Ed Leamer, a professor of economics and Chauncey J. Medberry Chair at the UCLA Anderson School of Management, as well as director of the UCLA Anderson Forecast, is running for vice president of the United States. A write-in candidate, he shares the ticket with running mate Laurence Kotlikoff, a professor of economics at Boston University and longtime colleague.
Leamer holds no illusions about being elected: He realizes that in today’s political climate it is virtually impossible for a write-in candidate with limited resources to actually get the most votes. But even with winning the election off the table, Leamer didn’t get involved as a publicity stunt. Instead, he sees it as a way for him and Kotlikoff to try to bring to the fore what they see as key economic issues.
Leamer sat down for a Q&A with the UCLA Anderson Blog to discuss these issues and opened by saying, “Economists are taught to think logically and clearly about all the potential impacts of a policy — not just the surface impact, but that which is unexpected. A famous 19th-century French economist named Frederic Bastiat said, ‘There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.’”
Politicians, Leamer was implying, often propose policies that, on the surface, look good to voters. But they often do so without considering the indirect impacts. Like the “good economists” that Bastiat references, Kotlikoff and Leamer are focused on what must be foreseen.
“[Our candidacy represents] the youth of America, the future of America, and we want to make sure that the public policies that are put in place are guaranteeing that America’s going to be a great place in a decade or two. We think every bill that goes through Congress should have a youth impact statement. There should be an assessment as to how this affects the youth of America. And if it’s adverse, then we ought to be avoiding that. It ought to get a big red asterisk, saying, ‘This is not good for the youth of America.’”
What types of proposals would avoid that asterisk?
From my perspective, there are three things that the nation ought to do. First of all, we’ve got to have much better employment prospects for college graduates and high school graduates. We need to do something to create the access to good jobs for the youth, and to a large extent that comes from workforce development and better educational outcomes.
We’re leaving vast numbers of Americans behind because they’re attending inadequate public schools. Even our colleges are inadequately attuned to the changing nature of the technology that’s being used in the labor market. So the country really needs to focus on workforce development, preparing 5-year-olds to 30-year-olds for the reality of the 21st century.
Second, we’ve got to get the elderly or near-elderly much more responsible for taking care of themselves and not relying so much on the taxpayers of the future. Larry Kotlikoff has estimated that the unfunded liabilities for Social Security and Medicare are $100 trillion, maybe more. It’s vast. And we’re letting that get bigger year after year. We’re borrowing in order to take care of the elderly in America, and this is going to be a big disaster for the country sometime in the future, when global lenders start to have other alternatives and start thinking that they’re never going to get their money out of the United States.
We thus need to ask our elderly: “Are you willing to give up some of your Medicare and Social Security benefits to reduce the tax burden on your children and your grandchildren?” If they say “no way,” then we will need to energize the AAYP [American Association of Young People ] to offset the political force of the AARP [American Association of Retired People]. In addition, like any family that includes folks who will need to be taken care of in the future, we as a nation need to save now, not pretend that this isn’t an issue and act surprised in a little more than a decade when the number of Americans older than 65 has grown from 40 million to 80 million.
Third: The amount of student debt. It’s a kind of fiscal child abuse. We have a generation of Americans that’s totally unique. In order to get access to decent jobs they must get a college education, and we’ve increased the price of that sky high, completely sky high. The reason for this is the same as the reason for high health care costs — very little incentive for cost control on campus. The presumption on college campuses is that costs can be passed on to students with higher tuition. And if the students can’t pay, then they can get loans. That’s the deal that we’ve been making for some time, and to me it’s unconscionable.
So you like the Democrats’ proposals for free tuition?
Actually, I don’t like the idea of free tuition at all. This is elementary economics: If the demand increases with no increase in supply, that means higher prices. Free tuition and federal loan programs don’t create many new slots for students, they mostly increase salaries of faculty and administrators. In addition, this isn’t free; it’s paid by someone. Since this will be financed by borrowing, the folks who will pay the tuition are future taxpayers — including the very students who thought they were getting free tuition. It would be much better to work on the supply side, facilitating the use of the internet as an accredited source of supply for higher education.
Is there a paradox? How do people without good employment prospects — people who either don’t work or have a low-paying job — save money?
Well, I’ve said that we’ve got to get better jobs for these kids and improve their incomes, but in addition, whatever your income level is, you’ve got to think about the future. The one forecast that I make repeatedly and nobody believes, and that I have absolute confidence in, is that a year from now, you’re going to be a year older. And most Americans, particularly young people, don’t think that at all. They think they’re going to live forever. Why bother saving for retirement because that’s so far in the future they don’t have to worry about it? But as a country, we need to really wake up. Social Security is a pittance, and if that’s all you have, that’s going to be an unfortunate elderly situation that you find yourself in.
