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Something about Obama attracts New D's, GOP's, Broderites, Indies, Perotistas, Reagan D's and Libertarians alike. Is it his big table? His promise to turn the page? His post-racial posture? Is it his cologne?

Or is it Austan Goolsbee?

Who??? Goolsbee. Economic wunderkind, forensics champ, MIT PhD, Yale Bonesman out of Waco via Milton Academy, Obama's chief / top / senior economic spokesman and senior policy advisor.

Oh, and DLC senior economist.

Huh? Whuzzat? Yes, that DLC.

June 19, 2006
Austan Goolsbee Joins DLC and PPI as Senior Economist

WASHINGTON, D.C. -- The Democratic Leadership Council (DLC) and the Progressive Policy Institute (PPI) are pleased to announce that Austan Goolsbee, the Robert P. Gwinn Professor of Economics at the University of Chicago, has agreed to become Senior Economist to both  organizations.

You hadn't heard that, had you? That's what a dog whistle is for. In distant corners of the political grid, they hear the pied piper's dog code loud and clear ... and they do come a-runnin'.

Read on as we crack the code.

And yes, it's that U. of Chicago -- bastion of neoliberal (free market) political economics, skunkworks behind the Old Right's counterrevolution against the intellectual decadence of FDR's New Deal, and Obama's primary academic stomping ground.

As one conservative Yale alum testifies:

... voters who usually lean Republican should take a second look at Obama ... Although some of his centrist economic prescriptions may disenchant liberals who distrust the benefits of globalization, Goolsbee said economic data indicate that free trade leads to higher wages.

George Will digs Goolsbee. What's not to like ... if you're George F. Will?

The liberal's liberal economist Paul Krugman? Not so much. Goolsbee is the unnamed advisor Krugman refers to when he tabs Obama's stimulus plan "disreputable". [There's the Rosetta Pebble, BTW, to a code we'll break later.]



Enough about who Goolsbee is. What does Goolsbee think?

Goolsbee thinks single payer is a bad idea. He thinks Warren Buffett  is just lucky. He thinks globalization is no biggie. He thinks subprime lending gimmicks made the market more perfect. And he gives Dubya high marks on trade, taxes, job creation ... but an "Incomplete" on Social Security.

Onward to the Big Picture framework questions of progressive policy and politics.

How do we remedy lopsided distribution of wealth and income? To Goolsbee, the main answers are education, education, and educational opportunity.

Obama's vision, as focused by Goolsbee's lenses, includes "democratizing capitalism". I guess that means we'll all be rich, a few decades after the rich pull everybody else on board into the investor class. (Heard this somewhere before, have you?)

Much as I sympathize with Goolsbee on some points of theory and stylistic emphasis, this is just wrong. No doubt an educated workforce grows the economy pie in toto. No doubt certain members of an educated class find the biggest slices on their plates. But in a positionally-competitive casino economy keyed to disproportionate reward for a limited number of key men (in franchises, networks and lineages), the system won't divvy up rewards in natural open market-theoretic shares just because everybody moves up the skills ladder.

This doesn't level the playing field - it just ratchets the game up to a higher level of difficulty. Same social order of advantage and disadvantage, with fatter sheep for the same ravening wolves.

How do we fix public education? With incentive systems, of course. Merit pay for schoolteachers.

On the plus side, Goolsbee does favor public investments in education and infrastructure. (These are the highest-return investments we know how to make, public or private.) Push the money out there, let private actors rearrange it optimally.

How do we regulate global corporate enterprise? Much as we regulate US corporations, i.e., not much. Strained through the academic economist's revealed preference for market outcomes, regulations are just a rats-nests of departures from the optimality of market outcomes. Outcome-directive levers of policy -- mandates, prohibitions and other regulations -- are bad. Incentives and public investments are good, as mitigations to market insecurities.

How do we reform health care? With a mandate-free version of Romney - Edwards - Clinton - Schwarzenegger insurance mandates.

Can we tax the rich? [In a global mobile economy, that's really the question of the age.] Here's a plus. Goolsbee argues that marginal tax rates on top-share incomes may not be as all-out destructive as Chicago School orthodoxy assumes. Still, the Obama camp is reluctant to venture into progressive taxation much beyond ending the Bush cuts.

Energy policy?

We should use a market-based strategy that gradually reduces harmful emissions in the most economical way. John McCain and Joe Lieberman are continuing to build support for legislation based on this approach,

Long on incentives, short on mandates.

