Unemployment rates fell in January and GDP levels rose last quarter. Both these figures may indicate that America’s recovery from the Great Recession is picking up pace. But Stanford economist John Taylor says America’s position is still weaker than past eras of economic growth. Taylor joins us to discuss his new book, “First Principles: Five Keys to Restoring America’s Prosperity.”

John Taylor: Five Keys to Restoring America’s Prosperity 16 February,2012forum

John Taylor, author, senior fellow at the Hoover Institution and professor of economics at Stanford University

  • Blake

    A good way to bring prosperity back to the USA and other states would be to replicate the model of the Bank of North Dakota, which is still the nation’s only state-owned bank. This approach removes price-gouging from banking and provides state government with a source of income that would otherwise go to the private banks. For more information, I refer you to the research by Ellen Brown who has spoken throughout the US about this. The big banks vehemently oppose this model in the way that gangsters oppose justice.

  • Gerald Fnord

    Does Mr Taylor favour the sort of “limited government and the rule of law” which allowed eleven-year-olds to lose their limbs sorting coal, private employers to call out troops to shoot down strikers, and of manufacturers to spoil or lessen our common wealth by polluting it even as they used resources ab initio belonging to  no-one?  That was what we had the last time things were as many at the Hoover would have them…many seem to not understand Mr Twain’s point in calling it a ‘Gilded’  Age rather than a ‘Golden’.

    Less snarkily: no-one noticeable is in favour of unlimited government; what is most common is that those whose peculiar, narrow, and short-term interests are gored by government wish government to be limited in ways favourable to themselves, even at an high cost to others (and themselves, eventually).  But a government perceived to work well only for a few must soon either become tyrannical or fall or both, at which point it ceases to be much use to anyone not in it and a few friends.

    Shorter:  “Property rights” really benefit one only to the extent that one has or can reasonably expect property, and protecting them above all else may create a situation in which they at least appear to be against most people’s self-interests.

  • James Ivey

    So, if we tax something at a higher rate, we get less of it?  I think we should tax extreme concentrations of wealth at a much higher rate since such is clearly bad for the economy.

  • marte48

    The wealth gap between blacks is much worse now. How can that be “better?”

  • Blake

    The data shows what Milton Friedman’s policies resulted in: Military juntas in South America that tortured and killed 10s of thousands of their citizens, including pregnant women and which even threw leftists out of airplanes over the ocean to make them disappear. Not to mention complete economic ruination for all but the very rich. Friedman was a madman and a fraud.

    • Ayn Marx 666

       Not really true—it was more that governments formed by reactionary madmen liked Friedman’s policies, not that those policies brought them into power.

      Still, the association is there, but those of us working against the dominant power in our culture should pay strict attention to facts, since facts are the only things not susceptible to the power of the powerful—all the money in the world can’t make 2+2 be 5, at least not with the usual addition operator over the  ring of integers.

  • James Ivey

    Didn’t we try mass deregulation from 2000-2008?  I remember 2008.  It was really, really bad.  Why are we even talking about returning to 2007?

  • marte48

    Rather than admit that they were wrong, republicans always say, “Well, the democrats went along with it.” 

  • marte48

    I wonder why they keep hiding Hank Paulson?

  • marte48

    Santorum voted to raise the debt limit 5 times.

  • marte48

    Obama (and the rest of the dems) accepted the plan presented by Bush and Paulson.

  • Aaron

    Who would win in a wrestling match, you or Krugman?

  • From Reagan’s presidency forward, no one but the wealthiest 1/2 of 1% have benefited substantially from the increase in wealth in this country. Throughout history, absent regulation, every country becomes Haiti, with most living in poverty, a handful in luxury, and a tiny middle class in between. 

    Great wealth never satisfies, but only leads to an insatiable desire for even greater wealth.

  • Nick

    John Taylor is from the school of opinions.  While some of his ideas certainly have merit, if you fire off a million shots in the dark statistics are on your side.

    Economists like him perpetuate things like the trickle down theory and Laffer Curve despite all evidence to the contrary.  They use periods of success as “undeniable evidence” of their theories without examining the other things going on at the time.  They cling to buzzwords like unpredictability and job creators with no real substance behind them.  

