White House Makes Great Choice for CEA Head

August 30th, 2011 at 1:38 am

Alan Krueger is an excellent choice to head the President’s Council of Economic Advisors.

He’s an expert on job markets and he has an excellent, empiricist’s understanding of what measures could move the needle on unemployment.  It’s actually unusual for a labor economist to head the CEA but with unemployment stuck around 9%, it’s an inspired choice.

Alan’s work has often focused on a theme I’ve tried to stress here: that it’s a mistake to form your beliefs on the impact of policies on economic theory alone (Alan would correctly say that my emphasis is “endogenous”–it relies on his work!).  The theory is often misrepresented by partisans/advocates who use research the way a drunk uses a streetlight—more for support than illumination (Krugman was the first person I heard use that line, btw…).   Or, it’s too simplistic to describe how complex creatures like the job market actually works…or, lately, doesn’t work.

Obviously, the larger question here is how hard policy makers will push for the implementation of solid ideas that could help get people back to work, and how far those ideas will get in air fractious political airspace.  But that’s going to be less Alan’s  bailiwick—I guarantee you he will be generating those ideas.


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5 comments in reply to "White House Makes Great Choice for CEA Head"

  1. David R says:

    Well, we will see

    If Mr. Obama includes a payroll tax cut on the employer’s portion of the tax or a tax credit for new hiring then we will know this appointment, or any appointment will not work out.

    The idea that by cutting the cost of labor one stimulates the demand for labor is just incorrect. The demand for labor is a derived demand, derived from demand for final goods and services the same way that demand for capital goods is a derived demand.

    A temporary decrease in employer payroll taxes or a tax credit for hiring will not cause businesses to hire employees they do not want or need. And they only need more employees if demand increases.

    I am not optimistic, this does not seem to be a concept either policy makers or many economists seem to understand.

  2. Dan Furlano says:

    I guess it will be a wait and see but I really doubt anything will come from this appointment, if the republicans let it go through.

    Obama now has a track record of ineffectiveness. One I really don’t think he will ever overcome.

  3. Ken H says:

    Krugman may have used the drunk/lamppost line. but he was not the first. It has been attributed to Mark Twain and others. but i found this reference as the oldest reference.


  4. D. C. Sessions says:

    And his chances for confirmation are …?

    Yeah. Thought so.

  5. Robert says:

    If this is the same guy who proposed a 5% regressive consumption tax back in January 2009, I’d say his chances of getting confirmed would be excellent.