How do we treat Social Security? Well, here's a puzzle. Barack Obama's position (as outlined by Goolsbee) is a dead ringer for Hillary Clinton's position (as scathingly criticized by Barack Obama).



Whence this worldview? A Financial Times profile finds Goolsbee "almost wholly lacking in political experience". This may account for his adherence to the textbook economist's faith in smooth curves and theoretical equilibria, and disdain for the disruptive hand of government.

He'd rather have the invisible giants tilt the landscape so that desirable outcomes flow naturally downhill and accumulate in convenient catch-basins.

Contact with real politics -- real constituents coming to you with real problems -- would have tended to take the gloss off whatever smooth shiny vision he brought to the party ... or to steer him toward a comfort zone in the other party, serving the Haves and sighing "can't be helped" to the plight of the Have-Nots.



Breaking the code: What does all this tell us about Barack Obama's vision of a low-conflict New Politics, and its strange attraction across the political spectrum? Here, it gets interesting.

Obama sincerely believes he's on to something. He hasn't told us what it is yet, or how it would work, or how he knows it would work, but he believes it's possible in principle to satisfy all sides of today's major divisions of interest.

Apparently he is convinced that much of the conflict evident in today's politics is inessential ... derivative ... superfluous. Where does he get that idea? Perhaps he's informed by the siren's call of naive economics and market idealism. If regulations were largely unnecessary, if imbalances were largely self-correcting, if economic growth itself were the path to economic justice ... then we could enrich the deserving Have-Nots without all those disagreeable takings from the powerful Haves.

There's a parallel here to presidential epochs past. Running for office, Reagan really thought he could give everyone a thirty percent tax cut, increase tax revenues, build a 600-ship Navy and a missile shield in space, and fund it by eliminating " two words: fraud and waste".

A closer parallel: Running for office, George W. Bush really thought he could give American conservatives their desired freedom from taxes and regulation, but also free them from the pangs of stricken conscience at the misfortune of others.

[Don't kid yourself. Few conservatives are indifferent to hungry kids or grannies freezing in the streets, even if it's not their kids or their grannies. They just don't know how to solve this problem without morphing into the despised -- and economically inconvenient -- liberals.]

Thus was born "compassionate conservatism". The advantaged could sleep soundly knowing that their very selfishness paved the road to riches for the disadvantages.

Yeah, it was a crock -- but so many wanted to believe, and so few asked the hard questions.



Now, with America beset by the legacies of these shared daydreams, who will ask the hard questions?

And who will respond to the beguiling whistle, and fall in line with the doggie parade?

[Cross-posted from goldberry's new riverdaughter blog-in-exile.]

Originally posted to RonK Seattle on Thu Jan 31, 2008 at 02:23 PM PST.

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Comment Preferences

  •  This explains a lot of Obama's positions (8+ / 0-)

    Thanks.

  •  Asdf. (2+ / 0-)
    Recommended by:
    cookiesandmilk, oldjohnbrown

    Photobucket

    "[R]ather high-minded, if not a bit self-referential"--The Washington Post.

    by Geekesque on Thu Jan 31, 2008 at 02:32:59 PM PST

  •  Thanks RonK for the rundown.... (4+ / 0-)
    Recommended by:
    bink, dus7, dconrad, BBelle

    They wonder why Edwards supporters are down in the dumps.  We are left with the non-choice, the candidates of the global/corporate agenda.

    We have shed those candidates that don't conform to the Straussian ravings of the University of Chicago.

    Haven't we had enough neo-cons/neo-liberals to prove that this theory is just wrong and unworkable on any level?

  •  This diary would be better . . . (8+ / 0-)

    if you focussed in on some of the ideas themselves, weighed some of the pros and cons, etc. rather than painting with such a broad brush.  Take the article on health care, for example.  You link it to support the claim that Goolsbee "thinks single-payer is a bad idea".  A closer look at the article shows Goolsbee starting by agreeing with Moore's critique of the US health care system.  That's a great starting place if you're a progressive.  If you're an open-minded progressive with a pragmatic orientation, you'll also be interested in the subsequent discussion of "pooling", which was included in both Obama's and Edwards' health plans (neither of which, btw, is single-payer).  So, taking a closer look at that article shows a much more sophisticated discussion of the issues than your diary provides.  Basically, all you're trying to do is make goolsbee look ghoully.  I mean, you denounce him just for being from UC.  Give me a break.  

