to be running White House foreign policy at the moment, telling Obama that she’s sensing some hostility from Vladimir Putin. @Gregory Indeed. It’s an issue that has long fascinated me. Authentic and righteous anger (K) vs Smooth Operator (F). The tragedy is that the K’s of this world achieve less in practical terms because politics requires the F’s to make people work together. CEO hair is a well identified marker of the leader. Captain Picard excepting. (and possibly some others). @Frank I hang my head. 😉 @Sarah I always suspect those who seem to lean just far enough in a debate to identify with a particular, er ‘leaning’ but never so far as to risk being seen by the powerful as unclubbable as having an instinctive self-interest circuit hard-wired into them with makes self-progression trump principle when push comes to shove. It makes them reliable, predictable, and a safe pair of hands. K-dude is the real deal. I was in attendence at Joshua’s talk and although he has,like myself an M.Sc Economics from the london School of Economics ,he clearly understands the “double Irish” tax stunt but he failed to grasp our feudal Irish commercial property lease law; usinessetc.thejournal.ie/upward-only-rent-review-targeted-1456040-May2014/#comment-2436427 Comments are closed.