Thomas Hopkins on Economy |
| Blooker Comments - Economy | |
OurBlook interview with Thomas Hopkins, professor of economics at Rochester Institute of Technology. Is the U.S. heading into a depression, and if so why, and how bad will it be? Like the 1930s? Or just more recession? TH: The turbulence will continue, and employment consequences worsen, for much of 2009. But I see little risk of a repeat of the Great Depression, because we've learned from that earlier experience. The actions now underway in Washington will be on balance helpful in slowing the decline and hastening the recovery. Either way, will there be problems across the board or would some sectors or parts of the nation be better off than others? TH: While the downturn affects much of the economy, the problems will be more acute in some regions and industries than others. That already has been apparent in the unevenness of the decline in housing prices, for example. Industries offering products and services such as telecommunications (e.g., Verizon) and consumer staples/necessities will be much less adversely hit. Could we be facing severe inflation or deflation? TH: The expanded rate at which the Fed is attempting to ease credit does indeed create a risk, once recovery begins, of ratcheting inflation rates upward. But the Fed is equipped to swing into a credit-moderation role and should be able to forestall that problem from getting out of hand. At present, of course, there are more signs of price declines than increases, and deflation is just as damaging as inflation. But I am optimistic that the Fed will be able to navigate us between both extremes. Rochester, N.Y., where you're located, used to be a beacon of American commerce ... Kodak and Bausch & Lomb come to mind. But now, many outsiders view Rochester and the rest of outstate New York as a basket case. Is there anything specific you see in your area that illustrates the situation this nation is in? TH: It is not easy for a successful innovator, such as was Kodak in the past, to sustain its successes, and Kodak -- to Rochester's sorrow -- fell behind in the transformation of its industry. Our region allowed past commercial success to mask the importance of moderating costs of doing business, and as a result our tax and regulatory burdens outpaced those of much of the nation. When times are prosperous, it's easy to allow such governmental burdens to climb -- but they handicap the rise of new generations of innovators. Are there any other points you would like to make about the severe economic problems facing the U.S. and the world? TH: We should be able to work our way through current problems if we step up the pace of streamlining activities/processes in both government and private sectors and insisting on fuller accountability and prudence across the board. Prof. Hopkins has served as dean of RIT's College of Business and as president of its U.S. Business School in Prague. He held senior management positions in two White House agencies during the Ford, Carter and Reagan administrations; in 1979, President Carter appointed him a charter member of the federal government's Senior Executive Service. In the early 1980s, he served as deputy administrator, Office of Information & Regulatory Affairs, in the Office of Management & Budget. His research on business burdens of government regulation has been sponsored by the Organization for Economic Cooperation & Development (OECD) in Paris and the U.S. Small Business Administration (SBA) in Washington. He has testified on regulatory policy issues before committees of the U.S. Senate and House, and Canada's House of Commons. He co-authored a 2001 SBA report, "The Impact of Regulatory Costs on Small Firms," as well as National Research Council reports on marine transportation, the Exxon Valdez oil spill, and trucking/rail/barge transportation. He previously was on the faculty of American University, University of Maryland and Bowdoin College. He holds a B.A. from Oberlin and a Ph.D. in economics from Yale.
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