    And finally, this is a really important point, Obama has said time and time again that he doesn't surround himself with only people he agrees with.  So, whatever criticisms you have of Goolsbee don't necessarily transfer.  I think that this is a good adviser for him to have, an original thinker with novel ideas.  I think that we should have the approach of trying things out, see what works and what doesn't: pragmatic progressivism.  Of course, that will always open us up to ideological purists. . .

    •  The article supports this claim in spades, neh? (4+ / 0-)
      Recommended by:
      daria g, importer, badger, dconrad

      Yes, I link it to support the claim that Goolsbee "thinks single-payer is a bad idea". Because he does.

      The subtitle confirms the claim:

      Michael Moore and the Beige Bomber
      He's got the indictment of health care right, but not the fix.

      Curious readers really should follow the link for detail, to discover what Goolsbee thinks the "Beige Bomber" is. It's very revealing.

      Obama may agree with Goolsbee. He may not. He may ahve changed his mind. He may have changed his stance, for political convenience. Or he may think single payer is a good idea whose time has not come ... or may never come.

      We take what clues we can from what we're given. In the case of Obama's dreams, we're not given very much.

      Thanks for playing.

      •  I think that Obama's been clear what his plan is, (2+ / 0-)
        Recommended by:
        Joe Willy, taylormattd

        and what his view of single-payer is, notwithstanding Hillary's attempted distortions.  I didn't say the article didn't support your claim, btw.  I said, basically, that you used it in a drive-by fashion that didn't really get at the substance.  

      •  BTW, I agree that folks should read it. (2+ / 0-)
        Recommended by:
        ohwilleke, taylormattd

        I don't think that the beige bomber metaphor suggests that Goolsbee thinks that singe-payer is a categorically bad idea.  

        Furthermore, what exactly is your point here?  If you want single-payer. . . well. . .  Kucinich is out of the race.  There's always Nader, I guess.  The fact of the matter is none of the candidates thought that single-payer was a good idea.  For whatever reason, none of the major players proposed it.

      •  Plus, the Gool-man repeats several times (0+ / 0-)

        about how bad "free" health care is, how it won't ever work to give people health care for "free", how when things are "free" people will have a lot more of them.

        First, universal health care isn't "free", people would be paying for it out of their taxes. You know, out of their pay checks.

        Second, if proctological exams were free, how many extra ones would you sign up for? I mean, isn't going to the doctor just the most fun thing you can think of?

        Just black and white, rich or poor / Senators, stop the war!

        by dconrad on Thu Jan 31, 2008 at 05:50:41 PM PST

        [ Parent ]

  •  i really do hear you (1+ / 0-)
    Recommended by:
    highacidity

    it's a giant red flag. but i can't over this fact - bill and hilary sat down and had a conversation and then decided to use race baiting as the central strategy to defeat obama.

    the suggestion that it might backfire made them laugh. besides inevitability there is another word that beats in their hearts - impunity.

    you can write your dog whistling diaries all day long. you can pose as a sophisticated machiavellian mendant all day long in the down market coffee shop where you pop this shit off. but it won't change disgust.  

  •  There is a bigger picture, of course. (8+ / 0-)

    This guy may be his lead economic strategist, but he is one voice. As play jurist points out, above, these discussions and even the articles to which you link, are not as cut-and-dried as you present here.

    That said, there is much not to like about Goolsbee from my perspective.

  •  We'll have to wait (6+ / 0-)

    for Obama's supporters to provide a tortured forthright explanation in order to find out what Obama really listened to when his advisors spoke, because what Obama really heard is probably different from what the advisor said.

    Judging from past experience.

    /semi-snark

    "You two! We're right at the end of the universe! At the edge of knowledge itself. And you're busy . . . blogging!" -- Dr. Who

    by prodigal on Thu Jan 31, 2008 at 02:44:30 PM PST

  •  Thanks for this diary! (7+ / 0-)

    I've been warning people about the Obama-Goolsbee connection for a while now, but you've really put the information together much better than I could have. Here's one more article about Goolsbee that you appear to have missed--the writer is a starry-eyed free-marketer, but the letters section, mostly written by Brits who are more schooled on economic matters than the average American, is chilling and spot-on.

    •  From the article cited (0+ / 0-)

      Austin Goolsbee . . . agrees with the liberal consensus on the need to address concerns such as income inequality, disparate educational opportunities and, of course, disparate access to healthcare, but breaks sharply from liberal orthodoxy on both the causes of these social ills and the optimal strategy for ameliorating them.

