Your Money
DECISION 2004
In terms of your prosperity, it’s pretty simple:
If you make less than $200,000, vote for Kerry.
If you make more than $200,000, consider Bush.
But bear in mind that there is more to your long-term prosperity than the tax rate on your income above $200,000. Kerry has the backing of Robert Rubin and Warren Buffett, perhaps the two best respected business leaders in the world. Also, the job and stock markets generally do better with a Democrat in the White House.
IT’S NOT JUST RUBIN AND BUFFETT . . .
I’ve previously linked to the recollection of one of the President’s old Harvard Business School professors. It turns out he is not the only professor willing go public with concerns. Here is an open letter signed by scores of them – 56 from Harvard Business School alone.
October 4, 2004
Dear Mr. President:
As professors of economics and business, we are concerned that U.S. economic policy has taken a dangerous turn under your stewardship. Nearly every major economic indicator has deteriorated since you took office in January 2001. Real GDP growth during your term is the lowest of any presidential term in recent memory. Total non-farm employment has contracted and the unemployment rate has increased. Bankruptcies are up sharply, as is our dependence on foreign capital to finance an exploding current account deficit. All three major stock indexes are lower now than at the time of your inauguration. The percentage of Americans in poverty has increased, real median income has declined, and income inequality has grown.
The data make clear that your policy of slashing taxes – primarily for those at the upper reaches of the income distribution – has not worked. The fiscal reversal that has taken place under your leadership is so extreme that it would have been unimaginable just a few years ago. The federal budget surplus of over $200 billion that we enjoyed in the year 2000 has disappeared, and we are now facing a massive annual deficit of over $400 billion. In fact, if transfers from the Social Security trust fund are excluded, the federal deficit is even worse – well in excess of a half a trillion dollars this year alone. Although some members of your administration have suggested that the mountain of new debt accumulated on your watch is mainly the consequence of 9-11 and the war on terror, budget experts know that this is simply false. Your economic policies have played a significant role in driving this fiscal collapse. And the economic proposals you have suggested for a potential second term – from diverting Social Security contributions into private accounts to making the recent tax cuts permanent – only promise to exacerbate the crisis by further narrowing the federal revenue base.
These sorts of deficits crowd out private investment and are politically addictive. They also place a heavy burden on monetary policy – and create additional pressure for higher interest rates – by stoking inflationary expectations. If your economic advisers are telling you that these deficits can be defeated through further reductions in tax rates, then you need new advisers. More robust economic growth could certainly help, but nearly every one of your administration’s economic forecasts – both before and after 9-11 – has proved overly optimistic. Expenditure cuts could be part of the answer, but your record so far has been one of increasing expenditures, not reducing them.
What is called for, we believe, is a dramatic reorientation of fiscal policy, including substantial reversals of your tax policy. Running a budget deficit in response to a short bout of recession is one thing. But running large structural deficits over a long period is something else entirely. We therefore urge you to consider the fiscal realities we now face and the substantial burden they are placing on our economy.
We also urge you to consider the distributional consequences of your policies. Under your administration, the income gap between the most affluent Americans and everyone else has widened. Although the latest data reveal that real household incomes have dropped across the board since you took office, low and middle income households have experienced steeper declines than upper income households. To be sure, the general phenomenon of mounting inequality preceded your administration, but it has continued (and, by some accounts, intensified) over the past three and a half years.
Some degree of inequality is inherent in any free market economy, creating positive incentives for economic and technological advancement. But when inequality becomes extreme, it can be socially corrosive and economically dysfunctional. Problems of this sort are visible throughout much of the developing world. At the moment, the most commonly accepted measure of inequality – the so-called Gini coefficient – is far higher in the United States than in any other developed country and is continuing to move upward. We don’t know where the breakpoint is for the U.S., but we would rather not find out. With all due respect, we believe your tax policy has exacerbated the problem of inequality in the United States, which has worrisome implications for the economy as a whole. We very much hope you will take this threat to our nation into account as you consider new fiscal approaches to address the nation’s most pressing economic problems.
Sensible and farsighted economic management requires true discipline, compassion, and courage – not just slogans. Given the tenuous state of the American economy, we believe that the time for an honest assessment of the problem and for genuine corrective action is now. Ignoring the fiscal crisis that has taken hold during your presidency may seem politically appealing in the short run, but we fear it could ultimately prove disastrous. From a policy standpoint, the clear message is that more of the same won’t work. The warning signs are already visible, and it is incumbent upon all of us to pay attention.
