All the Governor’s Men (Economists)

Paul Krugman notes Governor Walker’s advisers on economics at a recent meeting are Larry Kudlow, Stephen Moore and Arthur Laffer. These folks make appearances in the Econbrowser archives.

Larry Kudlow

From The Financial Crisis: Foreseeable and Preventable (Feb. 2011). Jeff Frieden asks, in the NY Times, why warnings of imminent housing collapse and financial crisis were ignored:

Ideology probably mattered. Larry Kudlow, economics editor of the conservative National Review, in 2005 dismissed “all the bubbleheads who expect housing-price crashes in Las Vegas or Naples, Florida, to bring down the consumer, the rest of the economy, and the entire stock market.” Of course, the bubbleheads were exactly right, but the predictions did not accord with Kudlow’s partisan commitments or his ideology.

And so it is with the post-mortems. Politicians, special interests, and ideologues all have their reasons to insist on a particular interpretation of the crisis. And those connected to the Bush administration have strong incentives to deny that the administration could have done anything differently. But they are wrong.

Stephen Moore

From State Employment Trends: Does a Low Tax/Right-to-Work/Low Minimum Wage Regime Correlate to Growth?, it’s shown that the Laffer-Moore-Williams Rich States, Poor States ranking of business environment does not correlate with growth. 47th ranked California outpaces 17th ranked Wisconsin (or 15th ranked Kansas). Using the entire 50 state ranking, I also show that there is little apparent correlation.


Figure 1: Ranking by annualized growth rate in log coincident index 2013M01-2014M03 versus 2013 ALEC-Laffer “Economic Outlook” ranking. Nearest neighbor nonparametric smoother line in red (window = 0.7). Source: Philadelphia Fed, ALEC, and author’s calculations.

Arthur Laffer

I first met Arthur Laffer more than 30 years ago. His presence on Econbrowser has been consistent, most recently in Whistling past the intellectual graveyard…the Extreme Supply-Sider one in Topeka, that is. Additional appearances, on seasonals (joint appearance with Professor Casey Mulligan), and in spirit, supply side responses (joint appearance with Bill Beach/Heritage Foundation), tax elasticities (joint appearance with Governor Mitt Romney).

I am ever thankful for the likes of Kudlow, Moore, and Laffer, even as they drag down the level of economic discourse. They just provide too many examples of how not to conduct serious analysis.

(For those who don’t recognize the allusion in the title, see here.)

Update, 8PM Pacific:

NB: Rick Stryker Notes that these men are not formally Governor Walker’s economic advisers. That observation is correct; they merely hosted the private meeting that Walker was guest of honor and provided their advice, as discussed here. The Governor has a set of official economic advisers in Wisconsin state government.

Update, 2/22, 9:30PM Pacific: Here is an article on one of the Governor’s economic advisers.

Update, 2/25, 2:30PM Pacific: Here is a Bloomberg article on the Wisconsin economy’s progress under Governor Walker.

34 thoughts on “All the Governor’s Men (Economists)

  1. Rick Stryker


    You got it wrong again. They are not Walker’s economic advisers.

    Laffer, Kudlow, and Moore hosted a dinner at the 21 Club in NY that Walker attended in order to build support for his candidacy among the conservative-libertarian wing of the Republican party. The audience were mostly media people and potential financial backers. Walker has been courting this group for some time now as he will need their support when he runs. The three economists were there to lead a roundtable discussion involving Walker and other attendees.

    People who attended the dinner included Rich Lowry and John Fund of National Review, John Stossel and Maria Bartiromo of Fox Business News, Bill Hemmer from Fox, James Freeman from the WSJ, and Mort Zuckerman, owner of the NY Daily News and US News and World Report. Rudy Giuliani and a number of business people were also there.

    1. Menzie Chinn Post author

      Rick Stryker: I was writing metaphorically. Most people would figure if Kudlow, Laffer and Moore host, they are providing advice, and the Governor presumably finds their advice of some merit. The Governor has literal (legally defined) advisers here in Wisconsin. But to be clear, I’ll add this link.

      1. Patrick R. Sullivan

        Maybe you should amend your post’s title to, ‘Not at all the Governor’s Men (Economists)’.

