They Had One Job

The Committee to Unleash Prosperity recently reminded folks that the prospect of inflation was raised and rejected by a plethora of Nobel prize winning economists as early as last September. As Congress was debating Biden’s $5 Trillion Build Back Better plan, 17 economists signed an open letter urging passage of this atrocious spending bill (coming on top of an extra $3 trillion in spending, mind you). 

The letter opened and closed with these two absurd statements: “The American economy appears set for a robust recovery in part due to active government interventions over the past year and a half” and “[the agenda] will ease longer-term inflationary pressures.” At the time of their writing, inflation was at (only) 6% and now we are past 8%. How much more egregious would things be had Congress actually passed this spending behemoth? And even more critically, how is it that 17 prize-winning economists managed to get their economic forecast so wrong?

Readers would be wise to steer clear of the following economists: 

• George A. Akerlof, Professor, Georgetown University

• Sir Angus Deaton, Professor, Princeton University

• Peter Diamond, Professor, Massachusetts Institute of Technology

• Robert Engle, Professor Emeritus and Co-Director of the Volatility and Risk Institute, New York University

• Oliver Hart, Professor, Harvard University

• Daniel Kahneman, Professor, Princeton University

• Eric S. Maskin, Professor, Harvard University

• Daniel McFadden, Professor, University of California, Berkley

• Paul Milgrom, Professor, Stanford University

• Roger Myerson, Professor, University of Chicago

• Edmund S. Phelps, Professor and Director of the Center on Capitalism and Society, Columbia University

• Paul Romer, Professor, New York University

• William Sharpe, Professor Emeritus, Stanford University

• Robert Shiller, Professor, Yale University

• Christopher Sims, Professor, Princeton University

• Robert Solow, Professor Emeritus, Massachusetts Institute of Technology

• Joseph Stiglitz, Professor, Columbia University

It must also be noted that Paul Krugman, another Nobel winner, did not sign the letter but did actively discuss it in his NYTimes column.

These economists had exactly one job: to tell the truth about spending and inflationary policies, namely that increased government spending as a means of intervention will typically result in higher inflation. But they didn’t do that. They would rather tell Congress what it wants to hear, instead of what it needs to hear, and they ought to be ashamed.