  • James Ivey

    Oh come on!  Drive us into recession/depression, dropping GDP, and then complain that the relationship of spending to GDP rises?  That’s pretty clear intellectual dishonesty.

    Second, name a country with a better standard of living with lower taxes as a percentage of GDP.  All countries with an enviable standard of living have much higher taxes than we do.

    • Mtngoat

      Sometimes a comment is both short and brilliant. Thank you James Ivey. All of the Scandanavian countries prove your second point — that countries with higher standards of living and higher measures of well being than the US all have much higher taxes. How telling that John Taylor avoided the question about Denmark. What a dishonest partisan piece of garbage.

      • Gzerovnik

        On the other hand, there’s Switzerland, with much lower taxes and a much better economy. I do not accuse you of being dishonest, just ignorant. http://www.heritage.org/index/country/switzerland

        • Lemotjuste12

          Those who are not professional economists cannot be expected to know details of a wide range of countries, so thank you for recognizing that.  His point was that the professor does know about Denmark but avoided having to account for it since that was counter to his argument.  This is a very different thing.

  • marte48

    The regulatory agencies that existed were miniscule in comparison to the industry they were tasked with overseeing. That’s why they want weaker government.

  • Steve von Maas

    It was a large, vibrant middle class which distinguished America and made it prosperous.  If we want the economic prosperity of 1950-1980, we need the same internal revenue code as in 1950-1980.

  • marte48

    Krugman’s main complaint was that the bailout was too small.

    • Ayn Marx 666

       No, I don’t think that’s true:  I think he was and is in favour of more aid to individuals (for humanity’s sake and to avoid a liquidity trap), but not sanguine about the money given to the banks.  I’m not sure about this, but I believe that he might have even been in favour of letting GM go bankrupt as long as its workers were supported to the extent that the local economy would not collapse.

      Since ‘bail-out’ is such a loaded word, it becomes more and more useful for someone to label any policy they dislike a ‘bail-out’.  Welfare and unemployment are not bail-outs—they are human mitigations of what would otherwise be a a deadly, and still very arbitrary and capricious, game.

      • Marte48

          Stimulus risks being too small not too large
        Robert Kuttner, co-editor of The American Prospect. – Stimulus “needs
        to be adequate to do the job. Eight hundred and twenty billion is about
        2.5% of GDP. But the economy is sinking at the rate of five to six
        percent. So they may find out they have to come back and ask for more.”
        Prominent economist Paul Krugman has also stated he believes that
        roughly $800b in economic stimulus is “too small”.[2]

  • Lev Schlaffer

    It seems to me that your guest sidestepped a question put to him by Mr. Krasny.  When asked whether the Bush Administration tax cuts for the wealthy have produced jobs or overall economic growth, Mr. Taylor reponded that a basic law of economics tells us that when you tax things less and thus reduce their cost you will have more of them being produced.  Unfortunately those tax cuts were not levied on firms who create jobs but on the personal monies of the wealthy. These are not commensurate. 
    – Lev Schlaffer, Berkeley, CA

  • Nxttogo

    If the “free market” worked well and solved all problems than the government would not need to intervene or try to solve problems. The problem is not government, the problem is the quote free market. If the “free market” could actually solve all problems and fill all needs you would have limited government. Instead of trying to cut government the “free market” needs to step up. Conservatives always say government is inefficient than there should be plenty of opportunity for the free market.

  • marte48

    The big banks are bigger than ever. All the result of “free market competition?”

  • marte48

    There are lots of very skilled and trained American (white) engineers who have and are being replaced by Indian engineers. Educated slaves are always beneficial and preferred by owners. 

  • marte48

    Do crony capitalists vote democrat or republican?

  • marte48

    We now have a severe scarcity of experienced air traffic controllers as a result of Reagan’s policies.

  • marte48

    The big banks did not fire anybody.

  • Dcteam62

    Maybe the question is can we as a society TRUST all those firms/companies to do the right thing after deregulating them?

  • marte48

    I think that Obama-haters have been intentionally refusing to hire anyone.

  • Daniel Danielson106

    What kind of an answer was that to the Glass-Steagal repeal?

    Michael, could you please insist more on your guest giving an answer to all questions, not just those that serve strengthening his position?

  • Chrisco

    The (other) Taylor Rule: Ben Bernanke is good when Bush appoints him. He’s bad when Obama does.

