BIPP: In Memoriam: Martin Feldstein, 1939-2019

Trey Gaither, BIPP Intern

An infamous quote popularly attributed to Winston Churchill reads, “Success consists of going from failure to failure without loss of enthusiasm.” This quote encapsulates the life of late Harvard economist Martin Feldstein (1939-2019). From his earliest days as a public figure in the United States, Feldstein served as key architect of many of the Republican party’s economic and political stances through an outstanding 38 years of service. He began his career in public service as the chairman of the Council of Economic Advisers during the Reagan administration. While in this position, he developed an economic theory that many classical economists credit with saving the United States economy from its stagnation in the early ’80s: good ole Reaganomics.

When analyzing the history of economic advancements, thought and theory leading up to the invention of Reaganomics, it is clear to see why the public regarded Feldstein as the country’s lifesaver. Reaganomics reflects a post-modern economic stimulus package, employed by former U.S. President Ronald Reagan’s administration, which took into consideration the “supply-side” of the macroeconomic interplay between supply and demand. Following this line of thinking, Feldstein utilized his profound understanding of public sector economics to show how a nation’s economy could be reinvigorated through tax cuts for its wealthiest members. While the White House was struggling to reform tax policy and reduce the federal budget deficit, Feldstein argued that economic growth alone couldn’t get the country out of a recession. Feldstein’s thought notably left the money supply sector alone while boosting transactions of fiat already circulating in the economy. The application of Feldstein’s theory was an enormous success; inflation remained low and the economy began to boom again.

Feldstein’s work did not stop with the end of Reagan’s term; he would later continue his public service as a member of the Foreign Intelligence Advisory Board under former President George W. Bush and by aiding the country through the 2008-2009 housing market crash as a member of the President’s Economic Recovery Advisory Board, an ad hoc advisory committee established by the Obama administration. In short, Feldstein is the epitome of “success within a world of failures.” When the country that he chose to serve fell into dire straits, he employed a creative economic theory to facilitate its recovery without long-lasting damage.

The decisions made by Feldstein were a turning point for modern-day economics. As a young economist, Feldstein brilliantly developed the idea of “trickle-down” economics: using the bustling one percent as an engine for the profitability of the entire country. Of particular note is the change in mindset Feldstein had after recognizing that economic power was shifting from the outsized influence of the top one percent to the transactions of those of middling socioeconomic status. His theoretical and pragmatic contributions to the Obama administration’s 2009 stimulus package – part of a larger effort to revitalize the American economy in the wake of the 2008 crash – outline a modern concept of “middle-out” economics, an approach of which I am very fond. In theory, “middle-out” economics employs policy and decision making designed for middle- and lower-class citizens. While he initially found that cutting taxes on the rich worked during the 1980’s “stagflation,” Feldstein later realized that the strikingly negative wealth gap between those in the one percent and the rest could only be attenuated through a stimulus that taxed the rich more than the poor; a basic – and brilliant – application of Keynes’s economic theories to economic stagnation.

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