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Why Washington Should Miss Austan Goolsbee

Goolsbee: Back to school.
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Megan Mcardle, The Atlantic
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Megan McArdle, The Atlantic
Aug. 11, 2011, 6:43 a.m.

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If you had known Aus­tan Gools­bee way back when, you might not have ex­pec­ted him to ever chair Pres­id­ent Obama’s Coun­cil of Eco­nom­ic Ad­visers. Even now, at 41, he still looks more like one of his M.B.A. stu­dents than like a pro­fess­or.

That ef­fect was even more pro­nounced at 35, when he first met Barack Obama, who was then a state le­gis­lat­or run­ning against Alan Keyes for a U.S. Sen­ate seat from Illinois. A mu­tu­al friend had sug­ges­ted that Gools­bee write some is­sue memos for Obama, but the two had nev­er met. When Gools­bee had a lengthy lunch with me re­cently at Found­ing Farm­ers, an eco-con­scious res­taur­ant in the headquar­ters of the In­ter­na­tion­al Mon­et­ary Fund, he re­called their first meet­ing, at a 2004 de­bate with Keyes. “You look noth­ing like a pro­fess­or,” said Obama, startled. “Where’s the beard and the tweed jack­et? And what’s with Gools­bee?”

Gools­bee chuckled. “”˜Hey, you’re not the only skinny guy with a funny name — as far as I’m con­cerned, you stole my bit.’”

By all ac­counts, this sort of thing has en­deared him to the pres­id­ent. Non­ethe­less, when he joined the Obama cam­paign, I had a shocked and faintly amused con­ver­sa­tion with an­oth­er eco­nom­ics journ­al­ist who knew the pro­fess­or fairly well. “Can you ima­gine Aus­tan in the White House? Aus­tan?“

It’s not that we thought he’d give bad ad­vice: rather the op­pos­ite, in fact. I’d known Gools­bee since 2001, first as my pro­fess­or at the Uni­versity of Chica­go, and then as an eco­nom­ist whom I in­ter­viewed. He was a sound eco­nom­ist, re­fresh­ingly in­de­pend­ent, and in­tel­lec­tu­ally hon­est. But those qual­it­ies seemed more like li­ab­il­it­ies than as­sets in Wash­ing­ton.

Our sus­pi­cions seemed to be con­firmed in Feb­ru­ary 2008, when a Ca­na­dian tele­vi­sion net­work re­por­ted that an Obama ad­viser, whom ABC later iden­ti­fied as Gools­bee, had told Ca­na­dian dip­lo­mats that Obama was step­ping up the rhet­or­ic on NAF­TA, and said, “It’s just cam­paign rhet­or­ic.”¦ It’s not ser­i­ous.” Every­one had already sus­pec­ted as much, of course, but Gools­bee seemed to have made the un-Wash­ing­to­ni­an mis­take of say­ing out loud what every­one else was un­com­fort­ably think­ing.

Gools­bee’s de­cision to step down in Au­gust after 11 months as head of the coun­cil (after join­ing it in March 2009) and re­turn to his pro­fess­or­ship in Chica­go was greeted by snip­ing and sniffs. One Fox on­line head­line crowed, “Obama’s Top Eco­nom­ic Ad­viser Jumps the Sink­ing Ship.” The Huff­ing­ton Post ar­gued that Gools­bee “has of­ten taken po­s­i­tions that have failed to carry the day, or he has rat­cheted down his pre­scrip­tions from the out­set.” Even The Eco­nom­ist, gen­er­ally a fan, ad­mit­ted: “Gools­bee’s ten­ure as chair­man has been a thank­less one.”

Thank­less, per­haps — but Gools­bee’s stature as Obama’s longest-serving eco­nom­ics ad­viser is in fact a fairly re­mark­able test­a­ment to him, and to his pres­id­ent. Christina Romer, the first per­son to chair Obama’s Coun­cil of Eco­nom­ic Ad­visers, had done ma­jor work on eco­nom­ic stim­u­lus and oth­er ques­tions that be­came very im­port­ant at the height of the crisis. Gools­bee’s con­tri­bu­tions are less ob­vi­ous — but that doesn’t mean they have been less im­port­ant. Pun­dits on the out­side may ask what spe­cif­ic ini­ti­at­ives he pushed, but that is not how Gools­bee de­scribes his po­s­i­tion. “I al­ways felt my role was like the pit crew in a Nas­car race and Pres­id­ent Obama was Dale Jr. — he’s driv­ing, and my job is to change the tires and get him back on the road.”