        1. Menzie Chinn Post author

          Patrick R. Sullivan: Thank you for your advice on titles.

          On a substantive note, I am still waiting to hear you admit you were in error regarding depth of the downturn in Canada vs. US during the Great Depression. As you recall, you stated unequivocally:

          Canada … had a less severe depression than the USA.

          And this statement is wrong.

    2. baffling

      rick stryker, considering the economic performance of laffer, kudlow and moore over the past seven years, i would not consider them economic advisers to walker either. walkers own mistakes are bad enough. imagine if he had to defend the performance of that troika.

  2. XO

    I really think this guy can win in 2016, and that should terrify anyone who has been watching WI. Hillary is a manufactured candidate, facilitated by nepotism. I think she is weaker than the polls suggest. Maybe Democratic advantages in Presidential years will help her get it done, but this clown could beat her. And then God help us.

  3. Jake formerly of the LP

    The thing that always gets me about Laffer and these boys in the RW bubble is that there is never any accountability for them being wrong for the last 35 years. They all continue to pull paychecks and get influence with self-justifying rich people, and political puppets like Walker. Heck, Menzie shows that Laffer could have had a better chance predicting state economic success by throwing darts at a map.

    It proves yet again that of there’s one thing right-wingers have major advantage in, it’s the “hack gap”, where they can trot out any wingnut welfare case they can, and somehow that person is given credence regardless of how failed their track record is.

  4. Robert Waldmann

    All the President’s Men was itself a reference to “All the King’s Men” by Robert Penn Warren, which features a crooked governor and his men (Willie Stark a just fictionalized enough to avoid a law suit version of Huey Long). Gov. Long was even more crooked that Gov. Walker, but with a very different speil — his slogan was “soak the rich and spread it out thin.”

    1. greenback

      All these titles are references to the Humpty Dumpty nursery rhyme. It’s fitting, because, no, these folks can’t put their economic ideology back together again, even with the help of a bunch of horses.

  5. miamijim

    I live in Wisconsin and have seen first hand what this clown has done to our state!! How he remains is up to the likes of Adelson Dumber than a box of rocks!! As said above, “God help us”.

  6. Richard Fox

    Thanks Menzie. It is good to see you recognize Walker’s supply theory economic leaning. It would truly be sad to have Krugman advising another Asian Flu economic meltdown.

  7. rtd

    The proverbial pot has met the kettle: “They just provide too many examples of how not to conduct serious analysis.”

      1. Jeff

        Menzie: An ad hominem is an argument based on irrelevant facts or claims about the person making the argument. I don’t see anything in rtd’s comment directed towards your character. On the other hand, alluding to Walker as a “Humpty Dumpty” simply because he attended a dinner with people whose arguments you don’t agree with—that sounds more like an ad hominem than anything rtd wrote. Which, ironically brings us back to rtd’s “pot meet kettle” comment. If you’d like another example, how about the fact that you criticize Kudlow’s 2005 prediction for being politically based and yet in the 1,000’s and 1,000’s of pages of “political analysis” you post here, I doubt you have once said anything even the slightest bit negative to anyone on the left side of the aisle. If we’re to believe your analysis isn’t just as politically biased as Kudlow’s, that must be one helluva coincidence.

          1. Jeff

            Menzie: Maybe you’d save yourself some further embarassment if you read my comment more carefully. Attacking a person’s character is one special case of ” an argument based on irrelevant facts or claims about the person making the argument.” The key is the irrelevance of the claim and I just gave you two examples of how you are guitly of the very things you accuse rtd and Kudlow, making the “pot meet kettle” comment rather appropriate. To which, your best rejoinder was– your comment two months ago contained a typo. Seriously? And this immediately following your critism that rtd’s comment was merely invective! Do you have any self awareness? It’s like trying to argue with a child.

          2. Menzie Chinn Post author

            Jeff: I am afraid I can not rise to the high level of refined discourse as exemplified by these choice Jeff quotes:

            As I’ve said before you make a better editor than economist.

            But don’t worry you’ll catch it next time (hint: Sarcasm again. I have doubts about your wit)

            Your arguments are so full of inconsistencies it’s making my head hurt.

