George Washington law professor and economist Neil Buchanan comments on the state of the economics profession today, linking it to the frustration many Americans feel when economists seem unable to come up with a clear set of prescriptions as to how the economy can be improved. Buchanan traces the root of the problem to the way in which economists are now trained, and the expectations placed upon PhD candidates. Ideally, Buchanan says, economists would be trained to study important and interesting real-world issues. Instead, he observes, they are not asked to actually try to understand the economy, but rather to master certain technical skills and to gain a command of topics in advanced mathematics that have limited, if any, direct real-world applications. Buchanan notes that some excellent economists do learn to grapple with real-world problems, but he observes that they do so more by happenstance, than as a result of their training. He traces the roots of this longstanding situation, and predicts that it will only change if and when the incentives presented to economics PhD candidates change.
Justia columnist, economist, and George Washington law professor Neil Buchanan comments on the controversy regarding the “Buffett Rule,” Warren Buffett’s observation that he surely should not pay a lesser percentage of his income in taxes than his secretary does. This rule—and the principle behind it—proved to be especially relevant this week, Buchanan notes, when presidential candidate Mitt Romney released some of his tax returns. Buchanan explains how wealthy Americans typically receive special tax treatment, and argues that it is not true that—as some claim—this treatment is necessary to induce the wealthy to invest. He also lauds the Buffett Rule as a key step toward reaching our ultimate goals as a nation, and ensuring the fair treatment of all Americans, regardless of income.
Justia columnist, George Washington law professor, and economist Neil Buchanan responds to some of the common criticisms of interdisciplinary legal scholarship, defending such scholarship on the ground that it makes a valuable contribution. He begins by noting how legal scholarship has changed over the years, beginning around the 70’s, from a field that primarily summarized legal developments, to one that primarily describes how the law could and should change. As a result of this evolution, Buchanan argues, it made sense to bring in other academic disciplines to assist law professors who were interested in improving policies, and who wanted to draw from the relevant schools of thought in framing their policy recommendations and developing their ideas. There has been nostalgia on the part of some—and, especially, some judges—for legal scholarship the way it used to be: primarily focused on describing the law, not improving it. But Buchanan argues that this nostalgia, while understandable, is misplaced, for combining legal expertise with expertise in another field can importantly further the debate on important policy matters. Some questions, Buchanan notes, are truly interdisciplinary and for these, interdisciplinary scholarship is not just useful, but vital.
Justia columnist, George Washington law professor, and economist Neil Buchanan comments on the state of college football, and how it can be improved. Buchanan argues that what is needed is not a movement toward more professionalism in sports, as some have suggested, but rather measures that would both ensure that college athletes do not face serious physical injury (and are taken care of, physically and financially, if they do), and also guarantee that players truly receive the college education that is supposed to come along with their admission. In addition to putting forward his own proposals, Buchanan also considers Taylor Branch’s analysis of the issue in The Atlantic, and Joe Nocera’s commentary on it in the Sunday New York Times Magazine.
Justia columnist, George Washington law professor, and economist Neil Buchanan takes strong issue with the claim that “contractionary” policies—such as budget cuts, and tax increases imposed on the non-wealthy—can help the American economy. To the contrary, Buchanan contends that such policies will only shrink the economy, and that the right approach to improving America’s economy is to use government spending and tax cuts aimed at the non-wealthy, who are very likely to spend the extra money that tax cuts free up and thus give a strong boost to the economy. And yet, Buchanan points out, all we have seen from Congress, over the past year, has been a series of contractionary approaches. Buchanan examines the case for invoking “expansionary austerity” in America now, and finds it sorely lacking when tested against the relevant evidence—as found in the recent and past experiences of America and of other nations. He concludes, based on this evidence, that “expansionary austerity” is simply a pipe dream.
Justia columnist, George Washington law professor, and economist Neil Buchanan discusses the issues raised by the candidacy of Harvard Law professor Elizabeth Warren, who is running for a Massachusetts Senate seat. Buchanan’s thesis is that Warren is more truly a capitalist than her opponent, Republican Scott Brown, or the voters and commentators who oppose her. In particular, Buchanan notes that Warren—an advocate of transparency in financial transactions; an architect of the Consumer Financial Protection Bureau; and an advisor to President Obama on financial industry issues—is a true advocate of free markets. The reason her opponents claim otherwise, Buchanan argues, is that they are confusing being pro-free market with being blindly pro-business, no matter what evils business interests may perpetrate. Being truly in favor of the free market, he contends, means that one ought to endorse—as Warren does—the principle that both sides need to be well-informed when they transact business. That kind of free-market thinking, he points out, might have stemmed or prevented the mortgage loan crisis.
Justia columnist, George Washington law professor, and economist Neil Buchanan takes very strong issue with the claim, often made by conservatives now, that the rich pay more than their share of taxes. In particular, Buchanan rebuts the common claim that Social Security and Medicare taxes—the taxes that fall most heavily on lower- and middle-income Americans—are somehow not really taxes at all. Buchanan points out that the overall federal tax code is only mildly progressive, and that state and local taxes are regressive, falling more heavily on the poor. And overall, he notes, rich and poor alike pay roughly the same percentage of their incomes in taxes each year—reflecting, rather than reversing, income inequality. Finally, Buchanan notes that conservatives take issue with calling Social Security and Medicare payments taxes, because benefits will be paid out down the line, but he presents several strong arguments showing that their contention is misleading.
