No need of Economics 101, Mr. (or Mrs.) President
The other day I heard Senator John McCain said that he really didn’t know much economics or how the economy is running. My first reaction was that–he was an honest man! I don’t think that he really knows nothing about the economy, rather, he is humble enough to acknowledge he knows very little about how to steer an economy.
It doesn’t matter. President does not have to know anything about the economy in order to be a president. The reason is: first, the economy does not run like a horse seeing who is the master on its back. I am confident that if McCain is elected, he could assemble the best heads of economics in the country as any other presidential candidates could do. Second, like any other presidential candidates, he could not run the economy from the White House and whatever is unfolded on the economic front is pretty much beyond his control.
That is why I think he is more straightforward than other presidential candidates to acknowledge the limited ability to manage the economy as a president. After all, George W. Bush has an MBA but couldn’t stop the country running into huge government deficit. Even his predecessor, Bill Clinton, who left the office with a budget surplus in 2000, acknowledged that he would have to run the budget deficit if he was president after Sept 11th.
But the question beyond this observation is: wouldn’t different policies adopted by different candidates have different impacts on the economy? Yes, indeed. Whatever is done to patch the economy will have some positive and negative effects. And historically, the negatives effects often outweigh the positive ones. If this is no further from the truth, then why would there still be economic fallouts, bubbles or mania after so much policy tinkering, adjustment, stimuli…? Don’t we have enough economists who are armed with thousands of empirical data points, perfect or imperfect economic theories and who should have already figured out what is going on? Are those Monte Carlo simulations they run to emulate the real economy just, simply, garbage in and garbage out? I hope not.
Then do we need more data, more theories, more mathematical tools and more powerful computers to have more accurate simulations?
I am not sure. But with all that we have already had, I am sure that we don’t need one more person, in this case, the US President, that is supposed to “know” about the economy.
