An Ambivalent Remembrance of Marty Feldstein

The recent passing of Harvard economist Martin Feldstein has led to praise from many of his students, who were quoted in the eulogy in The New York Times. Columnist Paul Krugman tweeted that “his lasting legacies will come from research — both his own, and the research environment he created for young economists.” It was observed that he was a supply-side economist but that, based on his research, he disagreed with the belief, widely held within the Reagan administration (in which he served as Chair of the Council of Economic Advisers from 1982 to 1984), that economic growth alone would erase the deficit.

I, too, was one of Marty Feldstein’s students, taking his graduate course in Macroeconomic theory in my junior year (1970) as an undergraduate. In retrospect, I was in over my head, but the clarity of Marty’s lectures helped keep me from sinking. I distinctly remember him criticizing Milton Friedman’s monetarism (maybe he said it was lunacy, but I likely threw away my notes years ago). I also remember that I arranged for him to give a briefing about economic policy to Father Robert Drinan, a Jesuit priest running for Congress as a liberal Democrat. The briefing was congenial, and I thought the two were on the same page. Drinan was elected in 1970, served until 1981, and had the distinction of being the first member of Congress to call for Richard Nixon’s impeachment.

I had no contact with Marty since the early Seventies, so I found it surprising to hear that a critic of monetarism who had briefed liberal Democrats by the Eighties was identified as a supply side economist who served in the Reagan Administration. Perhaps I didn’t understand Feldstein’s thinking enough to know that he wasn’t being inconsistent. Or perhaps he did change his views, following the aphorism attributed to John Maynard Keynes: “When the facts change, I change my mind. What do you do, sir?” I wish I had had an opportunity to ask Marty if he had changed his thinking between the early and late Seventies. For me, this is an unanswered question.

My second remembrance of Marty Feldstein is as an interviewee in Charles Ferguson’s 2010 Academy Award-winning documentary Inside Job. Ferguson did a number of interviews with prominent economists to show that they had prostituted themselves to the financial services industry for lucrative consulting contracts and corporate directorships. Worse, they had been riding on the locomotive in the economic train wreck of the 2008 financial sector meltdown, but had still gotten rich. Ferguson made fools of no less than John Campbell, then chair of the Harvard economics department; Glenn Hubbard, dean of the Columbia Business School; and Frederick Mishkin, a well-known finance professor at Columbia and former Governor of the Federal Reserve.

Feldstein agreed to be interviewed, but listen to his responses. When Ferguson asked him about his lucrative two decades on the board of American International Group and its subsidiary AIG Financial Products (the insurer the federal government bailed out in 2009), Feldstein smiled and said, “I have no regrets about being on AIG’s board, absolutely none.” Ferguson then asked if he had any regrets about AIG’s decisions and Feldstein, still smiling, replied, “I cannot say anything more about AIG.” Finally, Ferguson asked why Feldstein, a prolific researcher, had never written about executive compensation, corporate governance, and the effects of political contributions on government decisions, and Feldstein calmly said “I don’t think I would have anything to add to those discussions.” I’m glad Ferguson chose to include Feldstein. Hubbard, Campbell, and Mishkin all demonstrated how not to do an interview. Feldstein had the street smarts to realize Ferguson’s intent in the interview, and stone-walled expertly.

I recognize and appreciate the perspectives of Feldstein’s colleagues and students who acknowledged the originality and productivity of his research, his role in public policy debate, and his leadership within the economics profession by making the National Bureau of Economic Research a locus of cutting-edge research. My perspective is somewhat more ambivalent, but equally respectful.

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