Respectfully submitted,
Francis Aguilar
Professor of Business Administration, Emeritus
Harvard Business SchoolRamon J. Aldag
Glen A. Skillrud Family Chair in Business
School of Business, University of Wisconsin-MadisonTeresa M. Amabile
Edsel Bryant Ford Professor of Business Administration
Harvard Business SchoolKenneth R. Andrews
David K. Donald Professor of Business Administration, Emeritus
Harvard Business SchoolJames E. Austin
Eliot I. Snider and Family Professor of Business Administration
Harvard Business SchoolJoseph L. Badaracco
John Shad Professor of Business Ethics
Harvard Business SchoolLotte Bailyn
T. Wilson (1953) Professor of Management
MIT Sloan School of ManagementGeorge P. Baker
Herman C. Krannert Professor of Business Administration
Harvard Business SchoolLouis B. Barnes
John D. Black Professor, Emeritus
Harvard Business SchoolJames N. Baron
Walter Kenneth Kilpatrick Professor of Organizational Behavior and Human Resources
Graduate School of Business, Stanford UniversityJean M. Bartunek
Robert A. and Evelyn J. Ferris Chair, Professor of Organization Studies
Carroll School of Management, Boston CollegeYehuda Bassock
Professor
Marshall School of Business, University of Southern CaliforniaThomas A. Bausch
Professor
College of Business Administration, Marquette UniversityMax H. Bazerman
Jesse Isidor Straus Professor of Business Administration
Harvard Business SchoolCynthia Beath
Professor Emeritus
McCombs School of Business, University of Texas at AustinMichael Beer
Cahners-Rabb Professor of Business Administration, Emeritus
Harvard Business SchoolJack N. Behrman
Luther Hodges Distinguished Professor, Emeritus
Kenan Flagler Business School, University of North CarolinaNorman A. Berg
MBA Class of 1958 Professor of Business Administration, Emeritus
Harvard Business SchoolBarbara Bird
Associate Professor of Management
Kogod School of Business, American UniversityJohn E. Bishop
Professor of Business Administration, Emeritus
Harvard Business SchoolRobert B. Bostrom
L. Edmund Rast Professor of Business
Terry College of Business, University of GeorgiaJoseph L. Bower
Donald K. David Professor of Business Administration
Harvard Business SchoolStephen P. Bradley
William Ziegler Professor of Business Administration
Harvard Business SchoolArthur P. Brief
Lawrence Martin Professor of Business
Freeman School of Business, Tulane UniversityPhilip Bromiley
Curtis L. Carlson Chair in Strategic Management
Carlson School of Management, University of MinnesotaAlfred D. Chandler
Isidor Straus Professor of Business History, Emeritus
Harvard Business SchoolChao C. Chen
Professor
Rutgers Business School, Rutgers UniversityCharles J. Corbett
Associate Professor of Operations Management and Environmental Management
UCLA Anderson School of ManagementThomas G. Cummings
Professor
Marshall School of Business, University of Southern CaliforniaMichael Cusumano
Sloan Management Review Distinguished Professor
MIT Sloan School of ManagementFariborz Damanpour
Professor
Rutgers Business SchoolJose de la Torre
Dean, Chapman Graduate School of Business
Florida International UniversityJohn A. Deighton
Harold M. Brierley Professor of Business Administration
Harvard Business SchoolRohit Deshpande
Sebastian S. Kresge Professor of Marketing
Harvard Business SchoolNancy DiTomaso
Professor
Rutgers Business School–Newark and New BrunswickJane E. Dutton
Professor
University of Michigan Business SchoolAmy C. Edmondson
Professor
Harvard Business SchoolBenjamin C. Esty
Professor of Business Administration
Harvard Business SchoolRonald F. Fariña
Associate Professor
Daniels College of Business, University of DenverAnn E. Feyerherm
Associate Professor of Organization and Management
Graziadio School of Business and Management, Pepperdine UniversityJames A. Fitzsimmons
William H. Seay Centennial Professor of Business
McCombs School of Business, University of Texas at AustinJames W. Fredrickson
Tom E. Nelson, Jr. Regents Professor of Business
McCombs School of Business, University of Texas at AustinSherwood C. Frey, Jr.
