Obama Consults a “Wide Variety of Economists” – Just Not Those Who Got it Right

By William K. Black

In a PR effort that aptly illustrates his approach to governance, President Obama has revealed that he is meeting with a “wide variety of economists” to try to figure out what economic policies he should follow.  “Obama Seeks Advice From Wide Variety of Economists.”

Obama is already well into the lame duck phase of his presidency, so this is simply a PR exercise.  The message Obama wants to send is the same one he has sounded throughout his presidency.  He is open to economic views from the parts of the political spectrum that range from the hard right to the mild left.

Obama is not open to hearing the economic views of anyone who got the crisis correct or anyone his advisors consider to the left of Paul Krugman (who is mildly left in economic terms).  James Galbraith captured the first point brilliantly in an essay about a Krugman column.  Krugman was making the correct point that conservative economists had gotten the crisis wrong and, in passing, mentioned less than a handful of economists he considered to have gotten it right.  Galbraith stressed Krugman’s lack of interest in what economists got the crisis right and Krugman’s failure to list the economists who had actually gotten it right and had theoretical explanations for the causes of the crisis that had proved accurate in multiple crises.

Obama infamously ignored Krugman’s advice at a meeting early in his term.  Indeed, Obama eventually ignored his own team of economists and increasingly relied on Treasury Secretary Timothy Geithner (who lacks any expertise in economics) for his economic advice.  Geithner’s pro-austerity views, his devotion to the interests of the largest banks engaging in the most devastating frauds, and his indifference to the citizens of the U.S. led to Obama taking a series of acts that increasingly embraced moderate austerity and greatly weakened the recovery.  Obama is culpable for increasingly ignoring his economic team and agreeing with Geithner’s bad advice.

Obama’s current set of luncheon meetings with economists includes economists that range from the hard right to Krugman on the “responsible” left.  The article portrays this as “tapping a broad array of ideological views.”  It fails to “tap,” however, anyone who actually got the crisis correct and anyone remotely as far left as the economists Obama chose to speak with on the hard right.  Economists such as James Galbraith were once on the fringes of Obama’s economic team (pre-inauguration).  Galbraith is a bit to the left of Krugman, but he is nowhere near as far from the center as are several of the hard right economists Obama chose to talk with about economic policy.  The same is true of Dean Baker, Randy Wray, and Stephanie Kelton.  Our friends at U. Mass. – Amherst are about as far to the left as folks like Kevin Hassett are to the right.  The real difference, the thing sure to exclude Galbraith, Baker, Wray, and Kelton from Obama’s luncheon list, is that they have committed the unforgivable sin of having been proved correct (again) about big finance and the crisis.  There is, of course, no chance that Obama will ever invite any of us, much less our friends at Amherst, to lunch to discuss economic policy.

The good news for Americans, which I will explain in my next column, is that Obama is not remotely as bad as the European troika’s leaders and economists that set the EU’s catastrophic economic policies.

12 responses to “Obama Consults a “Wide Variety of Economists” – Just Not Those Who Got it Right

  1. It is frustrating trying to get people to pay attention to the left. The left has consistently been right about the issues but no one wants to listen to them. I’ve tried to get the green party, the democrats and others but I’ve had no success. I’ve tried to get people to go to neweconomicperspectives.org just to read what is said but I can’t claim a single success. They only want to hear what the media is saying.

    • I can’t understand what the problem was. Were you paying the going rate to purchase the politicians you talked to?

  2. One of the issues that I have had trouble getting across is the nature of the money system. I recently gave a public talk about how the modern economy actually works and discovered that some still have trouble understanding it. While it may have been my presentation, I doubt that is the problem, as I did get some positive feedback from some of the audience.

    I have tried to get my MP to read Randy, Bill, and others, and find that he would rather pass this info onto others. Bill seems to be right about the lack of understanding, but I have been unable to get anyone to tell me why they are unable to understand it. But I would argue that this lack is also to be found on the left. I suggest as examples of this, Ed Miliband and Ed Balls. Their concentration now is on Piketty, and part of his argument is neoclassical. Taking apart his argument requires time and some sophistication, and I don’t see the moderate left in the UK at least interested in this, even though I know they have people in their team who are more than capable of this.

  3. Personally, there are really ONLY two economists who measure up and are worthy not only of our attention, but our absolute attention: Prof. Michael Hudson and Prof. Michael Perelman.

