In Defense of Goolsbee


My friend and fellow blogger Jeet has suggested that Barack Obama should “wave goodbye” to his economic advisor, Austan Goolsbee – but not, mind you, because Goolsbee has done anything wrong. In the recent controversy involving Canada, NAFTA and the Obama campaign, Jeet even believes that “Goolsbee was the innocent party.” Why, then, does Jeet think Goolsbee should go? In a word, “because of his policies.” What policies, you may ask? Jeet evidently regards Goolsbee as a “neoliberal,” and quotes approvingly John Nichols’ comment in The Nation that Obama and Goolsbee do not have the same views on “NAFTA, China trade and a host of related issues.” 

Now Jeet – as readers of this blog will know – is normally a purveyor of erudition and common sense across the great range of topics he tackles. On trade, however, he seems to have adopted a rhetorical posture that suggests he could be writing under the influence of moonshine or Ralph Nader (or both). Imagining himself at a distance from me and the other two bloggers on this site, Jeet offers the following cryptic assertion: “I believe I’m the only skeptic of our group when it comes to neoliberalism and the policies that are often described as ‘free trade’ (but which are in fact managed trade agreements designed to bolster corporate power).” 

Where to begin? Here are my responses to this line of reasoning:

1.  I am not, and have never been, a blind supporter of policies that are only described as ‘free trade’ but in fact are really managed trade agreements designed to bolster corporate power. I support free trade, and I believe the arguments for free trade far outweigh the arguments against it. Having said that, I am fully aware that both ‘free trade’ agreements and countervailing protectionist measures reflect, to a large degree, the interests of local stakeholders. It is because of this reality that open trade on the global level is at once a worthwhile and elusive objective.

2.  Though I can’t be sure, I do not think the other two bloggers on this site are blind supporters of highly flawed free trade agreements either. I can say, however, that we have not formed a vast right-wing conspiracy of three on this point.

3.  Where is the evidence that Goolsbee is a neoliberal – and what does Jeeet mean by a neoliberal, exactly? Another observer tells us that Goolsbee is “not known for having a particular ideological orientation.” Is he progressive? Here is Goolsbee criticizing Republican attempts to revive supply-side economics, and endorsing the Democratic position that Bush’s tax cuts for the wealthiest should expire. And here is Goolsbee advocating (as support for Obama’s platform) higher taxes for oil and gas companies, because they need to pay their “fair share.” I expect that Jeet would support both of these positions, and again, I am not sure how they can be characterized as neoliberal.

Perhaps Jeet takes exception to Goolsbee simply because he, like 99% of economists, supports the principle of free trade. Does this make him a neoliberal? I hope North American intellectuals (or in particular, Jeet) will get past the misleading idea that free trade as an economic and moral principle can be reduced to either the left or the right on the political spectrum (for some distinctions in this regard, see fellow blogger Ian Mason’s response to Jeet’s Guardian essay).

4.  Goolsbee agrees with Jeet that it is important to be skeptical of managed trade agreements designed to bolster corporate power. As he commented at a January forum of the New America Foundation (quite publicly, alongside economic advisers to Clinton, Edwards, and McCain):

“I’m an economist. Nobody’s ever going to be more in favor of open markets and free trade than the economists. And so then, you would presume that I would say, Oh, we should be for everything that has the words “free trade agreement” in it … That said, if you look at the free trade agreement – if you have never read a free trade agreement, I encourage you to go read it. Because it is as close to the economists’ case for free trade as our tax code is to the economists’ case for the ideal tax system. If you look at these 900-page agreements, there are two pages of what every economist would say: Yeah, that’s great, they’re lowering tariff barriers. And it’s 898 pages of loopholes. It looks just like the tax code: ‘Protect this company, and make sure that they’re getting their money, and these investor protections.'”

So Goolsbee is saying that although the North American Free Trade Agreement (NAFTA) has the words “free trade” in it, in fact it is a managed trade agreement designed to protect companies. Sound familiar?

