It is hard for me to think about carrying on my career as an economist without Marty Feldstein.
I first met Marty in 1973, 46 years ago, when he hired me as part of his flotilla of a dozen or so research assistants.
My project involved extending Marty’s work on social security and saving by looking at international comparisons. I remember showing up for my appointment happily brandishing a big white computer printout of regression results that appeared to confirm Marty’s hypothesis.
Marty said, “before we look at the results let’s look over the data.” A moment later I heard him say, “Gee Larry, it looks like you are saying Belgium has a bigger Social Security program than the United States.” I responded, “well Northern Europe has really big social insurance policies.” He said, “I doubt that big.”
He said I needed to “look over” the data a bit more carefully before we looked at results.
It was the first but certainly not the most important lesson Marty taught me. I learned from him that summer, and even more from his public finance course and yet more from the countless seminar dinners and student receptions that economics was not a field but a calling
A doctor could treat and help a patient. An economist could raise the standard of living of millions who would never know his or her name. Better managed economies can, history teaches, be the difference between war and peace.
Keynes and Marty did not agree on much but they agreed on the power for good and ill of economic ideas.
Ideas that economists today take for granted, above all that public policies have major incentive effects and that people and businesses respond strongly to incentives had fallen out of the professional economic discourse by the late 1960s. Macroeconomics was dominated by what might be called hydraulic Keynesianism focused on spending flows. Public finance was largely directed at accounting for spending and taxes.
Then Marty started publishing a paper a month in a major journal demonstrating a previously undocumented incentive effect of a tax, spending or social insurance program.
Forty years later, the individual papers have often been superseded but the lessons that incentives matter, that taxes and spending and social insuring shape them, and that economists can measure them and make the world work better surely endure.
Fortunately for our profession, not to mention my career, Marty turned down Alan Greenspan’s offer to become a member of the Council of Economic Advisers (CEA) in 1975. Else he might not have been at Harvard to teach me how to become an economist.
More important, he might not have embarked on the three decades of National Bureau of Economic Research (NBER) leadership that has demonstrated the power of induced collaboration through conferences, working paper series, research programs and summer institutes to advance progress and understanding. Economics has progressed much faster and been much more closely connected to the great issues of our time than it would have been without Marty’s leadership.
Senior government experience was deferred not denied for Marty. Right after he recruited me back from MIT to Harvard, he took me away from Harvard to be on his staff at the CEA. Paul Krugman, Greg Mankiw, Larry Lindsey and John Cochrane were just a few of my colleagues.
Washington is often not a nice place. In the face of plenty of counter evidence, Marty maintained his faith in the power of ideas and good faith analytical advocacy. In Washington, and for that matter every place else, I never saw him say a truly nasty thing or make an ad hominem argument. His first loyalty was never to a party or a President but to the truth as he saw it.
That is why all of us on the Obama economic team thought it so important to include Marty on the President’s Economic Recovery Advisory Board (PERAB). It had no more energetic contributor.
Marty, as well as anyone I knew, wove together the roles of public intellectual and academic economist. Unlike many engaged with policy, he tested his ideas with academic stars but he also never forgot the importance of both learning from and reaching a broad audience. When with what we call in our models “optimizing agents” he listened as much as he spoke.
A final lesson I learned from Marty. I recall like it was yesterday, going to a family dinner at the Georgetown house the Feldsteins had rented. Margaret and Janet were in elementary school. Marty knew what they were doing in detail, in every subject. Unlike so many stars at work, for Marty it was always family first. He and Kate were partners in every sense of that word and their children were the center of their lives.
Teacher, scholar, public official, public intellectual, academic entrepreneur, mentor, close friend. It’s hard to imagine anything economists do where Marty did not excel. It’s hard to imagine our profession or my career without him. Thank you my mentor and my friend and may you Rest In Peace.