President Obama has a formal Council of Economic Advisers (CEA), plus informal access to every economic blogger out there. Are these intellects used to create new plans or justify old ones?
Matt Rourke / AP / File
Ed Glaeser has written a terrific piece about CEA Chair Austan Goolsbee's significant contributions to economic research . After being reminded about all that Austan has achieved up to this point, there is clearly an opportunity cost for him to not be at Chicago GSB right now. Is serving on the Council a productive use of his time? Clearly, he and the President believe so -- but I wonder.
In this age of blogs, the President's "Kitchen Cabinet" is very large. Rahm and David Axe can use google to quickly find out what Paul Krugman thinks without calling the busy Princeton economist. With economic advice, there has always been a "make versus buy" decision and in this age of blogs the price of "buying" advice is zero. You don't need to make it in house because there are dozens of star economists telling you what they think posted on their blogs (I'm not talking about this blog!).
During WW II, the leading physicists joined the secret Manhattan Project to work in house on a long run project for the U. S Government. I don't see a CEA analogue to this. It appears to me that the CEA has a short run perspective (helping to put out day to day political fires) as it has very little time to sit back and think about long run growth incentives that a David Brooks would celebrate.
These are highly partisan days where politics appears to trump economic logic. If a smart economist knows this and wants to have a senior White House job (and be a player there), does this make him/her a politician? Is there a dangerous line that one can cross between objective analysis and anticipating Republican snarky counter-responses? There is a "time to build" component to doing policy relevant research. Does the CEA have the time to engage in this socially productive activity or is it a middleman who connects politicians to the best recent work (NBER Working Papers) on the subject? Once the politicians are connected with the nerd economists, does the nerd's work have a causal effect on what regulations and policies that emerge or is the nerd's work used to justify a decision that has already been made? I would be much more excited about the CEA's work if the former story is accurate and I really hope that it is.
Being a naive guy, I had hoped that the Obama Administration would be a time of "Mr. Spock goes to Washington". I had imagined that Austan Goolsbee and the CEA would plant the seeds to run long run field experiments to see which government agencies are actually achieving good results. So, the Secretary of Education Duncan is trying to do this with his accountability and test scores at schools and the Department of Energy is trying to figure out how to design incentives and energy efficiency regulations to achieve measurable impacts on energy consumption. But, I had expected to see this in every agency .
Accountability comes from measurement and the anticipation that if $ is wasted on a specific government program, that the academic nerds will figure this out and the newspapers will report this.
The CEA continues to have excellent economists serving on it and I think this is great. But, what do they do all day long? Are they doing useful economic analysis or are they doing mandated boring tasks (in this Internet Age the "Economic Report of the President" is an out of date anachronism) or helping the political wing of the White House to play defense?
The job of the economist is to explain and predict human behavior. If government policies that Axelrod and Emanuel want implemented have serious unintended consequences or are silly (see Cash for Clunkers), does the CEA kill these off or is the CEA told to come up with some justification for supporting the legislation? I don't know the answer here.
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