People who have worked with Gools­bee do not talk about the fierce policy battles that he waged; they praise his flair for ask­ing ques­tions that get at the heart of the mat­ter, his self-de­prec­at­ing hu­mor, his tal­ent for “dis­agree­ing without be­ing dis­agree­able,” and his com­mit­ment to mak­ing sure that the pres­id­ent un­der­stood all pos­sible angles be­fore he made a de­cision. “He’s got no agenda,” said Valer­ie Jar­rett, a seni­or ad­viser to Obama. “He’s re­spect­ful, but he tells the pres­id­ent ex­actly what he thinks, and he’s not shy about telling the oth­er mem­bers of the eco­nom­ic team what he thinks.” Of course, ad­visers are al­ways nice about oth­er ad­visers — on the re­cord. Then again, no one has ever tried to con­vince me, on the re­cord or off, that Larry Sum­mers didn’t have an agenda.

Wash­ing­ton wor­ships the policy war­ri­ors, the bril­liant mac­roe­co­nom­ic ma­nip­u­lat­ors who push through their agenda, us­ing canny ne­go­ti­ation or the sheer force of fiery will. But Wash­ing­ton also very much needs its policy mech­an­ics, the people who make sure that no mat­ter what de­cision the pres­id­ent makes, the wheels won’t come off.

“What you like about Aus­tan,” said Jeff Im­melt, the CEO of Gen­er­al Elec­tric, “is that he’s curi­ous; he asks good ques­tions; he listens. He also re­cog­nizes the lim­it­a­tions of what policy can do.” Im­melt worked with Gools­bee on the Pres­id­ent’s Eco­nom­ic Re­cov­ery Ad­vis­ory Board. “He’s “¦ a bril­liant guy who’s also dis­arm­ing. He’s su­per­smart but he doesn’t make you think he’s su­per­smart — he’s stealthy.” Dav­id Axel­rod, an­oth­er of Obama’s close ad­visers, also called Gools­bee “bril­liant,” but put it more vividly: “He al­ways sounds to me like the voice-over guy on a beer com­mer­cial.”

Blunt­ness, self-de­prec­a­tion, and a knack for ask­ing dif­fi­cult ques­tions: These are not ne­ces­sar­ily the weapons you need to win policy battles. But in an ad­viser, they can be stra­tegic as­sets that help a pres­id­ent win the policy war. The last ad­min­is­tra­tion had lots of policy war­ri­ors; it also had lots and lots of ter­rible mis­takes made by people who didn’t ask enough ques­tions. Pres­id­ent Obama cer­tainly knew Gools­bee well enough to un­der­stand what he was do­ing in el­ev­at­ing him to the coun­cil chair at the tender age of 41, mak­ing him the second-young­est per­son ever to hold the job. (The young­est was Ar­thur Ok­un, who served dur­ing the last year of the John­son ad­min­is­tra­tion, and was just 39 when he took the job.)

But per­haps I am pre­ju­diced, be­cause I have ex­per­i­enced Gools­bee’s stealthy bril­liance firsthand. In the winter of 2001, Gools­bee opened my tech­no­logy-strategy class by ask­ing, “Okay, now who likes the AOL—Time Warner mer­ger?” We all raised our hands. The $165 bil­lion megamer­ger had just closed, and the top-tier banks and con­sultan­cies we’d been in­ter­view­ing with had got­ten a piece of the deal. We’d be­come ex­pert at gen­er­at­ing nov­el reas­ons to love that messy ag­glom­er­a­tion of old me­dia and new.

Gools­bee was nod­ding, which made us feel smart. “Okay, why?”

Even the nor­mally shy stu­dents bubbled over with jus­ti­fic­a­tions, and for some minutes Gools­bee listened in­tently and wrote our an­swers on the white­board. By the time he was done, the list spanned sev­er­al columns, and AOL—Time Warner was be­gin­ning to sound like the best idea since the joint-stock com­pany. And then he sys­tem­at­ic­ally de­mol­ished every one of those reas­ons.

The carnage went on for an hour, un­til his bar­rage of calm and deadly ques­tions had de­flated dozens of M.B.A. egos suf­fi­ciently to make room for learn­ing. And then, gently, he star­ted show­ing us when mer­gers do work — deals that re­quire spe­cial­ized in­vest­ments, vari­ous sources of syn­ergy, in­dus­tries with large eco­nom­ies of scale. But the list of suc­cess­ful-mer­ger con­di­tions was short, and noth­ing on it soun­ded re­motely like AOL.