  • Mark from Santa rosa

    Mr Taylor suggests the increase in federal spending-GDP ratio has been the cause of our declining prosperity. Couldn’t the same be said about the decreasing tax base-GDP ratio. That ratio is currently the lowest in history.

  • Dennis

    Mr Taylor speaks of improving education. Most information suggests that, additionally, our infrastructure (roads, bridges, etc). Since both of these areas are done (or not done) by government, how would Mr. Taylor accomplish these things, SPECIFICALLY?

  • Mtngoat

    In responding to the criticism from Paul Krugman, Taylor repeats the exact lie that Krugman so accurately noted. The reason that the ratio of governement spending to GDP has grown from 19 to 24 is because the denominator of the ratio, namely the GDP, collapsed at the end of the Bush administration.
    As a ratio between two variables, this ratio is useless as a long-term measure of governement spending. A valid measure would be growth of government spending adjusted for inflation and population growth. By this measure, social spending has not increased at all under Obama, according to the CBO. Taylor is lying about government spending, and he knows it. 

  • Larrygothberg

    I still have not heard anyone talk about the fact that workers in China, and other countries, are working for 6 cents an hour. This is the reason we have lost so many jobs in this country. How is this fair?

  • Chrisco

    The main macro-economic difference between Democrats and Republicans in my 30 years of observation: Democrats tax and spend. Republicans cut taxes and spend.  Therefore, Democrats are economically responsible and Republicans are not. George W. Bush took this to extreme levels and we are living his nightmare policies.

    • Daniel Danielson106


  • Frank

    I think Prof. Taylor exposed the limited scope of his views in his response to the question about Denmark.  He expressed a complete lack of interest in examining other economic models around the world.  Also, regarding his views on Glass-Steagall, check out Bill Moyers’ interview of John Reed and you will be amazed: 

  • marte48

    Could we ask all wealthy people to send back their social security checks? If republicans are so opposed to “big government” why do they collect social security?

    • Redducatist2

       Because it’s theirs.  It’s insurance, they paid the premiums, and are now due the dividends. 

      • marte48

        Then, I guess we should all be expecting returns from our car insurance?

  • Daniel Danielson106

    “Increasing taxes DOES NOT SEEM to be correct”???

    Despite what was happening over thirty years? All that was good (not much) was due to increasing taxes. All BAD, which was almost everything, was because little mishaps like 09/11??

    Can you freaking believe it? When a republican has nothing to say he just sticks to his guns …

    • Daniel Danielson106

      Sorry, my mistake. Should be “…due to DEcreasing taxes”.

  • Duane

    Mr. Taylor is an ideologue posing as an economist. Regardless of the question, government is the problem. He states that regulatory agencies weren’t effective in monitoring financial institutions, but doesn’t want to increase funding to make them more effective. He thinks self-regulation of businesses and finance is sufficient, yet acknowledges the widespread frauds resulting from deregulation such as Enron, Lehman Bros., etc. Talk about pretzel logic.

    • Red

       Perhaps, Duane, you are an ideologue posing as a commenter.  Taylor’s position may not be perfect, but has a lot of historical evidence to back it.

  • blind desire

    “Can wealth concentration trickle down?” was where a nauseating conversation turned ludicrous.

    No, Michael, wealth concentration is the sucking UP of wealth away from the “99%” into the realms of the rich and powerful. What trickles down is platitudes about working hard and making your own opportunities in the face of a globalized world, a poorer world, a third-worldized US.

    Poverty can, however, trickle up.

    “Entitlements” keep being eroded; Social security is worth less in real terms because the measures of inflation have become fake. Pensions are being robbed by the same banksters who destroyed the credibility of the financial system. The dollar itself is being devalued by continuing low interest rates and by continued monetization of the derivatives fiasco. Goods and services cost more (food is up, gas is up, rent is high, etc.) and the dollar has lost a lot of value against other currencies, but OFFICIALLY we don’t have inflation! We no longer measure M3.

    We don’t need no stinkin’ RULES. We don’t need Glass Steagal back, according to your guest. Heck, regulation wont work anyway, because the system is now so corrupt that regulators have become wholly owned subsidiaries of the powerful institutions they are supposed to be regulating. So for reasons that are absolutely horrifying, perhaps he’s right. At this point, feeding more money into regulators might truly be a total waste.