Ethyl Corporation Professor of Business Administration
Darden Graduate School of Business Administration, University of VirginiaCynthia V. Fukami
Professor
Daniels College of Business, University of DenverPankaj Ghemawat
Jaime and Josefina Chua Tiampo Professor of Business Administration
Harvard Business SchoolStephen M. Gilbert
Associate Professor
McCombs School of Business, University of Texas at AustinJames R. Glenn, Jr.
Professor of Management
College of Business, San Francisco State UniversityLeslie E. Grayson
Isidore Horween Research Professor, Emeritus
Darden Graduate School of Business Administration, University of VirginiaJerry R. Green
Daniel A. Wells Professor of Political Economy,
John Leverett Professor in the University
Harvard Business SchoolLeonard Greenhalgh
Professor of Management
Tuck School of Business at DartmouthDouglas T. Hall
Professor of Organizational Behavior
Boston University School of ManagementDonald C. Hambrick
Smeal Chaired Professor of Management
Smeal College of Business Administration, The Pennsylvania State UniversityRebecca M. Henderson
Eastman Kodak LFM Professor
MIT Sloan School of ManagementLinda A. Hill
Wallace Brett Donham Professor of Business Administration
Harvard Business SchoolRaymond Hogler
Professor of Management
College of Business, Colorado State UniversityYasheng Huang
Associate Professor of International Management
MIT Sloan School of ManagementMariann Jelinek
The Richard C. Kraemer Professor of Business Strategy
School of Business, College of William & MaryDavid B. Jemison
Foster Parker Centennial Professor of Management and Finance
McCombs School of Business, University of Texas at AustinJohn M. Jermier
Exide Professor of Sustainable Enterprise Research
College of Business, University of South FloridaShulamit Kahn
Associate Professor
Boston University School of ManagementKate M. Kaiser
Associate Professor
College of Business, Marquette UniversityRosabeth M. Kanter
Ernest L. Arbuckle Professor of Business Administration
Harvard Business SchoolSteven O. Kimbrough
Professor
The Wharton School, University of PennsylvaniaStephen J. Kobrin
Wurster Professor of Multinational Management
The Wharton School, University of PennsylvaniaThomas A. Kochan
George Maverick Bunker Professor of Work and Employment Relations
MIT Sloan School of ManagementNancy F. Koehn
James E. Robison Professor of Business Administration
Harvard Business SchoolHoward Kunreuther
Cecilia Yen Koo Professor of Decision Sciences and Public Policy
The Wharton School, University of PennsylvaniaRajiv Lal
Stanley Roth, Sr. Professor of Retailing
Harvard Business SchoolTheresa Lant
Associate Professor of Management
Stern School of Business, New York UniversityPaul R. Lawrence
Wallace Brett Donham Professor of Organizational Behavior, Emeritus
Harvard Business SchoolCarrie R. Leana
Professor of Business Administration and of Public and International Affairs
Katz Graduate School of Business, University of PittsburghDorothy A. Leonard
William J. Abernathy Professor of Business Administration, Emerita
Harvard Business SchoolHerman B. Leonard
Professor of Business Administration
Harvard Business SchoolDonald R. Lessard
Epoch Foundation Professor of International Management
MIT Sloan School of ManagementDaniel A. Levinthal
Julian Aresty Professor of Management and Economics
The Wharton School, University of PennsylvaniaDavid Levy
Professor of Management
Department of Management, University of Massachusetts, BostonE. Allan Lind
Thomas A. Finch Professor of Business Administration
Fuqua School of Business, Duke UniversityRichard M. Locke
Alvin J. Siteman Professor of Entrepreneurship and Political Science
MIT Sloan School of ManagementGeorge C. Lodge
Jaime and Josefina Chua Tiampo Professor of Business Administration, Emeritus
Harvard Business SchoolJay W. Lorsch
Louis E. Kirstein Professor of Human Relations
Harvard Business SchoolMichael Magazine
Professor
College of Business, University of CincinnatiMichael R. Manning
Professor of Management
College of Business Administration & Economics, New Mexico State UniversityTheodore R. Marmor
