Glenn Hubbard, American Economist

THE NEW YORK TIMES – Obama's Bad Economic Ideas

President Obama's economic proposals in Tuesday’s State of the Union address were a disappointment. His ideas — free community college, an enhanced tax credit for child care and higher taxes on high-income earners and large financial institutions — failed to go beyond mere talking points. With no chance of engaging the Republicans, they will surely die without a hearing.
 
But the president’s proposals do invite a case for a comprehensive tax and entitlement reform, one based not on redistribution but on growth, work and opportunity.
 
Our unwillingness to confront mounting inefficiencies in the nation’s tax code and growing obligations in entitlement programs has led to increasingly limited options. Corporate tax reform is held hostage to the misguided idea that tax cuts and tax increases must be balanced within the corporate sector alone, and to the faulty assumption that beneficial tax reform will not raise economic activity.
 
Piling up child tax credits and subsidies for health care over narrow household income ranges, as the president proposes, leads to high rates of taxation on earnings from work as assistance is phased out. Likewise, raising marginal tax rates on investment by the well-to-do reduces asset prices and is a threat to continued economic expansion.
 
So how can we enhance growth, work and opportunity? Four steps can help get us there.
 
The first is to move to a simple business tax system, with a lower marginal tax rate and no special industry preferences. There would be no separate corporate tax, only a single business income tax for all businesses. Ideally, investment would be expensed, and its cost deducted in the year it was made, rather than deducted gradually. Businesses would be able to bring back overseas profits free of additional United States taxes. A one-time modest tax on current overseas earning could be used to help finance reform. Such a business income tax would encourage both growth and investment opportunities in the United States, while offering more jobs and higher wages to American workers.
 
The second step is to use the individual income tax to better reward work. The top tax rate for most Americans would be the same as the business income tax rate. To maintain progressivity, a surtax on wages would be collected on very high earners. To make work more attractive, low-income workers, including single workers, would receive an expanded earned-income tax credit and a tax credit to buy health insurance (as opposed to the more complex subsidies that exist under the Affordable Care Act). The earned-income tax credit would be phased out gradually.
 
Workers would have the choice of switching to options available under current law for employer-provided health insurance and a health savings account, or a tax deduction for their own health insurance and health savings account as incomes rise. Reductions in marginal tax rates to support work would be paid for by limits on tax deductions for more affluent households.
 
The third step focuses on education and training. Like investment in technology and machines, investment in human capital should be deductible from income. Out-of-pocket educational expenses for bona fide schooling and vocational training could be tax deductible for all but affluent households. Personal re-employment accounts could be made available to all individuals facing more than temporary unemployment, with individual financial support for training and a bonus for re-employment.
 
The fourth step is to strengthen retirement security, while acknowledging the need for fiscal consolidation in entitlement spending. Minimum benefits for Social Security and Medicare could be strengthened to ensure that people with low lifetime incomes avoid poverty in old age. To reduce future deficits in these programs and to free up funds to support work and opportunity for younger workers in the future, Social Security benefit growth would be slowed for more affluent individuals.
 
In the same spirit, changing Medicare so that individuals would purchase insurance from one of a number of competing plans, with the federal government paying part of the cost, could focus the largest subsidies for health insurance on those with low lifetime incomes. Converting Medicaid to a block grant — in which federal support would be turned over to states — would give governors the flexibility to support health insurance tax credits for low-income residents, community health centers or other experiments in health insurance and delivery at the state level.
 
These four steps offer a road map for growth, work and opportunity without sacrificing income security. Other policies, including free trade, open competition and immigration reform, are also important. But these four steps can take place in a budget discussion, and congressional leaders and the White House have both emphasized the need for a more timely budget resolution.
 
While the reforms I sketched are comprehensive, they can be implemented in discrete steps — no “grand bargain” is required. And realistic proposals to advance growth, work and opportunity, not ideological talking points, are what we need right now.

This op-ed by Glenn Hubbard appeared in The New York Times on January 21, 2015
 

BLOOMBERG ADVANTAGE – How Washington Can Avert Financial Ruin After the Election

Kathleen Hays and Vonnie Quinn interview Glenn Hubbard on his "Process Before Policy: How Washington Can Avert Financial Ruin After the Election."
 