    But right-wingers also say letting poor people have more help won’t do anything to stimulate the economy, what we need is letting people like Mitt Romney keep their ill gotten private gains. Gains made by stripping the wealth out of companies, gutting them in what used to be called Vulture Capitalism but is now called ‘Private Equity. That kind of wealth is immune from all but the lightest taxation. It’s net effect is to destroy whole swathes of jobs, and the companies that created them.

    So if more and more companies are destroyed, Americans desperate for work. losing their homes, moving into their cars, are easy prey for any kind of work, at any kind of wage that might allow them to survive. That is music to the ears of the old fashioned kind of INDUSTRIAL capitalist. Re-pricing the labor market downward was a boon to that kind of financier.

    The old fashioned industrial capitalist is increasingly a myth from the past, along with the “work hard and you’ll get ahead” American dream.

    What we have is the FIRE sector (Finance, Insurance, Real estate), the stock market and “private equity” capitalism. Money that just creates money without creating anything of value along the way. Money spinning into more money. Pretending that taxing those investments will put a damper on job creation is ridiculous. Those investments COST jobs. If taxing them will create less of them, then it would save jobs (if anything) to tax the Mit Romneys — so he’d make a bit less when he devoured another business.

    The question to as is not “Can wealth concentration trickle down?” but “can poverty trickle up.” The answer is, yes. It’s called a depression or recession — when money velocity (in the actual economy real people live in) slows down. The huge fake economy spins debts, lies and quantitative easing, but the real people can’t buy and sell the necessities. People get hungry, they get angry. If the every day lives of the 99% get bad enough, the big companies that sell them things suffer. Stock prices go down.

    • Ayn Marx 666

      Wealth concentration is also responsible for the worries about our social spending.   Most workers are roughly twenty times as productive as so in 1937…but their wages, which are the bases for Social Security and Medicare, have not increased proportionally.  Instead, the wealth (dare I say it, ‘surplus value’?) has been siphoned off to the top, where even as wages it would mostly not be touched for these Social Security and Medicare.

  • gregory slater

    Taylor’s totally dishonest.  He made the absurd claim that the reason the economy crashed is because of the bailouts.  But, of course, the bailouts were a reaction (wise or not) to the crash which itself resulted form reckless wall street gambling after total rollback and corruption of all regulation!  And Krasny, big surprise! failed to call him on such an out and out lie. And then he has the unmitigated gall to say the answer to a catastrophe caused by total deregulation of reckless morally bankrupt financial gamblers is -get this! – more deregulation!  Is he a liar?  A fool?  Both?  Yes probably both.  Krasny, could yo please show some gumption in pushing back against such drivel?  Seriously man.  The guy’s a total knucklehead.  Get an honest man or woman on.  They’re out there.  And – ask – tough – questions – Krasny, OK?  Is that too much to ask?

  • gregory slater

    If this hypocrite is so worried about debt then why did support the reckless imperial, morally bankrupt attack and occupation of Iraq, the complete costs of which are 3-6 trillion dollars! (and which also resulted in the needless deaths hundreds of thousands of innocent men women, and children.  The man is just a shameless prevaricator.  Please get him off.  Stanford professor?  wow… that’s just sad.  guy’s maximally hypercritical.  I would so like to debate the twit.  In fact, I hereby issue a standing challenge to John Taylor to debate the insane policies he advocates.  I’m sure he doesn’t have the guts to take me up on it.

    • guest

      It is telling that there was not another economist on to debate his ideas. Something tells me that he prefers not to take the heat of an intellectually rigorous debate.

  • gregory slater

    Krasny – for heaven’s sake why didn’t you ask him straight out if he thinks the  repeal of Glass Steagall was a good idea?  Just ask him!  It’s like a sanity test for the guy.  If he says that was a good idea, you can safely throw him off the show and never have him back on.  Send him back to where he belongs. How do these guys keep escaping from the Hoover Institution For the Criminally Insane, anyway?  Are there insufficient guards there?

  • guest

    When will you have Robert Reich on for a rebuttal to these opinions? It is good to hear both sides of an argument.

  • ga

    I see John Taylor peddling the same lies for over a yr now

  • Marte48

    Professor Taylor has to say what his colleagues at the Hoover Institution want to hear.

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