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John Taylor, Stanford University economics professor, on his new book and how to rebuild the American economy.
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As the world -- economists who served as senior economic advisor to three president Ford Carter and George H.
W.
Bush.
And right now he thinks America is in serious trouble.
It just sort of new book and it's called first principles key by key reasons -- to restoring America's prosperity and John Taylor joins me now John welcome to to the show up.
It's a great data beyond I guess because the president's taking of victory lap the general media is all a Twitter about how great the economy is.
And you're actually saying we're in trouble why.
But good to see some some news about unemployment coming down but the truth is this recovery we've had instances serious recession has been.
So slow that we still have a lot of unemployment.
And people woes continue needed to drop about the labor force participation rate is low.
And their forecasts of continuing low growth so.
Again it's good to see some movement we have you know potential for so much -- -- I think it's promising that have some of the things on suggesting.
Are actually undertaken we can really get unemployment down to what we it should be.
-- wanna get you five principles but.
One what do you think the main reason into may be -- to -- but what what -- the main reason that this by some accounts is the worst post recession recovery and history this country.
I think the main reason is that policy as we've had a -- policy unpredictability.
We've had a monetary policy which is completely.
On rules based like we've had in the past so I go through all the policy things economic policy things sends me that's the main explanation for this which ordinarily weak recovery.
Nothing like we had in the eighties and and I think that's citizens -- -- my five principles.
Let's talk about than you do talk talk about predictable government policies.
You also talk about rule of law where has that been sort of the violated here of -- And their biggest examples are all in all these bailouts we've had.
And that question about they're gonna continued into the future that's that's probably the biggest but in addition do you think about like the new health care law there is.
People are giving in special waivers -- they -- implemented so that's deviation if you like from the rule of law based on what.
How much power people have so throughout the country.
We're moving further and further away from this very important principle.
Which has been so important for this in the success of our country and I see -- moving further not directions quite worries.
You know there's amazing of people ever took the time a look at all the waivers from the health care law it's amazing how many companies how many unions and then we of course always talk about fairness.
What about strong incentives because I'd still like that's what we get from the administration.
Maybe -- -- the incentives that you like or may be that free market but certainly feels like every week there's a new set of incentives thrown out there.
I don't see any incentives that are helping what what I see is happening is there's an enormous number of interventions in.
In the economy and just think about this thing we -- the cash for clunkers I was incentives -- people to buy some.
More cars but it was a little just split in the economy for the first time homebuyers and other little blip.
So they're in if you'd like the temporary cut in the payroll tax happened two months temporary.
Cutting the payroll tax really get the economy moving again so we have too many of these things I thing.
John you know we've got a minute left but I wanna focus on that this short term solutions to long term problem.
You think the American population though is at a point where.
People have the pace since -- live through this and I look at the prince of billion participation rate that you talked about.
-- Ronald Reagan came into office it was 63 point nine when he left it was 66 point five the exact opposite is happening what President Obama.
Did the American people have the patience.
To let a long term program pay off.
Well that's what's been successful in the past that's exactly why you saw that big difference from the eighties in the -- compared to we have now I think.
If people look at what happened we had bad performance when we got away from these.
Sensible predictable policies.
And we've had good performance when we stuck to them so it's not a matter of -- things will move it ahead really quickly if people are convinced there were moving to a different.
More predictable policy framework.
Right into your point we had on the third year GDPs on -- broke both Reagan and President Obama a very stark difference John Taylor fantastic book thanks a lot we appreciate.