 

FORTUNE – Why the Internet Won’t Kill B-School Classrooms

While the online revolution in higher education will drive new ways of teaching, it won’t replace the best business schools. Instead, the way professors use class time will change, says Glenn Hubbard, Dean of Columbia Business School.
 
At 12:01 a.m. on August 1, 1981, MTV began its first broadcast by playing a video for the hit Buggles song, “Video Killed the Radio Star.” It was an opening salvo for a revolution in the music industry, which caused no small amount of anxiety for many who foresaw a future of music via television. Of course, MTV has since given way to YouTube, which will make musicians famous far quicker than a DJ will. But video has not killed radio—multiple surveys show that more than 90% of Americans still listen to radio every week. That is hardly the sign of a dead industry. A revolution may have happened, but it did not have the destructive effect a lot of people thought it would.
 
There is now similar anxiety about a revolution in higher education, as massive open online courses, or MOOCs, proliferate. Since the first such course appeared in 2008, people have asked whether we still need traditional classrooms. Why attend expensive colleges and universities—where costs have far outpaced inflation—when you can receive an education from world-class professors for the cost of an Internet connection? Popular free MOOC providers, like Khan Academy and EdX, have prompted many a headline of this variety.
 
To worry about the fate of universities, however, you have to overlook the unique advantages of the traditional classroom—advantages that have allowed residential education to withstand numerous innovations in the past, from correspondence courses to television academies. After all, it has long been the case that you could receive a free education from a world-class professor by borrowing his or her textbook from a library, but that free and easy access has not lessened the volume of university applications. Clearly, being physically in a classroom, interacting with a professor and other students, is an irreplaceable component of effective learning. Professors can better assess a student’s learning in person, and adapt their in-class strategies based on immediate, non-verbal feedback. They can also create a comfortable but challenging environment where students will make the leaps that lead to intellectual breakthroughs.
 
Too much and too little is being made of disruptive forces from technology shaping higher education.
 
Business schools can serve as a case study. Online courses can meet a demand for certification (i.e., do you know how to do a particular thing?), and even an online degree can be a potentially lower-cost alternative to classroom experience—if that classroom experience does not offer a rich exchange of knowledge, information, and perspectives with fellow students and faculty.
 
That competition is much less for the best business schools, in which so much of the academic benefit reflects physical connections among students, faculty, and the schools’ practitioner networks. In that sense, the disruption from online education for top schools is likely smaller than many commentators think.
 
But in an important respect, disruptive forces are larger than many academic leaders imagine. If the Internet is causing a revolution in higher education, and in business schools in particular, it’s in prompting a discussion about how we use classrooms, not whether we need classrooms. Until recently, classroom time could be used to provide a lecture meant to elucidate the readings students would have done beforehand. With the ability to upload that same lecture to the Internet for pre-class viewing, the question of how to use classroom time is forcing faculty members to engage in a deep examination of pedagogy. The trend is toward allowing the classroom to be a space for collaboration, but as faculties engage more with the learning sciences, I expect that a rich array of models for classroom learning will emerge. At Columbia, the guiding principle is to use online capabilities to complement in-class teaching with integrated case discussions, not replace it.
 
So the online revolution in higher education will be both bigger and smaller than people think: big as a driver of new teaching methodology; small as an existential crisis for the best business schools and universities. Just as people still listen to the radio in a YouTube age, there is much value in obtaining an MBA in the classrooms of the best schools, even as information becomes more accessible outside of the ivory tower than at any time in history. And after all of the hype and anxiety, we will see that the Internet did not kill the B-school classroom.
 
This op-ed appeared in Fortune.com, November 18, 2014
 
 
 

Glenn Hubbard, Dean of Columbia Business School, served in the Bush White House from February 2001 until March 2003 as the Chairman of the Council of Economic Advisers and the OECD’s Economic Policy Committee {Read more}

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In The News

Glenn Hubbard with HH Dalai Lama

Glenn Hubbard making his presentation during the first panel discussion with His Holiness the Dalai Lama at the American Enterprise Institute in Washington DC on February 20, 2014 – Read the full article on DalaiLama.com


The New York Times – Review


Morning Joe – Watch the interview


Glenn Hubbard - Balance

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Glenn Hubbard with Charlie Rose

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Glenn Hubbard - Balance

Fareed Zakaria – Watch the interview


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Glenn Hubbard in The New York Times Magazine

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Books by Glenn Hubbard