  4. I know you’re on the outside Bill but feel free to mention Australian Prime Ministers and economics in that post too please.
    Please don’t just refer me to Bill Mitchell. Outside perspectives always welcome.

  5. For those of us who are bemused with the lack of understanding that eminates at the point ‘ruling’ (or ‘hegemonic’ or whatever term you may prefer) ideas about society get challenged, there is a whole body of expertise present in departements of English, cultural studies, sociology, philosophy,… that attempt, with different focuses and methodologies, to explain these reactions. I think though that there are certain limits to the bemusement of ‘why people don’t get it’, because if one ventures beyond the rhetorical (i.e. you say ‘I don’t know how you could possibly think X’ not because you don’t know, but because it gives you a certain force of argument) aspect, it is worrying that some on the left expect rational and logical arguments to be the reasons that people don’t get it, and that a rational, logical refutation of these arguments is enough to win the trust and confidence of the people in power, or an audience at a lecture for example. The reason why this is worrying, is that it betrays a lack of understanding of how the world (or the people that shape it) actually works. To make it short: if you start realising that any economic opinion is also in a sense a political/philosophical one, and as such, is therefore not subjected to the type of scrutiny one demands from rational argument, a lot becomes very clear.

    To give a simple MMT example, the old ‘budgets of states are like budgets of households’-type of conception is not held because people are (necessarily) dumb or stupid, but because their understanding of the subject and what it is (a customer of virtually anything, including his or her identity as an expression of self) does not allow for any other understanding. If you think that individuals are reasonably uncomplicated (rational or irrational, does not matter) economic agents, then the state can ONLY be a household (or in this case, a company) that offers services for a particular fee. The difference between the right and the left is then that the right thinks that fee should be high (reflecting the ‘true cost’, whatever that may mean) whilst the left thinks it should be lower for some and higher for others (mild redistribution of wealth). The difficulty for MMT or any other alternative economics is that they not only have to fight an institutional battle within academics (let us be naive and say that this is the rational and logical part), but that they have to change a whole way of (political, philosophical, …) thinking that does not stop with how we happen to think about the budget.

  6. http://www.federalreserve.gov/newsevents/speech/yellen20140702a.htm

    It can’t be ALL bad news for the thinkers who frequent this space. Especially when the Fed chairman references Minsky.

  7. Clonal Antibody

    entreposto, the Fed chairman is married to a person whose work, Bill Black uses and quotes often to highlight how control fraud occurs. So yes, hopefully it can’t be all bad!

  8. I think Joe Stiglitz is correct when he states we are evolving into a rent-seeking economy. Once established, it will take some effort to turn the ship. The rent-seeking Big Lebowski’s are diverting attention to the Little Lebowski’s as welfare queens, demanding austerity and discipline. Even with 100% employment, it is questionable that enough value can be created to satisfy unearned income. We are oversupplied with banker-broker-dealer drones in the hive.

  9. What is the opinion, (of the author or MMTers/Post Keynesians in general) of Stiglitz?
    He is a mainstream economists for sure, but I thought he was more “left” than many, and has made statements about our market economy, free trade, intl institutions that were more critical than other mainstream guys. I don’t know his ideas though on deficits, monetary policy and etc admittedly.

    Good article, I like that critics of Obama/Dems who cry socialism constantly haven’t made the realization he’s done exactly what they want: nothing. Oh, and that “Why hasn’t Obama done anything about the economy!?” is thus a bit hypocritical…
    Sadly, nothing is better than the austerity option. Just hope our next President/incoming Congresses don’t actually get austerity measures pushed through. 1937 all over!

  10. Indiana Right Wing Patriot

    Nationalist Right-Wing Also Ignored!

    Good points. But it’s also worth noting that Obama also ignores the nationalist right as well. On the right there are anti-globalization figures such as Pat Buchanan, and in milder form Rick Santorum. The Front National in France has a program of protectionism and bank nationalization that just won it the European Parliamentary elections in spectacular form. One hears nothing from the mainstream media or the President about reaching out to the patriots of the hard right.

    “Globalization” which so many on the right detest as strongly as those on the left is the true shibboleth of respectability among economists-bankers-DC pols-puppet media and never shall be discussed or thought about critically.

    …And the US is de-industrialized and pushed ever further to a pre-developmental state. Detroit everywhere and always will be the end result of America’s non-industrial future.