Prescott spoke on “How to Make Everyone Better Off”
In this year’s presentation of the Burkett Miller Distinguished Lecture Series, Dr. Edward C. Prescott, 2005 Nobel Laureate in Economics, advocated what he called a “simple economy,” which would encourage individual worker’s productivity and responsibility and lead to economic growth.
“Tax and transfer is a bad system if people’s labor supply responds to incentives, which we know to be true,” said Dr. Prescott in his presentation entitled, “How to Make Everyone Better Off.”
Dr. Prescott’s research demonstrates the benefits of lower tax rates. His research also supports changes in Social Security that would include mandatory individual savings accounts for retirement and establishing health savings accounts that are supplemented by major medical insurance.
“Financing retirement is not an insurance problem. The U.S. can cut Social Security retirement payments and Medicare payments without cutting public consumption, welfare transfers, or social insurance,” said Dr. Prescott. According to Prescott, workers would be more productive and overall national savings would .
Conceding that change is difficult, Dr. Prescott warned of the eventual collapse of the Pension Benefit Guarantee Corp., the federal agency that insures benefit retirement plans, saying that would force changes.
Dr. Robert Lawson, holder of the George H. Moor Chair in Economics at Capital University, offered a supporting response to Prescott’s presentation saying, “Higher taxes do cause people to work less. If you tax people more the more they work, then they will end up working less.”
The Burkett Miller Distinguished Lecture Series is sponsored by UTC’s Scott L. Probasco, Jr. Chair of Free Enterprise.
Prescott received the Nobel Prize in Economics for “contributions to dynamic macroeconomics, the time consistency of economic policy, and the driving forces behind business cycles.” His work has altered the course of macroeconomic thinking in the past three decades.
Prescott is currently Senior Monetary Advisor for the Federal Reserve Bank of Minneapolis, and holds the W.P. Carey Chair in Economics at Arizona State University. Previously, he held distinguished teaching positions at The University of Minnesota and the University of Chicago.
He earned a Bachelor’s degree in Mathematics from Swarthmore College, an M.S. in Operations Research from Case-Western Reserve University, and a Ph.D. in Economics from Carnegie-Mellon University. He has authored more than 100 articles in the most prestigious academic journals on business cycles, general equilibrium theory, money banking and finance, and economic methodology and policy. His recent book Barriers to Riches, published by Cambridge University Press, has been translated into three major languages and Harvard University press has published his book Recursive Methods in Economic Dynamics.
Prescott serves on the board of editors for numerous academic journals, including The Journal of Economic Theory, and The Review of Economic Dynamics. He is currently a Research Associate for the National Bureau of Economic Research and is past president of the Society of Economic Dynamics and Control and of the Society for the Advancement of Economic Theory.
He was honored with the Erwin Plein Nemmers Prize in Economics, and he was named the American Economic Association’s Richard T. Ely Lecturer and Laurea Honoris Causa in Economica from the University of Rome at Tor Vergata. Prescott was also named a fellow of the American Academy of Arts and Sciences, and The Econometric Society, and a Guggenheim Fellow.
October 21, 2005