Prof. Marina v.N. Whitman on Economy |
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This interview is part of the Stimulus Package interview series. This is an interview by OurBlook with Marina v.N. Whitman , professor of business administration and public policy at the University of Michigan, former member of the Council of Economic Advisers , and a former vice-president of General Motors.  What do you like about the huge stimulus bill signed by President Obama?MW: What I like best is that it's done; that it was put in place promptly and that, if we are to believe the words of President Obama, some of the projects it will fund will soon be underway, at a time when private-sector employment is shrinking faster than a wool sweater tossed into boiling hot water. What don't you like? MW: To quote some expert, whose name escapes me, stimulus measures should be timely, targeted and temporary. I've already commented that there's hope for timeliness, but I'm much more doubtful about targeted and temporary. The bill is a hodgepodge of kinds of measures, some of which can truly be regarded as short-run stimuli, others of which are directed toward long-run goals. And it's hard to imagine that some of them will end up being temporary ... imagine the political donnybrook when the Administration announces the termination of subsidized health coverage for the unemployed or federal aid to local school districts! What will be its impact, if any, on bringing our economy back? MW: No one will ever know for sure what impact the stimulus bill will have had on lessening or shortening the steep economic downturn, since the economy is bound to recover sooner or later in any case. And no one can tell at this point whether the stimulus bill is large enough to do the trick or not. Nor do I know whether the combination of spending and tax cuts in the bill is optimal. But the one thing I know for sure is that, if ever conditions were ripe for a government stimulus to kick-start an economy in the worst doldrums most people have experienced in their lifetimes, we have those conditions now, both in the U.S. and globally. Is there anything else government should be doing to help us out of the economic mess we're in? MW: The other important step the government must take is to settle on and communicate clearly a strategic plan for ending the financial crisis. The variety of stops and starts that have characterized both the end of the Bush Administration and the early days of the Obama Administration are far from reassuring, as the markets have told us loud and clear. I am reminded of the comment attributed to Winston Churchill: "you can always trust the Americans to do the right thing, but only after they've tried everything else." We've tried the "everything else"; it's high time those in charge figured out and implemented "the right thing!" On a personal level, what do you see happening in Ann Arbor or U. of M. itself that brings home what's happening economically? MW: Because universities and hospitals are the largest employers in Ann Arbor, our community is somewhat sheltered, comparatively speaking, from the degree of pain being felt elsewhere in Michigan and in the country as a whole. The unemployment rate is well below that for the state as a whole, and even below the national average. Foreclosures are way up, percentage-wise, but I haven't seen any of the signs that are so abundant, for example, in the Tampa Bay area of Florida, whence I've just returned. On virtually every block there, there were large signs that read either "Specialists in Short Sales: Avoid Foreclosure!" or "We have the Biggest List of Foreclosed Homes: Get Your Dream House at an Unbelievable Bargain!" But there's plenty of pain to go around, and local cultural and charitable organizations, in particular, are suffering from a double whammy: the closure by Pfizer, the town's second-largest employer, of its Ann Arbor facility, followed almost immediately by the national economic collapse. The University of Michigan doesn't know yet how much the state's contribution to its operating budget will be cut, so the belt-tightening largely lies ahead. But many of my older colleagues, looking at their shrunken retirement portfolios, have decided to postpone their planned retirements, which will make it that much harder for young PhDs newly on the academic job market to find positions. Is there anything else you'd like to say about the economic crisis facing our nation and the world? MW: One thing this global crisis has done is put to rest the idea of economic "decoupling" that was current a couple of years ago: that other countries' economic health was no longer linked to that of the United States. My hope is that the recognition that we're all in this together will push countries in the direction of greater cooperation and coordination of economic policies, rather than yielding to the siren song of protectionism that was so devastating in worsening the Great Depression. Prof. Whitman, daughter of the noted mathematician John von Neumann, holds honorary degrees from more than 20 colleges and universities ... certainly an indication of the distinguished career she has had. In addition to what we mentioned at the top of the interview, she has been an economics professor at the University of Pittsburgh, has served on the boards of Harvard and Princeton, has served on the boards of Alcoa, JPMorganChase, Procter and Gamble, and Unocal, and has authored several books. Oh, yes ... she also moderated a TV series, "Economically Speaking," carried on some 200 PBS stations. She holds a B.A. from Radcliffe and an M.A. and Ph.D. in economics from Columbia.
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