This all changed when Lindsey took a course in constitutional law, which led him to a life-changing conclusion: “I liked the way economists made decisions, and I didn’t like the way the legal profession made decisions.”
Being a lawyer, he decided, was too adversarial for him, “too much like fighting in the arena. How much better just to be logical? I like the idea that you had an objective and that you had tools to see how you could achieve that objective.” Most economics, said Lindsey, is common sense. “That’s because it’s based on the notion that we’re utility maximizers, which is a pretty commonsensical way of thinking about human behavior.”
He was talking to students in Associate Professor of Economics Stephen Meardon ’93’s class Econ 3513, The History of Economics at Bowdoin. The course examines two centuries of scholarship on the subject at the College, starting in 1824, when Bowdoin became the first college in New England to designate a faculty position in political economy. Using public documents and institutional archives, students explore the contribution of numerous Bowdoin scholars through the ages—faculty and alumni—investigating their contributions to economic thought, pedagogy, and policy.
This list of scholars includes Lindsey, a former Harvard professor who held policy positions under three Republican US presidents. He is also known for correctly predicting the stock market bubble of the late 1990s while serving as governor of the Federal Reserve, and for accurately predicting that the financial costs of the Iraq war would be much higher than White House estimates—a dispute that cost Lindsey his job as chief economic adviser to President George W. Bush in 2002.
During the ninety-minute conversation, Lindsey answered questions from the class on a range of topics, including taxation policy, how to deal with a recession, and his outlook for the financial markets, which is not optimistic: “We have the biggest peacetime deficit ever in a full-employment economy,” he observed, predicting a “sizeable adjustment” in asset prices next year. No matter who wins this year’s presidential election, warned Lindsey, “I think we’re in for a market disaster in 2025. That’s when the rubber hits the road.”