More of the Same Neocons

On January 12, NPR broadcast an interview given by the neoconservative economist N. Gregory Mankiw, the former chair of President Bush’s Council of Economic Advisors and professor at Harvard University. I agree with Dr. Mankiw’s support for free trade and his expression of disappointment that the Republican-controlled Congress did not reform Fannie Mae and Freddie Mac. However, most of his ideas are precisely what led to our country’s current economic disaster.

Science is simple. It tests hypotheses, observes the results, and then creates new hypotheses and theories. A scientific economist would clearly see the results of implementing Professor Mankiw’s theories. They failed, just as the economic theories of Karl Marx failed. The Soviet Union imploded under Marx’s economic policies, and our country nearly imploded in 1939 and 2008 as a result of conservative economic policies.

Mankiw proudly pointed to lifting the country out of the recession in 2001 by supporting tax cuts, particularly for the wealthy, but neglected to see or admit that the cuts contributed to our current economic catastrophe. It is self-evident that by deregulating financial markets and dramatically increasing our national debt his policies simply postponed an intensified recession until 2008.

He consistently supported lower taxes. Now is not the time to raise taxes, but if we don’t eventually lower our national debt, we will all become poor, no matter how low our taxes might be.

His support of less government regulation led to the collapse of Enron, the Madoff scandal, the housing crisis, the credit crisis, a deteriorating environment, global warming, and other ills. Managed capitalism can be wonderful, but if we allow the greedy to do whatever they want, we will again face sweatshops, 70-hour work weeks for the poor, lower wages, and an even greater economic mess than we currently face.

During the interview, Mankiw proposed that lower taxes, rather than paying for infrastructure development, would be better for the economy. During the interview, he maintained that we should go slowly when creating infrastructure projects. Investments in building roads, a better national electric grid, new green industries, quality education that is free to everyone, and other infrastructure investments will create jobs and increase our national income, because employed people pay taxes instead of collecting unemployment or welfare. Infrastructure development creates real long-term wealth, not just higher stock prices based on complex unregulated security transactions.

Lower taxes might eventually create some jobs, but their efficacy has been recently tested with the Bush tax rebates. They didn’t work well. A new hypothesis should be that investing in infrastructure revives a failing economy better than lowering taxes. Roosevelt tried this, and it worked.

The world has learned from experience and observation that neither neoconservative nor communist economic theories work. It is time for Professor Mankiw and other conservative opinion leaders in Congress, academia, and the media to reevaluate some of their core beliefs about economics and social justice.

We need to become a nation that pays for what we spend, not borrow to spend. In addition, a well-functioning government should regulate business and level the playing field so that every hard-working individual can share in a prosperous economy. Once individuals become prosperous, they should contribute more so others can succeed. Lower taxes and less government would be wonderful, but that implementation nearly destroyed our economy.

For the sake of our country, Professor Mankiw should reevaluate some of his economic theories in the cold light of reality. As policy, his theories have led our country to economic calamity. Many neoconservatives are bright and certainly influential. Their ideas count. For the sake of our country, they should rethink their core economic beliefs and stop supporting the failed Bush economic policies.


Thomas J. Donahue is the founder of Active Learning Systems, Inc.