Dana Milbank reports:
At week's end, [Christina] Romer will leave the council chairmanship after what surely has been the most dismal tenure anybody in that post has had: a loss of nearly 4 million jobs in a year and a half. That's not Romer's fault; the financial collapse occurred before she, and Obama, took office. But she was the president's top economist during a time when the administration consistently underestimated the depth of the economy's troubles - miscalculations that have caused Americans to lose faith in the president and the Democrats
I'm sorry to see her go. She might have accomplished more if she'd been listened to. However, something she said caught my attention:
Even now, Romer said, mystery persists. "To this day, economists don't fully understand why firms cut production as much as they did or why they cut labor so much more than they normally would." Her defense was that "almost all analysts were surprised by the violent reaction."
I'm not an analyst, so maybe that's why I'm not surprised.
As I blogged here yesterday, it pays to shitcan people. CEOs at companies who've let the most workers go make substantially more than those who work at companies that have kept workers on through the downturn. That's a powerful motivator, and one which Romer and other analysts failed to take into account.
I'm not sure exactly when shitcanning became so lucrative. I think it was some time during the 1980s, with the resurgence of Really Big Business. It became downright fashionable to unload massive numbers of workers, so you could get Lean and Mean (especially mean) to compete in a fast-paced, dog-eat-dog world. Every time a company announced new layoffs, investors clamored to buy its stock. There is another powerful motivator.
So what do you do when the economy implodes and your stock price (and executive bonus) starts to plummet? Fire, baby, fire! Dump as many workers as you can, as fast as you can, because it's a proven way to stop your losses.
I know Romer is a really smart person. She just needs to get out more.