      Instead of recommending traditional welfare-state liberalism as a solvent for socioeconomic inequalities and dislocations, Goolsbee promotes programmes to essentially democratise the market, protecting and where possible expanding freedom of choice, while simultaneously creating rational, self-interested incentives for individuals to participate in solving collective problems. No wonder, then, that Obama's healthcare plan is specifically designed to give people good reason to buy in, without coercing them. Likewise, as George Will reported in a column from October, Goolsbee's proposal for reducing income inequality is to lower barriers to higher education, the primary factor in determining future earnings . . . .

      Back in the spring of 2007, when the term "subprime mortgage" was beginning its ascent to ubiquity, Goolsbee composed an impressive op-ed in the New York Times, noting that - fraudulent lending practices aside - subprime products are a powerful tool for democratising the credit market and opening it up to lower socioeconomic strata, and had been substantially successful in reducing financial constraints on working-class people.

      I, for one, don't have a problem with that general approach.

      "Those who can make you believe absurdities can make you commit atrocities" -- Voltaire

      by ohwilleke on Thu Jan 31, 2008 at 03:10:52 PM PST

      [ Parent ]

  •  This helps explain the religious tone (4+ / 0-)

    to his campaign. It feels a lot like the Church of Stockman.

  •  Goolsbee is no villian (5+ / 0-)

    While he is no democratic socialist, he favors an approach to business and economics shared by most members of the Democratic party who have looked closely at the policy issues to one degree or another.

    This is to say that he believes that we need to be conscious of how basic principles of economics cause policies to play out, and that the United States should have a mixed economy, neither a doctrinaire lassiez-faire economic policy, nor a tightly governmentally controlled economy.

    He sees a place for significant government intervention in the economy, that can still preserve its basic foundation as a market based economy.

    I wouldn't necessarily draw the lines in the same places that he would.  Middle ground is a perilous place to put yourself.  But, given that politics is the art of the possible, idealistic perfect solutions are often politically beyond reach in any case.

    He is perfectly appropriate, for example, in calling attention to the risk that a government agency could unreasonably deny care in much the way that an insurance company does now, while agreeing with Michael Moore's critique that the underwriting model upon which our existing health insurance system is based is fundamentally flawed.  He is likewise, entirely appropriate in noting that a lot of the cost savings in foreign single payer plans come from paying providers lower salaries than they make in the U.S., as opposed to simply rooting out fraud, waste and abuse.  I'm inclined to think that lower pay for doctors wouldn't be such a bad thing, but many single payer advocates don't even acknowledge that this is an issue.

    He is also perfectly correct, for example, in noting that subprime lending has turned a lot of people into home owners, particularly blacks and Hispanics, and that something like six out of seven subprime borrowers do manage to make their payments.  I personally would go one step further and ask whether non-defaulting subprime borrowers are much better off as homeowners paying more than it would cost to rent the same property than they would be renting, because I don't embrace the notion that people are as rational in the market as he does.

    But, it is also worth noting that advisor is not the same thing as decision-maker.  I've read Obama's economic proposals (incidentally, mostly very similar in general thrust, magnitude and degree of government intervention to Hillary Clinton's) and Obama is clearly a smart enough guy to think for himself and avoid making some of the plausible but incorrect assumptions about people always acting in their rational self-interest that particularly mark those parts of Goolsbee's economic writings that I most disagee with on the merits.  

    As the New York Times noted, one of the defining themes of Obama's economic proposals is a "behavioral economics" orientation that recognizes that how things are framed can influence how people respond to them.  Obama also recognizes to a greater degree than policy wonks (Clinton among them) do the political importance of keeping government economic policies conceptually simple -- something that was central to the downfall of Hillary's health care proposals during Bill Clinton's Presidency.

    "Those who can make you believe absurdities can make you commit atrocities" -- Voltaire

    by ohwilleke on Thu Jan 31, 2008 at 02:55:15 PM PST

    •  isn't the suggestion of the diary (0+ / 0-)

      that Obama IS following Goolsbee's advice, and that that advice is bad?

      I don't understand this textbook analysis of politics. Is there any real danger to America's mixed economy based on any platform of any real Presidential candidate except maybe Ron Paul and Ralph Nader?

      •  The diary suggests that Obama (0+ / 0-)

        has Republican like economic views, and given where we stand in the election cycle, implies that Hillary Clinton is better.

        In fact, Obama and Clinton are extremely similar in substance on economic policy, differ moderately in style on economic policy, and are both in the middle of the road economically of the Democratic caucuses in the House and Senate -- neither blue dogs, nor progressive caucus members.