Justia columnist, George Washington law professor, and economist Neil Buchanan argues that calls for the abolition of the Fed, and a return to the gold standard, are misguided. While Buchanan’s views on the Occupy Wall Street protests are mostly positive, he suggests that the movement would be better off dropping its anti-Fed rhetoric. While the Fed has its flaws, Buchanan argues, its role in our economy is vital and its track record is far, far stronger than that of the gold standard—which has proven historically to be a disaster. Buchanan notes that the Fed is unpopular in part because it is undemocratic, but he explains two key reasons why it needs to be that way. He also explains why attacks on the Fed often come from the left (for instance, from Occupy Wall Street), rather than the right (with the exception of Ron Paul). Yet, over its history, Buchanan argues, the Fed has actually done most things right, and thus, while the left’s critique of the Fed makes some valid points, it is very overstated. In addition, Buchanan contends that it is not the Fed, but rather Congress and the White House, that should be blamed for the failure to remedy the economy’s current course—and that the adoption of the gold standard would only make our current situation much worse, and ironically, would lead to the creation of a “Gold Fed.”
Justia columnist, George Washington law professor, and economist Neil Buchanan comments on the “Occupy Wall Street” protests. He argues that this new movement should be taken seriously, not just dismissed as a passing fancy. Accordingly, he focuses on the substance of the protesters’ complaints, finding many of their points well-founded—particularly, their points about the inequality of economic and, relatedly, political and media power in the United States. Buchanan argues that such inequalities are damaging not just to the have-nots, but also to society as a whole: Greater degrees of inequality, according to the IMF, lead to slower economic growth. Buchanan also argues that protesters are right to the extent that they are calling for re-regulation of the financial markets. And he cautions that if the “Occupy Wall Street” protesters fairly modest and reasonable proposals for re-regulation and greater social equality are ignored now, the next protest movement we see, along these lines, may be much more dangerous and troubling.
Justia columnist, George Washington law professor, and economist Neil Buchanan takes strong issue with Republican presidential candidate Mitt Romney’s claim, in a recent debate, that European governments have adopted policies that Democrats in the United States would also like to adopt, and that those policies have led to disastrous consequences in Europe. Specifically, in criticizing President Obama, Romney said, “Guess what? Europe isn’t working in Europe. It’s not going to work here.” Buchanan argues that this comment gets it backward—for, he argues, the problem for Europe has not been the social-democratic policies to which Romney refers, but rather the very U.S.-style economic policies that Romney and other like-minded Republicans endorse. Thus, the truth, Buchanan says, is better embodied in the following statement: “American financial policies were a disaster in America. And they ruined Europe, too.”
Justia columnist, George Washington law professor, and economist Neil Buchanan comments on recent Republican proposals based on the idea that tax cuts for the rich will help curb the recession. Buchanan argues that there is no support, in either economic theory, or in empirical evidence, to conclude that America’s current tax rates are hurting the economy, or that reducing tax rates for businesses and the wealthy will improve the economy and/or reduce unemployment. All such cuts would do, Buchanan contends, is make the rich richer—while also imperiling vital public services.
Justia columnist, George Washington law professor, and economist Neil Buchanan offers a detailed response to an argument that has been in the news frequently: Billionaire investor Warren Buffett has contended that those with annual incomes above one million dollars should pay significantly more in income tax, and that those with annual incomes above ten million dollars per year should pay even more than that. Many commentators, Buchanan points out, have responded to Buffett’s argument by pointing out that Buffett is free to give away his own riches to the government, if he so chooses—for instance, by foregoing tax exemptions that he would be entitled to claim. But Buchanan offers a set of strong responses to this argument, suggesting that the debate should properly focus on Buffett’s proposal, and not on Buffett himself.
Justia columnist, George Washington law professor, and economist Neil Buchanan suggests how, in the future, we can ensure that the debt limit is not, once again, used as a political weapon. He discusses three key solutions: (1) simply eliminating the debt limit via a presidential directive incorporating a Fourteenth Amendment analysis, as The New York Times suggested; (2) and following one of Yale Law professor Jack Balkin’s two suggestions, which are nicknamed “Big Coin” and “Exploding Option.” Buchanan provides background to ensure that readers fully understand each suggestion, and points out a downside to Balkin’s ideas: the public’s confidence in money and the monetary system may turn out to be fragile, if the system is experimented with.
Justia columnist, George Washington law professor, and economist Neil Buchanan continues his commentary on the debt-limit crisis and its resolution. Buchanan contends that there is little to applaud in the resolution of the crisis—for, he says, we have now embarked on a path that will only make a sick economy much sicker, and could even push the country back into recession. In light of these realities, he argues, we need to ask how we got here: How did we reach the point where both parties became committed to an economic strategy that is so detached from reality? Buchanan stresses, especially, that America should have focused on unemployment, not spending reductions.
Justia columnist, George Washington law professor, and economist Neil Buchanan responds to a recent New York Times editorial by Laurence Tribe regarding the constitutionality of the federal government's debt ceiling. Tribe contended that the limit is constitutional; Buchanan contends that it is not. In his column, Buchanan summarizes and responds to Tribe's arguments regarding the key constitutional provision at issue, the Public Debt Clause.
Justia columnist, George Washington University law professor, and economist Neil H. Buchanan comments on the current situation regarding the federal debt limit, considers how it could be resolved, and notes that President Obama could take a constitutional stand in order to resolve the impasse. Buchanan begins by explaining for readers what the debt limit is and why it is important now; explains why the debt-limit law that set the ceiling was never necessary in the first place; describes the potentially very grave consequences of passing the debt-limit ceiling with that law in place, as it is now; and contends that our current game of political “chicken” regarding the debt limit is dangerous indeed. He then describes a possible constitutional solution that President Obama could opt for, based on arguments that the debt limit is illegitimate and void as a matter of constitutional law. Finally, Buchanan explains why, even if the debt limit were to be removed from the picture, an underlying, related problem with the political process would still remain.