The Difference Between Reich and Wrong

By Richard Vedder

REICH

Robert Reich is not one of my favorite persons. Au contraire, when he was Labor Secretary, I got into a very public written brawl with him in a major newspaper. If Robert Reich announced the sun would rise in the east tomorrow morning, I would probably rethink my own similar views on that subject-- so far are we out of sync with one another.

Having said that, however, I have to give Reich credit where credit is due. He showed some innovation in the face of big budget cuts at Berkeley, where he is currently teaching. He teaches a lecture course of 440, aided by nine TAs. He lectures 2-3 hours weekly, followed by some student time in smaller groups with the teaching assistants, a commonly used model for large classes throughout America. The Administration said, we are cutting your enrollment by 140 because we can only afford six TAs.

Reich thought this was a bad move, but he understood budget constraints (which often in public life he does not seem to do, such as the current brouhaha over health care). The average cost of educating a student in Reich's class would rise substantially with enrollment restrictions, since the big cost, I suspect, is Reich's own salary, more than the TAs. Reich said: let us offer Reich and Reich Light -- a 4 and a 2 credit hour version of the same course, with the two hour version consisting only on his lectures and a slightly watered down exam format with less essay writing. As he said, perhaps not the ideal solution, but one that probably increases the outcomes achieved relative to the inputs used.

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WRONG

Speaking of people I don't like, Ariana Huffington is very high on the list. She is a loud opportunist of limited capabilities in my judgment, and I don't agree with her politics. An associate of hers is now claiming the Fed may control the economics profession and what economists can say. She is dead wrong about that, since the Fed's tentacles over economists is limited to a small percentage of active academic economists. I have been critical of the Fed, think Bernanke is far inferior to Volcker and Greenspan, etc., etc., etc. I worry about Bernake's duplicity with Obama in macroeconomic policy and am scared about all sorts of problems arising form huge excess bank reserves and massive government borrowing.

Having stated my anti-Huffington bona fides, let me also say that the author and the Huffington Post does have a point. Writers and scholars are beholden to their patrons, and, if as is claimed, a majority of the editorial board of the Journal of Monetary Economics has the Fed as their employer, there is at least a theoretical possibility of conflict of interest, and the stifling of good publications. I would not rule it out. I doubt, however, the Fed controls also the Journal of Money, Credit and Banking, the Journal of Finance or, for that matter, the American Economic Review. In other words, there are multiple outlets for research, the number growing as informal internet-based publishing gains in importance.

In a broader sense, I think of the left-wing orientation of most intellectuals, including economists, comes in part because they are paid by the state (broadly defined to include the central bank and multiple governmental entities). People don't want to kill the goose that lays the golden eggs that they live on. In a world with less government support for higher education, would professors be more balanced in their political orientation? It is an interesting question that, alas, I do not know the answer.