TOBIN, NOBEL WINNER, SLAMS REAGANOMICS'
Author: Associated Press
Date: Friday, October 16, 1981
Page: ?????
Section: ECONOMY
President Reagan's economic program is a "recipe for high interest rates" and
will not cure inflation or improve employment, James Tobin, the latest winner
of the Nobel prize for economics, said today.
In a wide-ranging criticism of the Administration's economic policies,
Tobin said "Reaganomics" will cause "considerable economic pain and damage"
and trap the economy in a pattern of stagnation for several years.
"On the whole we will have a rather stagnant, sputtering economy . . . and
not much growth or improvement in unemployment," Tobin told reporters after
speaking at a New York University conference on the US economy.
He said Reagan's program will not bring interest rates down enough to spur
economic growth, until the economy suffers a recession.
Tobin, a Yale University professor, was named Tuesday as the winner of the
1981 Nobel Memorial Prize in Economic Science for his analysis of the
relationship between financial markets and the investment decisions of
families and businesses.
Tobin said that instead of achieving his goals of ending inflation and
improving employment, productivity and investment, Reagan's cuts in Government
spending and taxes will worsen the plight of America's poor people.
"What it is sure to do is redistribute wealth, power and opportunity to
the wealthy and powerful and their heirs," he said. "If that is its principal
outcome, the public will become considerably disenchanted."
Tobin also criticized Reagan for promising Americans that inflation can be
cured without major sacrifices. In doing so, Tobin said, the President has
discredited Federal Reserve Chairman Paul Volcker's warning that inflation
cannot be stopped without a prolonged period of economic hardship.
"President Reagan has not made Volcker's threat credible to those who
determine wages and prices; instead he has undermined it by promising
disinflation without tears, an instant spurt of rapid growth, falling
unemployment and declining inflation," Tobin said.
Reagan's effort to reduce the Federal government's role in private
enterprise and in social-service programs will enlarge the gaps between the
wealthy and poor, Tobin said.
"The new federalism,' as is only beginning to be realized, will have
devastating effects on the finances of many state and local governments and on
the services they render, especially to the poor," Tobin said. "Meanwhile the
tax cuts will be widening the gulf between the living standards of the rich
and . . . the poor."
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