Yale's Tobin Guides Obama From Grave as Modern Keynesians Eclipse Friedman

[marmar]

Yale’s Tobin Guides Obama From Grave as Friedman Is Eclipsed
By Oliver Staley and Michael McKee


Feb. 27 (Bloomberg) -- So long, Milton Friedman. Hello, James Tobin.

After a three-decade run, the free-market philosophies of Friedman that shaped U.S. policy are being eclipsed by the pro- government ideas of Tobin, the late Yale economist and Nobel laureate who brought John Maynard Keynes into the modern era.

Tobin’s stamp is on the $787 billion stimulus signed by President Barack Obama, former students and colleagues say. His philosophies are influencing Austan Goolsbee, a former Tobin student advising Obama, and Ben S. Bernanke, head of the Federal Reserve. Unlike Friedman, Tobin provides guidance for today’s problems, said Paul Krugman, a Princeton University economist.

“Hard-line doctrines don’t seem very appropriate at this troubled moment,” said Krugman, a New York Times columnist who also worked with Tobin at Yale from 1977 to 1979. “Tobin was never a guru in the way Milton Friedman was; he never had legions of Samurai ready to spring to the defense of his theories, but that’s part of why he is so relevant right now.”

The decision by Bernanke last year to invoke the Fed’s emergency powers and put mortgages and other assets on the central bank’s balance sheet “is pure Tobin,” Krugman said. Bernanke cited Tobin’s 1969 essay on monetary theory in a 2004 paper discussing options available to the Federal Reserve for stimulating the economy when interest rates approach zero. ........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601109&sid=ajz1hV_afuSQ&refer=home

[SoCalDem]

1. Three decade RAMPAGE is more like it ..n/t