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1981 AEI Economist 1 (1981)

handle is hein.amenin/aeieco1981 and id is 1 raw text is: the a economist I American Enterprise Institute for Public Policy Research January 1981 This issue concludes the series of articles surveying the main economic problems likely to be confronted by a new administration at the beginning of1981. Previous issues dealt with a general view of the topic (June), inflation (July), taxes (A ugust), poverty and the budget (October), productivity and economic growth (November), and international economic relations (December). Curriculum for Economics 1981 Presidents and Economics Herbert Stein Presidents are not economists. At least, no president up to now has been an economist. Now that one barrier has been broken, and for the first time a movie actor has been elected president, we may look forward to a time when an economist may be elected; but that is probably a long way off. Like other adult Americans, presidents have certain information and certain ideas about the economy. If they have been senators or congressmen or, even, governors, they have an above-average knowledge of some pieces oflegislation with economic content. They also have a body of shibboleths about such things as free enterprise, balanced budgets, and full employ- ment. But of economics as a science, or near-science, with a corpus of theory and data, they are likely to be innocent. If they have had a course in economics as college undergraduates, it has left no more lasting mark on them than on other undergraduates. A journalist who attempted to deduce something about the economics of Mr. Reagan from the nature of the economics taught at Eureka College in the early 1930s was, I am sure, fantasizing. Moreover, presidents are unlikely to make a hobby of the amateur study of economics. President Kennedy is said to have enjoyed reading and discussing economics, but this is said by Kennedy economists who apparently think that is the highest compliment they can pay their hero-and themselves. My only relevant evidence is the story that President Kennedy had to remember that the Federal Reserve was con- cerned with monetary policy by reminding himselfthat the name of the chairman of the Fed-Martin-and money both began with the letter m. Of course, a person doesn't become president in these days of press conferences and debates without being a quick learner, and a president will certainly learn a good deal of economics on the job. But how much and what he learns will depend on how he organizes to do his job, which is the subject of these reflections. The obvious consequence of this condition is that a president will delegate many decisions, and depend heavily on advice, in the field of economics. This is true in all fields, of course, but it is much more true with respect to economics than it is in the other usual main area of presidential attention, foreign policy. There are several reasons for this. Presidents tend to be skillful in interpersonal rela- tions, and to enjoy them. Foreign policy seems to be an area in which much can be achieved by dealings with Economics has been the scene of more defeats than tri- umphs lately, and presidents don'tlike to be closely asso- ciated with defeats if they can help it. There is comfort in having an inflation czar who can be removed orforgotten if things go wrong. other individuals-Brezhnev and l-across the table. Economic policy deals with abstractions, or statistics or masses. The president cannot confront the GNP eye- ball to eyeball, or even the consumer. Some presi- dents think they can deal with economic problems on a The AEl Economist / l

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