“In the ‘yes we can’ days after Barack Obama’s election in 2008, the all-star team of economists gathered round the new president seemed one reason for optimism…On taking office Mr. Obama made Harvard’s Larry Summers head of the National Economic Council and Christina Romer, a leading economic historian, head of the Council of Economic Advisers. Other first-rate advisers included Austan Goolsbie, a young star from the University of Chicago, and Paul Volcker, elder statesman of unsurpassed eminence….Now though, Mr. Obama has no choice but to take a more prominent role in economic policy. He will do so with a weaker team. Mr Summers has gone back to Harvard, Ms. Romer to the University of California, Berkeley, Mr. Goolsbee is returning to Chicago. Mr. Volcker’s role, always vague, appears defunct. Mr Obama is not bereft of good economic advice and has competent people at hand, but the intellectual firepower is reduced.” Editorial, ‘Barack Obama’s economists’, Financial Times, June 28, 2011
The Financial Times simply does not understand what happened, most probably because the Editor of the newspaper shares President Obama’s progressive socialist ideology.
President Obama did not choose his first economic team because of its academic distinction but because it shared his own predilections for progressive socialism and for the destruction of laisser-faire capitalism. In truth, none of the three above-mentioned economists is so distinguished.
Larry Summers has had a checkered academic career as he has glided in and out of government positions over many years. Almost all his scholarly papers are co-authored. As an economist of great initial promise, he has significantly under-performed. However, Larry Summers is a committed advocate for progressive socialism including the massive redistribution of income and wealth through highly progressive taxation.
Christina Romer’s reputation is almost completely dependent on co-authoring scholarly papers with her truly distinguished husband, David Romer. She was completely outclassed intellectually by Summers and did not possess the stature to confront him and stand him down. So she played the role of White House nonentity until she fled the President’s team barely 18 months into his presidency.
Austan Goolsbee is a long-time sycophant to President Obama, writing policy papers for him throughout his time in Illinois. His resume is truly thin. He would not have made tenure at any middle-ranked economics department in the United States. One supposes that the University had other reasons for retaining his services, just at it had other reasons for retaining a grossly under-performing, non-publishing Barack Obama on its law school faculty for a period of ten years.
The glue that held that economic team temporarily together was progressive socialism, not high quality economics. As progressive socialist economic policies failed to lift the economy out of its recession, so the team disintegrated, hopefully before the full blame would fall upon their shoulders.
Of the original team, only Paul Volcker wore the right-sized shoes. But a Fed Chairman who had squeezed stagflation out of the United States by the wise use of monetary constraint, under the presidential leadership of Ronald Reagan, was never going to influence a president whose dream was to emulate Lyndon Johnson’s Great Society Program. So Paul Volcker was sidelined from the outset, though certainly not over-awed by Larry Summers.
The advantages that President Obama now possesses are twofold. First, he has learned first-hand that progressive socialism does not work, indeed that its continued pursuit will terminate his presidency in 2012. Secondly, he has a Republican House majority that will not allow him to force bad policy into law. That is why his economic policy will improve during the second-half of his first term. The supposed reputations of his economic advisers are not relevant to this change of direction; not relevant at all.
Tags: failure of progressive socialism destroyed the team, Financial Times unjusifiably over-awed by Obama's first economics team, progressive socialism the glue that held the team together, prospects better for 2011-2012