I believe this is a huge problem for the Obama Administration. This question stems from an article in Newsweek regarding the absence of Professor Joseph Stiglitz from President Obama's circle of advisors. Professor Stiglitz may be prickly but he is a great economist.
Stiglitz is perhaps best known for his unrelenting assault on an idea that has dominated the global landscape since Ronald Reagan: that markets work well on their own and governments should stay out of the way. Since the days of Adam Smith, classical economic theory has held that free markets are always efficient, with rare exceptions. Stiglitz is the leader of a school of economics that, for the past 30 years, has developed complex mathematical models to disprove that idea. The subprime-mortgage disaster was almost tailor-made evidence that financial markets often fail without rigorous government supervision, Stiglitz and his allies say. The work that won Stiglitz the Nobel in 2001 showed how "imperfect" information that is unequally shared by participants in a transaction can make markets go haywire, giving unfair advantage to one party. The subprime scandal was all about people who knew a lot—like mortgage lenders and Wall Street derivatives traders—exploiting people who had less information, like global investors who bought up subprime- mortgage-backed securities. As Stiglitz puts it: "Globalization opened up opportunities to find new people to exploit their ignorance. And we found them."
Then Professor Krugman chimes in this morning:
Yes, Joe should be playing a bigger role — he’s an insanely great economist, in ways you can’t really appreciate unless you’re deep into the field. I’d say that he’s more his generation’s Paul Samuelson than its John Maynard Keynes: as with Great Paul, almost every time you dig into some sub-field of economics — finance, imperfect competition, health care — you find that much of the work rests on a seminal Stiglitz paper.
But the larger story is the absence of a progressive-economist wing. A lot of people supported Obama over Clinton in the primaries because they thought Clinton would bring back the Rubin team; and what Obama has done is … bring back the Rubin team. Even the advisory council, which is supposed to bring in skeptical views, does so by bringing in, um, Marty Feldstein.
He is my answer: Larry Summers. President Obama has turned his economic policies over to the old Robert Rubin Team. This Robert Rubin Team comes from the same financial conglomerates that destroyed our economy. The Robert Rubin "School of Economics" believes in a strong and very powerful financial oligarchy and financial sector.
Just look at their record:
1) Gramm Leach Bliley Act of 1999 - signed by President Clinton and advocated by Rubin and Summers
2) Commodity and Futures Modernization Act of 2000 - signed by President Clinton and advocated by Rubin and Summers.
Oh, BTW, Robert Rubin was co-chairman of Goldman Sachs before becoming Clinton's Secretary of Treasury.
As for Mr. Summers: check this letter out from Mr. Summers to Mr. Ken Lay, deceased former CEO of Enron:
FYI: Here is the Summers correspondence with Ken Lay: Link
President Obama was elected because he represented "Change". He campaigned heavily on this theme. This all rings hollow by allowing the Robert Rubin School of Economics run your economic team.
ABSOLUTE DISAGREEMENT!
Boy oh boy do I ever disagree with you (no offense, though).
First, free markets only exists in the speeches of politicians and the minds of pseudo-economists - so anyone and everyone should argue against that fraud concept.
Second, Stiglitz is consistently wrong about everything! He was a supporter of NAFTA when he was affiliated with the Clinton Administration, and there was that Bretton Woods Committee letter floating around on the Web awhile back - it was the one that killed the "Buy American" clause in the federal stimulus package (which encouraged another round of jobs offshoring, and funneled the stimulus funds to multinationals - which could purchase products overseas and not in America) - and Stiglitz was one of the signers of that letter.
Stiglitz is, like almost every recipient of the Nobel Prize for Economics, a complete clown (possible exception: Mancur Olsen).
Real progressive economists: Prof. James Galbraith, Prof. Ravi Batra, and my personal favorites, Prof. Michael Hudson and F. William Engdahl.
Bigger point: where are the progressive economists?
That is the bigger question. Stiglitz article started the question and it was followed up by Krugman - who did mention Prof. Galbraith.
My bigger point is that the Robert Rubin Team is running economic policy which is to our detriment.
