Word: feldstein
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Dates: during 1970-1979
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Still undergraduates when Keynesianism was flourishing in the late 1950s and the 1960s, the new economists are now professors in their own right at universities around the country. Among them: Martin Feldstein, 39, of Harvard, who is the leading thinker in the group; Robert Lucas, 41, of the University of Chicago; Michael Boskin, 33, of Stanford; Rudiger Dornbusch, 37, and Stanley Fischer, 35, both of M.I.T.; as well as many, many others...
...intellectual leader of the young economists is Harvard's Feldstein, a soft-spoken family man from The Bronx, whose looks and middle-class background and mannerisms call to mind a benign dentist. While most of his peers remain academically cloistered, concentrating on the higher mathematics and econometric concepts of modern research, Feldstein is at home in both academe and Government. He is equally comfortable pondering a regression equation for a computer program or testifying to a congressional committee, which he often does. Both political parties eagerly seek his counsel. He was an adviser to Jimmy Carter's '76 campaign, turned...
Along with the other incentive economists, Feldstein argues that the Government is trying to do too many things that it either cannot do efficiently or that people can do better for themselves. That, of course, is a direct affront to Keynesian doctrine. Beginning in the mid-1930s, Establishment pillars of the dismal science have propagated Keynes' captivating notion that governments could tame beastly economies, making them stand up and jump through hoops. His prescription succeeded in lifting Western countries out of the 1930s Depression that had been triggered by an almost complete collapse in demand both...
...spend, elect-and-elect politicians of a democracy. Apostles of Keynes contended that to maintain the proper level of demand, the Government regularly had to "fine-tune" the economy with just the right amount of stimulus, either tax cuts or spending increases, or maybe both at once. As Feldstein puts it, the nonstop jiggling and juggling amounted to "an embellishment of Keynes beyond anything that he had claimed...
...Keynesianism can still play an important role. But now the economic pendulum has swung from underutilization of capacity to overstraining of productive resources, and policies aimed at further firing consumer demand without simultaneously increasing investment and supply have become about as useful as Gerald Ford WIN buttons. Says Feldstein: "It is a much more complex world than Keynes or anyone else admits, and it is constantly changing. We know enough to move the economy out of a trough but not to control the business cycle...