Laurence Kotlikoff: Is Purple the New Black?
by Max Hasan | Boston University
“If you were a talented engineer and saw a bridge being built poorly by a politician, what would you do?”
Laurence J. Kotlikoff, a recent entrant to the presidential race, sums up his concern for the future of our nation with this concise rhetorical question. The distinguished Boston University economics professor, who decided to join the presidential race last month, enters without prior experience of holding public office. In addition to being an economics professor, Kotlikoff has juggled his time between writing for Bloomberg, authoring several books, and consulting for foreign governments, international institutions, and several Fortune 500 companies.
Already a busy man and entering the race at a time when major news outlets are heavily saturated with coverage of Republican primaries, the 60-year-old economist faces a daunting task. I was lucky enough to interview the professor, and was fascinated to learn more about his ideas.
Kotlikoff is pursuing a bid on the Americans Elect ticket, which, though technically a third party, describes itself as nonpartisan and representative of candidate-centric rather than party-centric choices. Americans Elect will use an internet-based primary to select a representative candidate. On the site, voters can browse through a sizable pool of potential candidates and choose which ones to track or support.
Kotlikoff’s decision to pursue the Americans Elect bid is highly appropriate due to his nonpartisan stance, which parallels the political group’s mission. He believes that dualism of the two politically opposed parties generates uncooperative attitudes, resulting in inefficiencies and incompetence in policy planning. Kotlikoff cites the health care debates as an example of such a political stalemate:
“[My] policies are designed to make both parties happy. They’re not tailored to one party more than the other. Economics really helps you see that there’s a lot more common values between the policy proposals of Democrats and Republicans. Take, for instance, Paul Ryan’s healthcare proposal versus Obamacare. Though essentially the same thing, both parties package their proposals in different rhetoric. The discussion of policy is always, ‘Is this going to be good for the party?’ It’s never, ‘He’s in a different party but it sounds like a good idea, let’s have a non-emotional discussion about this.’”
Ultimately, he believes that healthcare should be universal, similar to the German, French, and Japanese health systems. He claims that the most efficient system would be privately run, paid for with vouchers, and funded by the approximate 10% of GDP that Medicaid, Medicare, and health exchange spending currently utilizes.
Healthcare is just one of the six elements that makes up Kotlikoff’s “Purple Plan.” This plan—aptly named for its neither red nor blue political ties—represents Kotlikoff’s ideas on how the current political and economic system can be reformed and improved. Included under this umbrella are financial, tax, health, social security, generational balance, and energy plans. These items are comprehensive and endorsed by economists across the political-economic spectrum, including several Nobel Laureates.
Regarding his background in economics, I asked Professor Kotlikoff, “There aren’t many economists who run for president and, in fact, no president in our history has ever been trained as an economist. What kind of edge does your position as an economist give you?”
He replied, “What’s a good training for being a president? Is it being an actor? Is it running a baseball team? Running a pizza joint? A lawyer? A General? Currently, our biggest problems are based on economics, and we need an economist to try to fix these problems. Countries like Italy, that are facing problems largely economic in nature, are in fact turning to economists for leadership.”
Although most of our effective previous presidents have either been lawyers or affiliated with the military, Kotlikoff calls into question their successes in dealing with economically rooted problems, like those we fact today. The effectiveness of a president depends on the current events with which he must deal.
Kotlikoff further criticizes some economic and financial advisors as typically being too “politicized,” or in other words, representing too political of an agenda, claiming, “Economics is a science and thus should be completely independent and objective. It’s time to set aside biases and think about the actual effects of actions.”
Many economists disappear from the public eye at the first sign of prosperity, but as soon as a recession (not to mention the unspoken “d” word of economics) rears its ugly head, economists will start popping up, being questioned by the media as to the nature of such a financial failure.
Similarly, Kotlikoff, as an economist, is notable for his ideas regarding the financial meltdown of 2008. I asked him, “Your beliefs on the financial system are quite well known due to your successful book Jimmy Stewart is Dead. You are also known for coining the term ‘limited purpose banking.’ How does this term apply to preventing further crises?”
He said, “We don’t want financial intermediation systems to go bankrupt because they function much like highway connection systems and thus are a public good. The reason banks were able to leverage the public to bail them out is because of this vital role that they play. Because banks occupy this role, their job is not to gamble but to assure that money is facilitated transparently, efficiently, and safely.”
To divert excessive risk-taking away from financial companies, Kotlikoff suggests that they should operate under limited liability exclusively as mutual fund companies backed by cash mutual funds. This plan would effectively connect borrowers and depositors with monetary conduits that are much more secure than current financial products.
Additionally, such an organization would limit the amount of complex regulations. Such a system, Kotlikoff claims, would solve the problem of bank runs similar to the one in the classic film, It’s a Wonderful Life, in which the character played by Jimmy Stewart (the namesake of his book) must step in to prevent the depositors from simultaneously withdrawing their money, thus preventing financial disaster.
With a lot of ideas that sound excellent on paper, the only remaining challenge is how to gain momentum for his cause. Kotlikoff is sympathetic towards young voters, which is appropriate for a college professor. He believes that the current political and economic system in place is unfavorable to the future of today’s youth and intends to focus the most on this demographic. He plans on a heavy use of social media outlets such as Twitter and Facebook, blogs like HuffPost and Bloomberg, and viral video to explain his ideas to the youth.
Historically, third party candidates have only ever gotten marginal percentages of the vote (with the exception of Theodore Roosevelt’s run via the Progressive or “Bull Moose Party”). But might the innovative Americans Elect platform be enough to put a dent in a status quo duopoly and open up more opportunity for future third parties? Will Kotlikoff’s creative and (presumably effective) policy ideas be enough to draw more attention to a viable solution to repair our political system? Will young voters be persuaded by Kotlikoff or Americans Elect to be more participatory in the political system?
To learn more about Kotlikoff’s “Purple Plans” you can visit: www.thepurpleplans.org
To view Kotlikoff’s campaign site you can visit: www.Kotlikoff2012.org
To browse Kotlikoff’s personal site you can visit: http://www.kotlikoff.net/