Over the last 24 hours, President-Elect Obama has announced his new economic team. What do they all have in common?
- Retreads from the Clinton Administration? Rubin protégés? No, not all.
- Friends of mine? Well, yes. As it happens, they have been friends, for 12-to-30 years. (god forgive me. There is no greater turnoff in a column than an author who thinks it’s “all about me.” On the other hand, this isn’t a column. It’s just my personal blog. So what the hell.)
- Yesterday, President-elect Obama formally introduced Larry Summers as his choice for Chair of the National Economic Council and Tim Geithner as his choice for Treasury Secretary. Both excellent choices.
- At the same time, he introduced Prof. Christina Romer as his choice for Chair of the Council of Economic Advisers. Christie was my colleague for 20 years in the Economics Department at the University of California, Berkeley; she and her husband David Romer form a team who were my favorite daily lunch companions during that period. Although this is her first policy job, she is another excellent choice. She, together with Fed Chairman Ben Bernanke, have the added bonus of being among the world’s top experts in the monetary history of the Great Depression, an expertise that is of unexpected benefit at the current juncture.
- Today, Obama also announced Peter Orszag as his choice for Director of the Office of Management and Budget. In 1996, when I arrived at the Council of Economic Advisers, Peter was a Senior Staff Economist at CEA, working on international economics. Even then his extraordinary abilities had made him indispensable to top officials. He was the sort of person who rises very quickly in a merit-oriented government: not just extraordinarily smart, but able to get lots of things done very quickly and very well. When Peter returned from a quick spell at the London School of Economics (finishing his doctoral degree), he moved to a key position on the National Economic Council staff. More recently, he has been director of the Congressional Budget Office. This position at the Capitol Hill end of Pennsylvania Avenue is the counterpart to the OMB Director job at the White House; thus Orszag will “hit the ground running” with respect to the budget, in the same way that Geithner will with respect to the financial crisis.
Irrelevant gossip: At the height of the East Asia crisis in 1998, I hosted a party in honor of Peter Orszag. The party is mentioned in Paul Blustein’s The Chastening (which remains the book that gives the best blow-by-blow account of the East Asia crisis), because Joe Stiglitz took Stanley Fischer outside on the doorstep to voice in person the critiques of the IMF’s management of the crisis that he had been making in public. The reason they went outside was so that Larry Summers, who was managing the crisis from the Treasury, could not hear them inside.
- No, the reason that Obama chose this team is that they are The Best and Brightest and The Least Arrogant. As he says, the American people want effectiveness.
- The phrase “The Best and the Brightest” comes readily to mind because their IQs are off the chart. After 8 years of the current President and his appointees, I hope that the American public, despite its understandable anti-elitist bias, understands that intelligence and ability do actually matter.
- But IQ in an academic sense, by itself, is a very incomplete qualification for higher office. Many university professors are famous for being as bad at social skills, personnel management, openness, and humility as they are smart – all abilities which are just as important in policy making. Indeed, the phrase The Best and the Brightest comes from the famous book by David Halberstam, where the phrase is meant ironically since the Kennedy brain trust screwed up so badly in Vietnam. The McNamaras were arrogant in the same sense as Cheney and Rumsfeld: when reality diverted from their pre-conceptions (whether in Asian wars or other policy areas), they stubbornly refused to process the discrepancy and to adjust course. But the Obama team is different. It is The Best, the Brightest, and the Least Arrogant. With one possible exception, these people have no ego, no rough edges. They are not close-minded or stubborn. They are not ideologues. They will scoop up facts and arguments, on all sides of a policy question, before making a decision; and even after a decision has been made, they will monitor new information as the situation develops and adjust course when necessary. These traits, more than anything, has been missing from government in recent years.
- Many will object to this description with the observation that Larry Summers is famous for being arrogant. Summers’ arrogance is a little overdone, compared to some others I could name. But it is true that Larry’s personality is not ideally suited for the traditional job description of the Chair of the National Economic Council, which is to be an honest broker (in the classic phrase of Roger Porter’s early description of the proto-position). The NEC manages the decision-making process in the White House. It must make sure that every agency feels that its views have been heard and fairly represented to the president. (“Agencies” here means not just cabinet departments like Treasury, State, Commerce, Labor, Agriculture, HHS, etc., but also White House agencies such as CEA, OMB, NSC, etc.) It is evident that Larry was given the title of NEC Director so that he could have the status of Principal, which means he gets a seat at the table in cabinet-level meetings, as opposed to having to sit in the row behind, where the top aides sit. I am sure that Obama realizes that Larry is not perfectly suited to the honest-broker role. (The same was true of Larry Lindsay, who was fired from the NEC Director position by George W. Bush not just because he correctly forecast that the cost of the Iraq war would be higher than the official line. He did not have a lot of interest in running the policy process, and was rather more interested in expressing his own views to the President, as compared to his more bureaucratically inclined successors.)
- Not to worry. The Wall Street Journal has evidently reported that the NEC will have Jason Furman as Deputy Director. Jason, who has been Obama’s Economic Policy Director during the national campaign, could not possibly be better suited to the job of running the policy process as an honest broker. He is a young version of the others: brilliant, tireless, non-ideological; no ego, no rough edges, a team player. I know. He worked for the CEA in 1996 and 1997
- The Best, The Brightest and the Least Arrogant. Current conditions are so bad it would be foolish to make an optimistic prediction about economic performance over the coming years. But I will make the prediction that this team will function like clock-work, and give the country the most capable economic policy making it has had in many a decade.
Originally published at Jeff Frankel’s Weblog and reproduced here with the author’s permission.
2 Responses to “The Best, the Brightest, and the Least Arrogant”
While I agree that this team may indeed be dynamic, uber-intelligent, and generally lacking in excessive egos, the same cannot be said for their ultimate bosses in Congress and the Senate. The clash of cabinet-level brilliance vs corrupt self-interests in the Halls of Politics will be the true test of how adroit this team is in navigating solving of this economic Rubric’s Cube. And let’s be frank: this is assuming that they are not part of the problem to begin with.My sentiment is that the best trait even beyond brilliance – if they have it – will be the innate ability to play harder hard-ball than the opposing team. Time will tell.
Regulation of financial markets is far too complex for any new regulatory policy to perform as expected.The moral of this article is the hubris of the financial industry — author included.At some point, complexity exists to the extent that no one person is capable of understanding. If you watch the so-called experts these days, they all seem to be at a loss.At this point, we have to back out through slow but deliberate deregulation from top to bottom. This will put bring transparency to a market than only god understands at the moment.Perhaps the outcome in the world of near-perfect information and delusional analysis from top to bottom are new IT systems to assess market risk. But this can only happen after transparency comes from massive deregulation leading to total privatization of currencies.It was the Federal Reserve and their economist brethren who did this to us. We’ve had nothing but inflation since 1913 and the centralized nature of the Fed’s power is anti-democratic.