            You may be easily impressed by the dangling keys of a fancy VAR but I tend to be a bit more critical in my thinking.

            But you are right — I should have responded to your allegation. The point is Kudlow is wrong. Please point out predictions I have made in error; the fact that my reasoning aligns mostly with those of Democrats might tell you something about the validity of the views on the other side of the aisle.

          3. rtd

            I’ve already replied to that. In the context of the conversation, nothing was in error. We were discussing employment gains during presidential terms & the timing thereof.

            And, yes, it is a ridiculous act when someone cherry picks comments & especially when blatantly ignoring the initial assertion.

            Also, you are quite skilled at initiating baseless attacks.

            Maybe you should stick to your hobby as ‘climatologist’ where you’re especially skilled in “how not to conduct serious analysis.”

        1. baffling

          “how about the fact that you criticize Kudlow’s 2005 prediction for being politically based”
          because kudlow’s predictions were ideological and wrong, they were subjected to criticism. there is actually no need to create a tit for tat, if i pick on a conservative then i need to be equal and pick on a liberal. wrong is wrong, period. the question really is, the troika discussed in the article have been wrong for a long time. why do people still give credibility to people who have been wrong for so long?

  8. Johnny

    If Walker want’s to make it, he will not make it. The bush clan with their saudi connections is financial and political much more powerful, say Koch brothers. But whatever the outcome, Hillary or Jeb – two wings of the same bird. We do not have a democracy, it’s an oligarchy.

  9. sherparick

    Reference all of Governor Walker’s (and now Governor Rausner’s) schemes to shift huge amount of state taxpayer money to their small circle of friends and supporters, remember all this grift and graft is IOKIYAR. Ethic rules, like taxes, are for the little people (unless you find a prosecutor like they have in Virginia).

  10. Jeff

    Menzie: Let’s recap. So far 2 replies from you, 2 empty barbs, and 0 rebuttals to my examples where you are guilty of the exact thing you are criticizing in others. Are we to assume that you don’t hold yourself to the same standards as those whom you disagree with?

    1. Menzie Chinn Post author

      Jeff: I do not understand. Please provide an instance where I criticized Kudlow, Moore, or Laffer for being wrong in a prediction, or wrong in a factual assertion, and it has turned out they are correct. Then please provide me with an instance where I was wrong in a prediction and/or wrong in a factual assertion — and I failed to admit.

      Perhaps hyperinflation showed up, and I failed to see it across the land? And was the 2008 housing boom collapse a figment of my imagination?

      1. Jeff

        Menzie: Re-read my first post. But let me restate my points. First you claimed that Kudlow lowered the discourse bar because he let politics influence his analysis but yet your posts are the epitome of partisan analysis. Second, you were quick to object when you felt others made an ad hominem argument but I would argue that the title of this post is nothing more than an ad hominem attack on Walker. So I ask, are we to assume that you hold yourself to different standards?

        1. Menzie Chinn Post author

          Jeff: My key point is the Kudlow, Moore, and Laffer were wrong. In the case of Kudlow, he was wrong according to Jeff Frieden because of partisan and ideological blinkers. (By the way, do you disagree Kudlow was wrong about the impending housing bust? Did I miss the continued rise in housing prices after 2006?)

          I don’t object to ad hom attacks – all I asked for was a substantive commentary.

          1. Jeff

            Menzie: So in your opinion politically biased analysis is acceptable as long as the predictions are accurate? By the way, do you disagree that your posts are politically biased?

          2. baffling

            “So in your opinion politically biased analysis is acceptable as long as the predictions are accurate?”
            if it is accurate then it does not have a bias.

  11. baffling

    jeff, that troika has been very wrong for years. that is the point of the article. any discussion otherwise is simply a diversion away from the content of the article. stick to the topic please. do you have any commentary on the performance of that troika over the past few years? i am interested in your evaluation of the performance of moore, kudlow and laffer, not menzie chinn.

  12. Harry Thompson

    Re: Larry Kudlow, Art Laffer, Stephen Moore

    Do you have email addresses for the `troika,` hah!

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