I’m at a conference on the Council on Foreign Relations, looking back at the Great Depression and the New Deal.
One speaker is Ed Prescott, 2004 Nobel Prize winner. He said:
I do predict the U.S. will lose a decade of growth. Marginal tax rates will be increased. Productivity-depressing policies will be adopted.
When asked what we should do noww, he said (more or less exact quotes, based on my rapid typing):
Don’t subsidize inefficiency. Cut tax rates to get people to work more This financial stuff is much ado about nothing. I don’t see any reason for the taxpayers to bail out Goldman Sachs in a roundabout way. Let these businesses go bankrupt. They gambled, they lost. That’s part of life.
I’m not necessarily agreeing with him, but it’s an interesting position.