        It is absolutely true that no Kucinich/FDR school Democratic weathered the primary/caucus process en route to the 2008 Democratic Party nomination.  Clearly, the diarist direly wishes that one did.

        But, both Obama and Clinton are far to the left on economic policy of Ron Paul, McCain and Romney -- although Romney is no fundamentalist on economics having allowed policies like Obama and Clinton's proposed by a Democratic party controlled legislature to become law on his watch even though he didn't support those policies.  They are even to the left, realistically, of Huckabee on economic issues, although Huckabee is very populist on economic issues compared to other Republican candidates.

        "Those who can make you believe absurdities can make you commit atrocities" -- Voltaire

        by ohwilleke on Thu Jan 31, 2008 at 03:17:55 PM PST

        [ Parent ]

    •  On all economics-sensitive policy fronts ... (3+ / 0-)
      Recommended by:
      badger, J Rae, kidneystones

      ... Obama is to the right of Clinton.

      Is Goolsbee' approach "shared by most members of the Democratic party who have looked closely at the policy issues to one degree or another"?

      No, it's not.

      If it were, how could it serve as foundation for Obama's "New Politics"? That requires a breakthrough innovation in policy frameworks ... not just an era of nice talk.

      Goolsbee is a smart cookie, and his behavioral intuitions are not without their own virtues ... but they haven't been tested in practice, except by decades of Republican rule.

      BTW, Clinton's health care proposal WAS conceptually simple ... almost Goolsbian(?). Arlen Specter simply concocted a diagram that made it look horribly complex. Don't imagine any of Obama's good, simple plans will meet any kinder reception.

      •  this is not the place (2+ / 0-)
        Recommended by:
        RonK Seattle, badger

        for sober discussion of Obama's possible shortcomings.  

        you're just a racist old-fart DLC enabler for bringing it up anyway.

        c'mon let's sweat...baby

        by CC Music Factory on Thu Jan 31, 2008 at 03:20:24 PM PST

        [ Parent ]

      •  Obama's plan will have (0+ / 0-)

        a Democratically controlled House and Senate with a wider Democratic majority in the Senate than we have now to receive it.

        I also don't agree that Obama's proposals are "to the right" of Clinton.  For example, one area to which Obama devotes a lot of attention, which Clinton simply doesn't speak to at length, is a thoughtful and detailed critique of problems with the existing bankruptcy laws, laws that Clinton voted (with all Republicans and roughly half of all Democratas to overhaul in a much more conservative direction in 2005).

        Most Democrats do favor a mixed economy.  There are very few true blue free marketeers in the Democratic party and Goolsbee is not one of them.  Neither are either Obama or Clinton.

        For example, when I read the respective health care plans of the candidates (Obama and Clinton), I see very similar proposals.  No currently viable candidate in the 2008 Presidential race favors a single payer health care system, for example, and both favor subsidies for purchasing health insurance that extend far beyond the poor, a decent plan available to all Americans without regard to pre-existing conditions.  Obama's plan, in fact, is the one that explicitly mentions as a front page item some form of mandatory coverage.

        "Those who can make you believe absurdities can make you commit atrocities" -- Voltaire

        by ohwilleke on Thu Jan 31, 2008 at 03:34:35 PM PST

        [ Parent ]

      •  Clinton's health care proposal back then (0+ / 0-)

        certainly didn't come across simple at the time.  I remember trying to puzzle it out.  The health care narrative has improved but then there are proposals like this one from the Clinton campaign:

        Fight vertical integration, which has crippled American agriculture, by establishing mandatory Country of Origin Labeling for all U.S. products; pushing for a ban on packer ownership of livestock; having her Justice Department investigate agriculture consolidations; and ensure that the small- and medium-sized producers compete on level playing field with corporate agribusiness.

        That simply make me cringe.  It is pure wonkese.  Compare that to this much more accessible statement of essentially the same policy:

        Prevent Anticompetitive Behavior Against Family Farms: Obama is a strong supporter of a packer ban. When meatpackers own livestock they can manipulate prices and discriminate against independent farmers. Obama will strengthen anti-monopoly laws and strengthen producer protections to ensure independent farmers have fair access to markets, control over their production decisions, and transparency in prices.

        Being able to explain your ideas at an accessible level matters a great deal in politics.

        "Those who can make you believe absurdities can make you commit atrocities" -- Voltaire

        by ohwilleke on Thu Jan 31, 2008 at 03:47:37 PM PST

        [ Parent ]

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