RebelCapitalist.com - Financial Information for the Rest of Us.
rah, rah, cheerleading squad
A lot of this is true, but Stiglitz revisited NAFTA and showed it was not beneficial, i.e. he was dead wrong.
But more to your point, I think there is kind of a rock star thing going on in econ and it should be by theory, work, Academic research that actually makes sense and improves/advanced the theory by on the ground reality.
I have to agree with you the Nobel Prize team seem to have a highly political motivator in a lot of their prize awards....
So, we can use EP to highlight some of the better work out there.
I was thinking of adding LaTEX for equations, as far as I know I'm the only one who can use it but if you can too, let me know.
Krugman - Morning Joe
Here's the thing that kills me, anyone, anyone at all, digging around into policy positions to backgrounds to advisers could clearly see Obama was the #1 guy for the Corporatists, the Rubin agenda.
Even worse, so called Progressives wrote piece after piece denying this and tried to claim Hillary was the ultimate corporate front guy.
Now, I would never call Hillary a real Progressive but I went through her policy papers, some of the advisers she was using, on and on and came up with the conclusion she had superior positions on a host of trade, economic, labor, health care positions.
I mean I can understand why no one trusted her, especially with her beyond the pale ties to Indian outsourcers...
but I mean why is this such a surprise? To me the entire blogosphere should hang their heads in shame for jumping on the bus, writing so much information to the point you couldn't even go on DK without being troll rated or banned to point out policy differences, Senate vote differences and so on....
I had one person, who was such an Obamanut, he literally got royally pissed at me and claimed I didn't know jack shit. Ok, that's fine, I'm just a voice in the wilderness...but now that we're over 6 months into this and Larry Summers is running this show....
I've yet to be proved wrong on my from the sidelines examination of stuff out on the Internets to reach the conclusion I did...
so I don't get it. These people are supposed to be aware, reading policy papers, paying attention, tracking money....not being blinded by star power....where the hell were they and why is anyone so surprised?
Seriously!
As someone who did support Barack Obama
in the primary and general election, I felt that Obama was going to bring "Change". I thought that meant new blood and new way of thinking in Washington. I don't believe I was being too idealistic. Now, it was a little disconcerting when Summers was picked to be an advisor after the primary. But when he picked Summers and Geithner I knew things were not good.
Hillary Clinton, who had Robert Rubin and the rest of the DLC establishment behind her, I didn't believe would push for the change that was necessary.
Obama had the momentum and political capital to achieve great change a very short time ago but he squandered that momentum on unnecessary compromises.
He often talked during the campaign about being from the Southside of Chicago and how Chicago politics was a tough business. I agree. I was born, raised and lived a good portion of my adult life on the Southside of Chicago. President Obama doesn't act like he is from the Southside of Chicago. Mainly, he should know that when an opponent is weak such as the GOP you bury them. And when you have people in your party - centrist Democrats - you make sure they understand who is the boss - you don't compromise with them.
My gosh it is no different than what Bush II except, I thought, Obama would be doing it for working class and middle class families across America. So far, I have been wrong.
RebelCapitalist.com - Financial Information for the Rest of Us.
Hillary did not have Rubin
as a direct adviser although you can be sure he was pulling some strings, but she also had a host of very Progressive advisers. Biggest thing I noticed was she really was paying attention to manufacturing.
But that said, there were many people who I just couldn't believe the denial, real experts.
So, my sum was Obama did Bill better than Bill and Hillary had a lot of positions different than Bill but no one realized it and she also knew where the power is too. That said, these politicians give this financial oligarchy power.
I think the key is to understand PR and marketing techniques vs. reading Senate votes, white papers, and who is talking to who.
Well too late now
I never saw Obama as a S. South Sider. I saw him moving into the Harvard elite power circles, as well as the University of Chicago economic insanity school.
But ya know, too late now, gotta focus on policy, stats, legislation, bills.
tell me we do not need a financial consumer protection agency
Check out this New York Times story, (h/t CR) revolving scum moves from subprime to refinance