Economy Needs to Get Back to Hamilton’s Original Formula

The role of the government in growing and directing the U.S. economy is often hotly debated and often overlooked, but it goes back to what Alexander Hamilton set into motion as the country’s first Secretary of the Treasury, said Stephen Cohen, author of Concrete Economics. ‘It’s a simple game where entrepreneurs and government come together to reshape the economy,’ said Cohen. ‘It’s like tigers mating, they don’t sit around and cuddle very long.’ Cohen is a professor emeritus of city and regional planning at the University of California at Berkeley. He also codirects the Berkeley Roundtable on the International Economy. His previous books include The End of Influence with J. Bradford DeLong. Cohen said that Hamilton used tariffs to protect the fledgling nation’s fragile economy in a deliberate and ‘concrete’ manner. He said presidents Lincoln, Roosevelt (FDR) and Eisenhower similarly took the lead in opening new economic spaces.

0:00Steven Cohen Alexander Hamilton he’s hired literature he’s hot on Broadway
0:05and in your book concrete economics you say we have to get back to his vision
0:09can you explain yeah Hamilton was the first and most important leader to
0:16reshape the american looked out the window into what kind of colonial
0:22message this northern state we send them timber and Beaver and friend the
0:29mid-atlantic region of tobacco and from the slave plantations we send them cut
0:33in a sense as the industrial goods and the high-end services like shipping and
0:38insurance we’ve got to become an industrial country being tariffs 19
0:47about tariffs is over 25% given the huge efficiencies in shipping in those days
0:54so formidable barrier and brilliantly clearly we industrialized at fastest
1:01pace in those days and over the years every now and then government steps
1:08forward and reshapes the economy to simple game we have entrepreneurs and
1:15government come together to reshape the economy try Tigers meeting they don’t
1:20sit around and cuddle very long so picky about the republicans in the
1:26mid-nineteenth century Lincoln railways and they said we have the Midwest I said
1:33Li Reese the land off to the highest bidder small plaques you state product
1:41we don’t know how it had they done so which he seemed normal now we have a
1:48social system lot like platinum
1:50Erica landless agricultural workers and they plantations fast-forward each each
1:57time the government reshaped
2:00you look at what I would like a little suspect is being but I stepped forward
2:09and said look we keeping the New Deal and here’s what you can get a car
2:15house washing machines hehe huge amount of defense and investment in science and
2:23research and development to always be first technologically and defense which
2:28came all our new technologies right so if you’re arguing that the government
2:33has always played a role in the USA economy even though a lot of people say
2:36it’s been put off to the side which of the current presidential candidates
2:42would you say reflects that vision and your vision and concrete economics that
2:48has to be done by us we can hire condominiums are reshaping we had one
2:53and starting in the nineteen eighties we simply regulate everything get the
2:57government down let the markets do it and the same thing happened we opened up
3:02a new economic space this time through deregulation he was fantastic innovation
3:08and entrepreneurial energy we got this you do train actualization we grew the
3:13financial sector by over a pentagon which was a good unity economic side now
3:19financial sectors need it but how big should be but he is the alternative
3:24would you rather people work in factories because the United States is
3:28always had this battle between the jeffersonian and the Hamiltonians in the
3:32Hamiltonians to a certain extent one because we’re certainly more of a
3:35commerce based economy than in the Garden Society you know that said now
3:39the big question is
3:40labor versus financials and it seems to me is the most people would rather work
3:45on wall street or in mortgage banking or even in taking calls in a cost center
3:50then working in a factory on a farm they are
3:54sending him back to do dirty work in factories and factories in the latest
4:00employment he people how big you grow the financial sector right now finance
4:06processing health insurance claims and a real estate transactions over
4:11twenty-some-odd presented the economy you could argue that there’s no value if
4:17finance words as it was during the fifties sixties when you get into a
4:22beautifully with a less than half that size so we need a new growth there and
4:29there are you talking about what shapely want to give us what we want this
4:37economy to look like the way I said here’s what it’s gonna be a LinkedIn put
4:41it out there we refuse to do that we do talk to Dr edgy and economic theory
4:48that’s really not entered all we need to get back to Concord economic definitely
4:53pragmatic concrete and that would do more good than anything else I could
4:58think thank you stephen cohen thank you thank you for watching street