On May 28, 2009, Time Warner an­nounced that it was spin­ning off AOL after nearly a dec­ade of dis­mal per­form­ance, dur­ing which the com­bined com­pany’s stock had dropped from $161.40 a share a week after the deal closed to $23.55.

Gools­bee’s gift for ques­tion­ing the things that sound smart seems like an es­pe­cially help­ful qual­ity when you’re try­ing to ne­go­ti­ate the worst fin­an­cial crisis since the Great De­pres­sion and half of mac­roe­co­nom­ic the­ory is melt­ing down. Ac­cord­ing to Axel­rod, even when Romer was still at the helm, Gools­bee was “more than a mem­ber of the CEA, be­cause of his re­la­tion­ship with the pres­id­ent. The pres­id­ent would fre­quently ask for Aus­tan to be present at meet­ings, be­cause he wanted his judg­ment.”

A seni­or eco­nom­ic ad­viser for George W. Bush once told me a rather haunt­ing story about the ad­min­is­tra­tion’s de­cision to sign the 2002 farm bill, one that il­lus­trates why Obama might have liked hav­ing Gools­bee around. Like vir­tu­ally all sound eco­nom­ists, Bush’s ad­visers dis­liked the bill, a sub­sidy-laden mon­stros­ity that was con­sid­er­ably worse than the farm bill that had pre­ceded it in 1996 — but they re­luct­antly al­lowed it to go for­ward, be­cause they thought passing the farm bill would buy le­gis­lat­ive sup­port for something they con­sidered even more im­port­ant: the au­thor­ity the pres­id­ent needed to ad­vance the next round of treaty ne­go­ti­ations at the World Trade Or­gan­iz­a­tion.

As com­prom­ises go, this one didn’t seem too bad, so Bush’s ad­visers put on their game faces as the pres­id­ent signed it in­to law on May 13, 2002, with a touch­ing speech about provid­ing a safety net for farm­ers. All went well un­til later, when someone cracked a joke about how “we don’t need an­oth­er farm bill.” The pres­id­ent, shocked, de­man­ded an ex­plan­a­tion. “What’s wrong with the farm bill? No one told me to veto the farm bill.” The ad­viser wasn’t try­ing to hide the foot­ball, but had just as­sumed that Bush knew. So had every­one else. It was so ob­vi­ous to eco­nom­ists, no one thought to tell the pres­id­ent.

Herb Stein, who was head of the CEA when Nix­on im­posed far-reach­ing wage and price con­trols in 1971, once re­flec­ted on the blind­ness that can af­flict ad­visers — and hence, their pres­id­ents.

Even now, I am amazed to think of how little we looked ahead dur­ing that ex­cit­ing week­end at Camp Dav­id when we (the pres­id­ent, really) made those big de­cisions.”¦ Some people at Camp Dav­id had a the­ory of what we were do­ing with the ninety-day freeze.”¦ It was a rather flaky the­ory, and we were not pre­pared for the strong pos­sib­il­ity that it was wrong.

Nor was Nix­on. When the “tem­por­ary” 90-day con­trols had to be re­newed, Nix­on told Stein and George Shultz, “If this baby gets too strong we can strangle it in its cradle.” They couldn’t. Wage and price con­trols las­ted nearly three years, and much longer for oil and nat­ur­al gas. The oil and gas short­ages las­ted much longer too, in­to the early 1980s.

Gools­bee ap­par­ently al­ways re­membered to tell the pres­id­ent — even when do­ing so brought him in­to con­flict with oth­er mem­bers of the ad­min­is­tra­tion. Steve Rattner, the former “car czar,” de­scribes in his book a brief­ing where Sum­mers told the pres­id­ent that they’d de­cided to provide $5 bil­lion to sup­port auto sup­pli­ers while they made up their minds about a plan for the auto­makers. Sur­prised, Gools­bee im­me­di­ately broke in, even though he’d agreed he was just there to listen and not to speak:

“Mr. Pres­id­ent,” he in­ter­rup­ted, “just be aware that the second we an­nounce we’re go­ing to save the sup­pli­ers, every­body is go­ing to as­sume we’re sav­ing the auto com­pan­ies too. Have we really de­cided that?”

