http://www.nytimes.com/...
The front page of Sunday's New York Times Business section profiles Glenn Hubbard, who Mitt Romney would be expected to name as his Treasury Secretary in the unfortunate event that Romney succeeds in his quest for the Presidency. Here is a clip of Mr. Hubbard being interviewed by Charles Ferguson in the Oscar-winning documentary, Inside Job. The clip provides a valuable glimpse into Hubbard's temperament and character.
Mr. Hubbard has helped to draft many of Mr. Romney’s economic and tax policies, and, at least implicitly, lent his imprimatur to others he did not conceive. The benefits are potentially mutual. If Mr. Romney is elected, Mr. Hubbard is considered a strong candidate for the job of Treasury secretary and even, after Ben S. Bernanke’s term expires, chairman of the Federal Reserve. (Robert Zoellick, former president of the World Bank, is another possible contender for the Treasury job.)
Ferguson was interviewed by NPR's Melissa Block about his encounter with Hubbard:
BLOCK: Charles Ferguson, tell me about that moment in Glenn Hubbard's office.
Mr. FERGUSON: Well, the entire interview was fairly contentious, as you can imagine. It surprised me somewhat to realize that these people were not used to being challenged, that they'd never been questioned about this issue before. They clearly expected to be deferred to by me and I think by everybody.
The Times article paints a similar picture of Hubbard as a smug, politically agile tool of corporate interests, particularly the mutual fund industry.
“Dean Hubbard is a mercenary,” says John P. Freeman, emeritus professor of business and professional ethics at the University of South Carolina School of Law, who has accused the mutual fund industry of profiteering, “out to protect fund managers who are taking advantage of investors.”
The Times reports that the mutual fund industry has supplied a substantial chunk of Hubbard's income. He testifies as an expert witness regularly on behalf of the industry and has authored papers for them, one of which garnered him $150,000 which he characterized as an "honorarium." Such papers are useful in defending lawsuits as they add the imprimatur of reliability to whatever proposition is being defended. In Hubbard's case it was the proposition that the mutual fund industry's "service fees" charged by investors were appropriate.
The mutual fund industry has been a major source of income for Mr. Hubbard, and through that work he has taken a solidly pro-industry stand on a much-debated and much-litigated question: Do mutual fund advisers gouge clients by charging excessive fees? No, Mr. Hubbard argued in a paper he wrote with John C. Coates IV of Harvard Law School, titled “Competition in the Mutual Fund Industry.”
Hubbard argued in his industry-funded "academic paper" that it was essentially impossible for a mutual fund company to overcharge on fees since the industry was so "competitive."
As the authors wrote, “fund investors may fire advisers at any time by redeeming shares and switching to other investments.”
Of course, this argument ignores the reality that the vast majority of mutual fund "investors" are unsophisticated laypersons essentially captive to their company's 401k plan and in fact they have no option of "switching to other investments."
Ignoring reality is one of Hubbard's trademarks. Hubbard is primarily responsible for designing the Bush tax cuts and is a strong proponent of deregulation--coincidentally two of the primary factors in precipitating the 2008 economic collapse as well as the massive degree of debt this nation now finds itself mired in.
In July he authored a piece for the Financial Times that was widely interpreted as touting an austerity plan for the U.S. From the op-ed, which is available through the link above behind a subscription wall:
Gradual fiscal consolidation may also be stimulative in the short run. Research by Hoover Institution economists concludes that reducing federal spending relative to GDP to pre-financial-crisis levels over a decade would increase GDP in the short and long term.
This is known as "expansionary austerity." When Hubbard authored his piece in the Financial Times it was a theory still held in enough esteem by some to warrant its implementation in Europe. The results, of course, were
disastrous.
Romney has been intentionally vague on his "Economic plan," beyond the stated intention to cut everyone's taxes by 20%, a promise no one actually believes. Because Romney refuses to provide this basic information most political observers have deduced it by looking to Hubbard''s leanings and associations:
IF Mr. Hubbard becomes the Treasury Secretary, the job will surely mean a drastic cut in pay. What it would mean for the rest of the country is not easy to divine; the Romney campaign has been vague on many details, particularly how it would offset a 20 percent across-the-board tax cut without adding to the deficit.
But you can get a pretty good sense from looking at the economic priorities of the George W. Bush administration, says Martin N. Baily, who served as chairman of the Council of Economic Advisers under President Bill Clinton and is now a senior fellow at the Brookings Institution. Mr. Baily was a critic of the Bush tax cuts because, he says, they left the country without the wherewithal to battle the great recession.
“When I read the Romney economic plan,” he wrote in an e-mail, “it seemed to me that it was basically the Bush plan.”
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