Professor of Public Policy and Management
Yale School of Management and Political Science DepartmentJoanne Martin
Merrill Professor of Organizational Behavior
Graduate School of Business, Stanford UniversityThomas K. McCraw
Isidor Straus Professor of Business History
Harvard Business SchoolAnita M. McGahan
Professor and Everett W. Lord Distinguished Faculty Scholar
Boston University School of ManagementKathleen L. McGinn
Cahners-Rabb Professor of Social and Organizational Psychology
Harvard Business SchoolRobert P. McGowan
Professor
Daniels College of Business, University of DenverRobert C. Merton
John and Natty McArthur University Professor
Harvard Business SchoolDavid M. Messick
Kaplan Professor of Ethics and Decision in Management
Kellogg School of Management, Northwestern UniversityAlan D. Meyer
Charles H. Lundquist Professor of Entrepreneurial Management
Lundquist College of Business, University of OregonMarshall W. Meyer
Richard A. Sapp Professor, Professor of Management and Sociology
The Wharton School, University of PennsylvaniaRichard F. Meyer
Thomas D. Casserly, Jr. Professor of Business Administration, Emeritus
Harvard Business SchoolIan Mitroff
Harold Quinton Distinguished Professor of Business Policy
Marshall School of Business, University of Southern CaliforniaCynthia A. Montgomery
Timken Professor of Business Administration
Harvard Business SchoolDavid A. Moss
John G. McLean Professor of Business Administration
Harvard Business SchoolJ. Keith Murnighan
Harold H. Hines, Jr. Distinguished Professor of Risk Management
Kellogg School of Management, Northwestern UniversitySteven Nahmias
Professor
Leavey School of Business, Santa Clara UniversityBarry Nalebuff
Milton Steinbach Professor of Management
Yale School of ManagementDas Narayandas
Professor of Business Administration
Harvard Business SchoolPaul Newman
Clark W. Thompson, Jr. Chair in Accounting
McCombs School of Business, University of Texas at AustinWilliam Ocasio
John L. and Helen Kellogg Distinguished Professor of Management and Organizations
Kellogg School of Management, Northwestern UniversityPaul Osterman
NTU Professor of Human Resources and Management
MIT Sloan School of ManagementLynn S. Paine
John G. McLean Professor of Business Administration
Harvard Business SchoolJohannes M. Pennings
Marie and Joseph Melone Professor
The Wharton School, University of PennsylvaniaMargaret Peteraf
Associate Professor of Business Administration
Tuck School of Business at DartmouthJoel Podolny
Novartis Professor of Leadership and Management
Harvard Business SchoolJohn W. Pratt
William Ziegler Professor of Business Administration, Emeritus
Harvard Business SchoolDrazen Prelec
Professor of Management Science
MIT Sloan School of ManagementKeith G. Provan
Eller Professor of Public Administration & Policy
Eller College of Management, University of ArizonaRonald E. Purser
Professor of Management
College of Business, San Francisco State UniversityRoy Radner
L. N. Stern School Professor of Business
Stern School of Business, New York UniversityDaniel Raff
Associate Professor of Management
The Wharton School, University of PennsylvaniaHoward Raiffa
Frank Plumpton Ramsey Professor of Managerial Economics, Emeritus
Harvard Business SchoolV. Kasturi Rangan
Malcolm P. McNair Professor of Marketing
Harvard Business SchoolStefan H. Robock
R. D. Calkins Professor of International Business, Emeritus
Graduate School of Business, Columbia UniversityDavid Rogers
Professor Emeritus of Management and Sociology
Stern School of Business, New York UniversityJohn W. Rosenblum
Dean Emeritus
Darden Graduate School of Business Administration, University of VirginiaLori Rosenkopf
Associate Professor of Management
The Wharton School, University of PennsylvaniaWalter J. Salmon
Stanley Roth, Sr. Professor of Retailing, Emeritus
Harvard Business SchoolCarol Saunders
Professor of MIS
College of Business Administration, University of Central FloridaMelissa A. Schilling
Associate Professor
Stern School of Business, New York UniversityArthur Schleifer, Jr.
