Tuesday, June 7, 2011

Austan Goolsbee resigns as the Chairman of the Council of Economic Advisers



Goolsbee has been one of Obama's longest serving advisers. His ideas have been more or less progressive and even though he teaches at University of Chicago, he seems to come very much from a post Keynesian perspective.

It is rumored that he left out of frustration with the White House's stubborn resistance to move aggressively with policies to stimulate jobs and the economy.

So runs the narrative among those inclined to accuse the administration of failing to marshal an adequate response to the strains of the Great Recession, setting aside plans to put Americans back to work via government-financed projects in favor of scrimping to shrink budget deficits.

Goolsbee may not be the ideal guy from an MMT point of view to make policy, however, he was close enough than many of the others who currently advise Obama, so I consider it a terrible loss that he's now going.

15 comments:

Dan Kervick said...

I assume Obama will now approve a Pete Peterson-vetted deficit hawk who will blow more compliantly with the political winds.

I wonder if Goolsbee felt humiliated after having to defend administration policies on ABC's The Week and being taken to task for a perceived passivity in the face of massive unemployment.

TomatoBasil said...

Hmmm, we could put Auerback at the Fed, Norman at Treasury and Mosler at the Council of Ec. Advisers. These guys probably wouldn't be willing to take the pay cut. Oh well.

Matt Franko said...

Mike,

I remember AG being with the Obama campaign from WAY back in the primaries.

And usually people who are with the Admin from early in the process are the ones who get the positions in the Admin if they win. (George Stefanoplous, Harriet Miers, Karl Rove, etc..)

So the Obama Admin must really be being run with "outsiders" at this point if someone like Goolsbee feels he has to leave, similar to Christina Romer.

'Tis a shame.

Resp,

Crake said...

It appears this is confirmation that the Administration is fully sold on deficit reduction. So the economic outlook is very cloudy at best and likely bleak.

This blog has some extremely knowledgeable posters. Any mind pointing to investment ideas. During the last six weeks, I cut my equity exposure to around 15 to 20% from 60% and I sold some TIPS I bought in 2008 (for pretty good gain.) So now I am about 55 to 60% cash plus about 15% in CDs.

Anyone have any ideas where to put cash? I am already in senior floating rate bank loans, Utilities and merger arbitrage funds (Utilities and merger funds are pretty much all of the equity exposure I have left.) Any other relatively stable, income producing assets I am missing?

Thanks for any help, and if it helps legally, I am not looking for advice just ideas I can check out.

Mike Norman said...

I would! I would!

Mike Norman said...

I spoke to my buddy Bob Beckel at Fox yesterday and he told me that the MMT argument has completely lost the debate in the White House. It's full steam ahead on deficit reduction. He also said that Biden is, privately, "very disappointed" and has made comments (privately, again) that our side "would like."

Mario said...

this is not good. Interesting about Biden too.

These politicians and powerful people that know the truth about these economic matters have it pretty rough in terms of guilt in my book. Not to get too religious on ya'll but these people that get what is going on and don't just speak up about it remind me of Pontius Pilate who also just sort "went with the crowd." I feel sorry for such people and all of us too of course who get to feel the brunt of their inactivity. Hamlet could be said to be in this boat as well I guess you could say.

I'm afraid Life is less logical than we'd like to admit. ;)

Adam said...

Crake - for investment advise from an MMT perspective I would read Pragmatic Capitalist.

beowulf said...

He also said that Biden is, privately, "very disappointed" and has made comments (privately, again) that our side "would like."

Mike I appreciate you sharing those comments. Obviously Biden has to run out the play that Obama calls on the field. But he has a tremendous amount of institutional power to move the ball forward by the MMT briefings he sets up (or has a friendly third party set up- Beckel!) for congressional staffers and admin economists; by the updates he requests from White House and Department staffers (for starters, sectoral balances and, of course, the JTF fiscal liquidity index); and once he sees that some admin economists are getting it (and they might be out at the DOL or the Pentagon), requesting in-paradigm policy proposals from within the Admin. The two questions Biden's staff should be drilling down right now are:
1. What happens to the long term deficit numbers if the Fed Fund rate is locked at 0? (most of the projected deficits vanish).
http://2.bp.blogspot.com/_VyTCyizqrHs/SmsglBC4xPI/AAAAAAAAEW8/3aPwlqq3Eus/s400/USdebt2080.jpg
and 2. What alternatives does Tsy have if the GOP walks away from the table out of spite because they think a debt ceiling will hurt the WH more than it hurts them (start minting jumbo platinum coins).
http://moslereconomics.com/2011/01/20/joe-firestone-post-on-sidestepping-the-debt-ceiling-issue-with-coin-seigniorage/

Tom Hickey said...

The real interest rate is what counts. It is never a bad idea to be in cash when the trend is deflationary. especially in the face of uncertainty. In such a case, holding cash not standing idly on the sideline but a good strategy.

The question then becomes which currencies to hold or hedge.

Anti said...

Romer may have been the biggest loss. I see that the authors of this blog don't believe in QE, but she was right in my view that we needed a lot more of it. She also wanted much more fiscal stimulus, as seems well-known.

http://www.econ.berkeley.edu/~cromer/Stanford,%20Zale%20Lecture.pdf

HT to Krugman.

Even for anti-QE MMTers, it would be better to have people in charge who would try both actually targeting the NGDP forecast, and also being willing to go for a stimulus that they calculate will actually close the output gap.

Anti said...

That is, actually go for a fiscal stimulus big enough to close the output gap.

Crake said...
This comment has been removed by the author.
Crake said...

In the piece that Anti posted, the author wrote "According to projections by the Congressional Budget Office, the Ryan plan takes discretionary spending (including defense) and non-health mandatory spending down to levels not seen since the 1920s."

This should be getting more attention. The CBO is credible and I think journalists could project what that means in every day terms pretty easily (i.e. explain to public that their ABC service would be gone, their XYZ service would be cut etc.) letting the public know how Ryan’s plan would affect them versus letting them continue to believe foreign aid and welfare for the "other" guy are the only things to be cut on Ryan’s table.

Crake said...

I was researching market neutral funds and came upon the Marketfield fund. That fund’s manager latest comments on commodities is very good and worth reading – some in financial sector get it.

http://www.marketfieldam.com/MFLDX201104.pdf