As soon as the meet­ing broke up, a furi­ous Sum­mers cornered Gools­bee in the hall­way and “ex­ploded”:

“You do not rel­it­ig­ate in front of the Pres­id­ent!”

“I was not lit­ig­at­ing in front of the pres­id­ent,” Aus­tan shot back. “He hasn’t seen that pro­gram and it has noth­ing to do with the fin­an­cial res­cue.”

In­side the White House, Gools­bee may voice his dis­agree­ments, but out­side he is loy­ally reti­cent, ac­know­ledging the dis­putes only ob­liquely even though they’ve been widely re­por­ted. “I al­ways think it is im­port­ant that the pres­id­ent hear the un­var­nished truth, as seen by the vari­ous po­s­i­tions,” he told me. “His­tory is not kind to ad­min­is­tra­tions where all any­one says is “˜Good idea, boss.’ So there were al­ways de­bates, but that was a sign of health.”

And though in private coun­cils he may have been dev­il’s ad­voc­ate in chief, in pub­lic he was simply ad­voc­ate in chief. Early on, he star­ted de­ploy­ing his for­mid­able ped­ago­gic tal­ents as the ad­min­is­tra­tion’s chief eco­nom­ic evan­gel­ist, in ven­ues ran­ging from the Sunday-morn­ing talk shows to You­Tube videos. He is ex­traordin­ar­ily per­suas­ive, on is­sues from small-busi­ness in­vest­ment to tax policy.

He was also very con­vin­cing when he was telling me dur­ing the cam­paign that the ad­min­is­tra­tion didn’t need an in­di­vidu­al man­date in its health-care plan — the op­pos­ite of what it is now ar­guing in court as it de­fends the 2010 health-care act from leg­al chal­lenges. “My goal in life is to be 80 per­cent Paul Vol­ck­er and 20 per­cent Muhammad Ali,” he told me. I’ve heard Re­pub­lic­ans privately com­plain that his present­a­tions are un­fair and one-sided, and the com­plaint is not en­tirely off-base. I have nev­er heard him say any­thing un­true, but like all ad­visers, he paints his ad­min­is­tra­tion’s policies in the best pos­sible light.

But really, people place ab­surd de­mands on aca­dem­ics who be­come polit­ic­al ad­visers: They want former pro­fess­ors to pub­licly cri­ti­cize their boss’s policies as if in an aca­dem­ic sem­in­ar. And they grouse if the politi­cians don’t make policy as if they, too, were liv­ing in­side a the­or­et­ic­al mod­el. This is not reas­on­able — and cri­ti­ciz­ing people who can’t meet this im­possible goal seems likely to di­min­ish the qual­ity of the ad­vice, not im­prove the qual­ity of the policy.

“There’s a cer­tain kind of aca­dem­ic that comes to Wash­ing­ton and can’t sur­vive,” Gools­bee said. “They’re the ones start­ing each sen­tence with “˜The eco­nom­ic mod­el says.”¦’ They are prone to sil­ver-bul­let-style an­swers, which demon­strate very soph­ist­ic­ated think­ing about the mod­el but very un­soph­ist­ic­ated think­ing about the real world.” The mod­el may be miss­ing a few things that are found in the real world — not least, the in­sti­tu­tion­al and polit­ic­al obstacles that make some prob­lems sil­ver-bul­let-proof. “If you’re go­ing to be an aca­dem­ic who’s in­volved in the world of policy, you have to be in­volved in the world that ex­ists,” Gools­bee told me. “I was al­ways a data guy, not a the­or­ist. The­or­ists can main­tain total pur­ity. The data are al­ways messy.”

Gools­bee ex­pects to take some heat for his ad­min­is­tra­tion’s ac­tions, and for his loy­alty, es­pe­cially be­cause he’s go­ing back to the Uni­versity of Chica­go — where a gradu­ate-school ap­plic­ant once said dur­ing an in­ter­view that he wanted to do pub­lic fin­ance and was told, “At Chica­go, we don’t con­sider that a field.” Gools­bee seems un­fazed by the pro­spect. “I have no doubt that there will be some heated ar­gu­ments in the sem­in­ar rooms and in the hall­ways. But in some sense, that’s why I want to get back to Chica­go. If you want to be re­peatedly told by your own al­lies, “˜Oh, yes, we are 100 per­cent right; those oth­er guys are crazy,’ then Wash­ing­ton is more for you.”

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