Georgetown University’s Newspaper of Record since 1920

The Hoya

Georgetown University’s Newspaper of Record since 1920

The Hoya

Georgetown University’s Newspaper of Record since 1920

The Hoya

Lawrence Lindsey Discusses NEC, Post-Sept. 11 Economy

SPEAKER Lawrence Lindsey Discusses NEC, Post-Sept. 11 Economy By Andrew Tein Hoya Staff Writer

Assistant to the President for Economic Policy and Director of the National Economic Council Lawrence B. Lindsey discussed the necessity of having a National Economic Council and the status of the American economy post-Sept. 11 on Friday.

His lecture drew upon his current positions with the government and his past experience as Federal Reserve System Governor, Special Assistant to former President Bush and a member of President Reagan’s Council of Economic Advisors.

One of the facts of government is that various sectors have certain institutional biases, Lindsey said. A National Economic Council serves first to “forge a consensus” among these sectors. According to Lindsey, the NEC also serves “as an honest broker” which presents the consensus to the president who, in turn, makes ultimate policy decisions. The final role of the NEC, Lindsey said, is to provide its opinion on policy matters to the president. These three roles show how the president can make an economic decision despite competing interests, Lindsey said.

Lindsey said that while these three roles were the job description when he assumed the position, the nature of that policy changed the morning of Sept. 11. “They don’t have any book called what to do when you have a terrorist attack,” Lindsey said.

Lindsey described the unforeseen consequences he experienced post-Sept. 11. He By Sean West

Special to The Hoya

Assistant to the President for Economic Policy and Director of the National Economic Council Lawrence B. Lindsey discussed the necessity of having a National Economic Council and the status of the American economy post-Sept. 11 on Friday.

His lecture drew upon his current positions with the government and his past experience as Federal Reserve System Governor, Special Assistant to former President Bush and a member of President Reagan’s Council of Economic Advisors.

One of the facts of government is that various sectors have certain institutional biases, Lindsey said. A National Economic Council serves first to “forge a consensus” among these sectors. According to Lindsey, the NEC also serves “as an honest broker” which presents the consensus to the president who, in turn, makes ultimate policy decisions. The final role of the NEC, Lindsey said, is to provide its opinion on policy matters to the president. These three roles show how the president can make an economic decision despite competing interests, Lindsey said.

Lindsey said that while these three roles were the job description when he assumed the position, the nature of that policy changed the morning of Sept. 11. “They don’t have any book called what to do when you have a terrorist attack,” Lindsey said.

Lindsey described the unforeseen consequences he experienced post-Sept. 11. He

received immediate calls from the automobile industry saying that they were going to shut down all the auto plants in Michigan because tightened border security had caused an 18 mile-long backup of trucks carrying auto parts from Ontario. Without the parts, the automobile industry could not have met its turnaround time on production, according to Lindsey. For that reason, the industry needed governmental assistance to have the parts delivered through “electronically bonding shipments,” Lindsey said.

He also described stock market problems resulting from the attacks and the subsequent transport of an electronic generator from Washington to New York on a tugboat so that a small stock exchange could have electricity to reopen.

“For a few days after 9/11 . we had something approaching a command/control economy,” Lindsey said. Lindsey said the experience has helped him understand why America won the Cold War. “You cannot operate any economy that way,” he said.

One far-reaching effect of the terrorist attacks had to do with terrorism insurance, according to Lindsey. Insurance is the “scientific pricing of risk” which is found by taking the “probability of a terrorist attack happening times the amount paid out,” according to Lindsey. He said it is impossible “to have a rationally functional market for terrorism insurance.”

“Who controls the risk [of a terrorist attack]?” Lindsey asked. “Uncle Sam, so ultimately Uncle Sam should be in charge of insurance,” he said.

“Ultimately capitalism is about pragmatism. How do you get it done at the least cost?” Lindsey added.

The ensuing question and answer session included topics ranging from free trade in regards to the steel industry to social security. Lindsey also fielded questions about defense spending, the recent Enron scandal and agriculture.

Economics Professor and School of Foreign Service Dean Mitch Kaneda said he thought Lindsey was “very open to the questions from the floor . [and gave] a great account of the government’s reactions [to Sept. 11].”

A senior at Illinois-Wesleyan University and a participant in the Carroll Round, Deborah Slezak said she found Lindsey’s discussion of the government’s perspective “amazing.”

Lindsey commenced the 2002 Carroll Round by presenting the inaugural Ibrahim M. Oweiss Lecture in Riggs Library. At the national undergraduate economic conference, 25 non-Georgetown students assembled to present original research, Carroll Round Founder and Chair Christopher L. Griffin (SFS ’02) said in a broadcast e-mail.

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