James J. Hill Professor of Business Administration, Emeritus
Harvard Business SchoolClaudia B. Schoonhoven
Professor of Organization and Strategy
Graduate School of Management, University of California, IrvineBruce R. Scott
Paul W. Cherington Professor of Business Administration
Harvard Business SchoolMichael S. Scott-Morton
Jay W. Forester Professor of Management, Emeritus
MIT Sloan School of ManagementJames K. Sebenius
Gordon Donaldson Professor of Business Administration
Harvard Business SchoolBenson P. Shapiro
Malcolm P. McNair Professor of Marketing, Emeritus
Harvard Business SchoolRoy D. Shapiro
Philip Caldwell Professor of Business Administration
Harvard Business SchoolWilliam F. Sharpe
STANCO 25 Professor of Finance, Emeritus
Stanford Business SchoolWilliam W. Sihler
Ronald E. Trzcinski Professor of Business Administration
Darden Graduate School of Business Administration, University of VirginiaAlvin J. Silk
Lincoln Filene Professor of Business Administration, Emeritus
Harvard Business SchoolHarbir Singh
Edward H. Bowman Professor of Management
The Wharton School, University of PennsylvaniaJitendra V. Singh
Saul P. Steinberg Professor of Management
The Wharton School, University of PennsylvaniaSim B. Sitkin
Associate Professor
Fuqua School of Business, Duke UniversityWilliam B. Snavely
Professor of Management
Richard T. Farmer School of Business, Miami UniversityOlav Sorenson
Associate Professor
UCLA Anderson School of ManagementDebora L. Spar
Spangler Family Professor of Business Administration
Harvard Business SchoolBert A. Spector
Associate Professor of Human Resources Management
College of Business Administration, Northeastern UniversityRichard Staelin
Edward and Rose Donnell Professor of Business Administration
Fuqua School of Business, Duke UniversityWilliam H. Starbuck
ITT Professor of Creative Management
Stern School of Business, New York UniversityJohn Sterman
Jay W. Forester Professor of Management
MIT Sloan School of ManagementRichard S. Tedlow
MBA Class of 1949 Professor of Business Administration
Harvard Business SchoolRamkrishnan V. Tenkasi
Professor of Organization Change
College of Business and Technology, Benedictine UniversityDavid A. Thomas
Naylor Fitzhugh Professor of Business Administration
Harvard Business SchoolWilliam R. Torbert
Professor
Carroll School of Management, Boston CollegeAnne S. Tsui
Motorola Professor
W.P. Carey School of Business, Arizona State UniversityMichael L. Tushman
Paul R. Lawrence MBA Class of 1942 Professor of Business Administration
Harvard Business SchoolKarl T. Ulrich
Professor of Operations and Information Management
The Wharton School, University of PennsylvaniaGarrett J. van Ryzin
Paul M. Montrone Professor of Private Enterprise
Graduate School of Business, Columbia UniversityN. Venkat Venkatraman
David J. McGrath Jr. Professor of Management
Boston University School of ManagementRichard H. K. Vietor
Senator John Heinz Professor of Environmental Management
Harvard Business SchoolMary Ann Von Glinow
Research Professor
College of Business Administration, Florida International UniversitySandra Waddock
Professor of Management
Carroll School of Management, Boston CollegeMelanie Wallendorf
Eller Professor of Marketing
Eller College of Management, University of ArizonaRichard T. Watson
J. Rex Fuqua Distinguished Chair for Internet Strategy
Terry College of Business, University of GeorgiaDavid Weil
Associate Professor of Economics
Boston University School of ManagementLouis T. Wells
Herbert F. Johnson Professor of International Management
Harvard Business SchoolPatricia H. Werhane
Ruffin Professor of Business Ethics
Darden Graduate School of Business Administration, University of VirginiaBirger Wernerfelt
J. C. Penney Professor of Management Science
MIT Sloan School of ManagementD. Eleanor Westney
Society of Sloan Fellows Chair in Management
MIT Sloan School of ManagementJames D. Westphal
Ed and Molly Smith Chair in Business Administration
McCombs School of Business, University of Texas at AustinRobert B. Wilson
Adams Distinguished Professor of Management, Emeritus
Stanford Business SchoolSid Winter
Deloitte and Touche Professor of Management
The Wharton School, University of PennsylvaniaJoAnne Yates
Sloan Distinguished Professor of Management
MIT Sloan School of ManagementDavid B. Yoffie
Max and Doris Starr Professor of International Business Administration
Harvard Business SchoolAbraham Zaleznik
Konosuke Matsushita Professor of Leadership, Emeritus
Harvard Business SchoolRay Zammuto
Professor of Management
Business School, University of Colorado at DenverPaul H. Zipkin
The T. Austin Finch, Sr. Professor of Business
Fuqua School of Business, Duke University.
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