News Journal:Robert Shiller is one of my heroes
Ted Kaufman 2:03 p.m. EDT March 23, 2016
A Yale professor and a Nobel Laureate in economics wrote a book in 2000 called “Irrational Exuberance.”
In it, he correctly forecast the end of the dot.com mania, saying, “The present stock market displays the classic features of a speculative bubble.”
In 2005, he warned about “the enormous home price boom that many countries have been experiencing since the late 1990s” and forecast the bursting of the housing bubble that caused the stock market crash of 2008 and the subsequent Great Recession.
Two bubbles. Two prescient calls. Fortunately for me as an investor, I listened to Professor Robert Shiller on both occasions. Whenever he has an opinion about a major issue, I am eager to hear it.
This year he is the president of the American Economic Association. “I felt a moral obligation,” he said late last year, “to use our annual meeting [in January] as a setting in which to bring attention to serious economic problems. And the refugee crisis, whatever else it may be, is an economic problem. But a dearth of papers addressing it had been submitted to the meeting. So I decided to create a session entitled “Sixty Million Refugees,” and invited some of our discipline’s most distinguished scholars on migration. I asked them to describe the dimensions of the refugee problem in economic terms, and to propose some sensible policies to address it.”
Two of the papers Professor Shiller called for deserve special attention. One, by Timothy J. Hatton of the University of Essex and Australian National University, examined refugee flows around the world to see what drives them. The data he compiled corrects one of the most common arguments against accepting refugees. That is, that they are not really seeking to escape the political terror and human rights violations in their home countries, but are instead trying to gain admittance to one of the more economically successful countries. “People in fear for their lives,” he said, “run to the nearest safe place, not the richest. There is no escape from the moral imperative to help them.”
A paper by Semih Tumen of the Central Bank of Turkey presented evidence regarding the impact of the 2.2 million Syrian refugees on the labor market in border regions of his country. Tumen’s paper takes on a different popular excuse for not taking in refugees. That is, that the new refugees will steal existing jobs from workers and cause wages to drop. He found that in the formal sector jobs for locals actually increased after the arrival of refugees. He attributed this to their simulative effect on the region’s economy.
Professor Shiller and his colleagues showed there are a number of popularly accepted arguments for turning back refugees that cannot stand economic analysis. I am grateful for that. It is good to know, as American history also teaches us, that welcoming refugees may have a short-term cost but in the long run will have an enormously positive effect on our economy. But the most important argument that came out of his Sixty Million Refugees Session, I believe, wasn’t an economic one: “There is no escape from the moral imperative to help them.”
At my church recently, one of the prayers from the altar was to pray that refugees found a home. I prayed, and with conviction, but we all ought to be doing so much more. It is a shame that the Golden Rule and the wisdom of “Do unto others as you would have them do unto you” are rarely invoked in the current political debates about the refugee crisis.
I do hear a lot about American values and how exceptional we are, often from the same politicians who argue against this country accepting any refugees at all. As for me, nothing makes us more exceptional or more American than the words on the Statue of Liberty:
“Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore. Send these, the homeless, tempest-tossed to me, I lift my lamp beside the golden door.”
Ted Kaufman is a former U.S. senator from Delaware.