Thursday, July 21, 2011

Trying to Understand the Freshwater Economists - Robert Lucas

I've been trying to figure out what the frak these people are talking about since they're basically controlling policy these days.   


The freshwater economists I know of - off the top of my head - are Robert Lucas, Eugene Fama, John Cochrane and Robert Barro.  I'm sure I'm missing about 400 economists, but I think that'll be a fairly representative sample.  Here's a bit of what Robert Lucas has to say:

Robert Lucas

The first point to be made about Robert Lucas is that he's a big deal.  He'll tell you - but, in truth, so will everyone else.  He really has done all kinds of big stuff that everyone recognizes as important. 


This doesn't have anything to do with what Lucas thinks about the Lesser Depression - which is what I'm interested in - but it's such a supply-side-Jesus statement that I just felt I had to start here.  Via Noahpinion:
Now, is there too much inequality? I don’t see it. I think people who drop out of high school, take drugs and so on are going to be poorer than the guys who worked hard. It doesn’t bother me at all. Why shouldn’t they be poor? It’s hard to work!
Lucas's wiki page is oddly silent regarding his life of toil, but moving along....


Here is what Lucas had to say about the Lesser Depression and why it's proving to be so prolonged.  It's a lecture, not a paper so there's no real model being presented and he's kind of throwing out graphs, but what is clearly not mentioned is demand.  


Instead, the problem, according to Lucas, is Obama's policies - programs like the Affordable Care Act (even though it still hasn't gone into effect).  


Um, weak.  


Look, everyone says this guy is a big deal, but economic careers will be defined by this crisis.  Based on his - and his protege's - performance thus far, mentioning Lucas in a serious economics discussion may one day be met with whispers and giggles. 
Posted by Saphron at 7/21/2011 11:41:00 AM

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