Dr. Edward Prescott, Nobel laureate in economics, told an audience at Texas Tech University (TTU) that the current global economic situation is good and getting better.
Speaking about the importance of free enterprise during an event organized by TTU’s Free Market Institute, Prescott – co-recipient of the 2004 Nobel Memorial Prize in Economic Sciences – predicted that there is no recession in sight and that technological advancements are driving the growth situation.
Texas Tech’s Dr. Seshadri Ramkumar (left) with Nobel laureate Dr. Edward Prescott.
He noted that the United States’ economy is booming, which has resulted in a shortage of skilled labor – which is positive news for higher education. He pointed to the recent lowering of the U.S. corporate tax rate as one factor that is enabling the higher economic growth.
The East, he added, is catching-up fast with the West, and the tech capital they are developing will help them as well as the West.
Regarding the current trade war and tariff situation, Prescott said that Presidents must do this from time to time to take care of national interests, referring to President Johnson’s effort to protect the U.S. tire industry.
“President Lincoln was the greatest proponent of tariffs,” he quipped.
Having multiple business and manufacturing locations, is an added advantage, said Prescott, citing Walmart as a good example for having locations in Mexico and elsewhere. He pointed out that team production and resource allocation for the team’s efforts, as currently practiced in big corporations, increases productivity and the wealth of nations. This is what happened in the late 1750s with the start of the industrial revolution, which completed changed the traditional way of doing business.
It’s good when knowledge becomes public, but Prescott cautioned the audience to “know your data.” He advocated for decentralization, stating that competition among entities like states within a federal system is healthy, mentioning how Texas has been recently growing in population and economy.
Joseph Heppert, TTU’s Vice President for Research and Innovation, stated that visits by such acclaimed scientists motivates students and researchers and helps enable positive outcomes.