5.  Goolsbee hasn’t all of a sudden shifted his economic policies – so why say goodbye now? Either Obama knew, or ought to have known, where Goolsbee stood when he hired him. Certainly, Obama ought to have known that he was hiring a supporter of free trade. As prominent economist Jagdish Bhagwati wrote recently in the Financial Times, Goolsbee has been “a valuable source of free-trade advice over almost a decade.”

6.  Is there really an important difference between Obama and Goolsbee on economic matters? If Obama is not a supporter of the principle of free trade, then he has a good economic advisor in Goolsbee who can persuade him why he should be. But in Goolsbee’s characterization at least (in the same January forum mentioned earlier) the two of them share the same general approach: “I think that the case for open markets is different from ‘What do you think about this, that, or the 146 trade agreements that were signed in the 1990s?’ Obama has been trying to get us away from what I call the false choice – that either you’re for every single thing that the administration has done, or else you’re a protectionist and you’re against America’s role in the international economy. Neither of those are true.”

7.  If Jeet is advocating that Goolsbee be replaced by a protectionist (if only a protectionist escapes the neoliberal moniker in Jeet’s eyes), then he is advocating a turn in a very dangerous direction for the world. Would an American-led global turn towards even greater protectionism (than we have now) give poor farmers in Africa a better chance of escaping poverty, and would it encourage greater stability in emerging economies like India and China? By contrast Goolsbee, who wants to see real free trade in the world, is encouraging Obama to support progress at the World Trade Organization, the only forum capable of achieving change across the proliferation of local trade agreements. Broadly, those are the world’s choices: progress towards truly open and stable global trade (what Goolsbee wants); a proliferation of highly imperfect and preferential local trade agreements meant to favour local businesses (what neither Jeet nor Goolsbee wants); or a turn towards even greater global protectionism than we have now (what Jeet may want, although I’m not sure).

8.  Goolsbee is a talented economist. There is probably some hyperbole in a recent description that he is “one of the world’s premier economists” – but he may very well be on the path. The Economist recently described one of his ideas – to ease the burden of tax returns for most people – as a “gem,” and further suggested that Obama – thanks to Goolsbee’s influences – “offers a more measured response to the housing crisis than Mrs. Clinton does.”

 9.  Finally, and especially for an economist, Goolsbee is an unusually gifted communicator – and he communicates with the same generosity of spirit that Obama does. Back in the day, in university debating tournaments in the early 90s, I had the pleasure of watching Goolsbee give speeches. (One of his debating partners from that period, Dahlia Lithwick, went on to become, in Jeet’s estimation, “the best writer on legal issues in America“). I recall Goolsbee giving a very funny speech at McGill warning of the perils of Quebec separation, and my debating partner Stephen Pitel and I ran up against Goolsbee one memorable round at a tournament in Toronto. All this may sound like a self-indulgent trip down memory lane (OK, it is partly so). But there is a larger point I want to make here about character, civility, and talent: Goolsbee was good enough as a debater that he didn’t have to be a jerk to compensate for any insecurities. What Jeet wrote of William F. Buckley Jr. was also true of Goolsbee in university debating days: he “treated his interlocutors with a courtesy that other mainstream debaters, whether liberals or conservatives, lacked.” I believe my anecdotal observation ought to count for something, assuming his character has not changed dramatically in the intervening years: civility is a scarce commodity in Washington.

Both Madeleine Albright and Richard Holbrooke have warned that the next U.S. president will inherit the most difficult foreign relations file in the history of the American presidency. The next president will need all the help he or she can get to steer the world towards greater stability and to restore a position of credible leadership for the United States. If Obama makes it to Washington, I hope Goolsbee is in his economic corner, urging him towards truly open and global trade, and helping him to craft arguments that might resonate with skeptics like Jeet.

3 thoughts on “In Defense of Goolsbee

  1. A great defense of Goolsbee, John. I’m almost willing to confess that I’m crushed. In my defense I’ll simply say that I’d be happier if there were a little more intellectual diversity in Obama’s economic team; that it would be good if he had some social democrats around him (I’m thinking here of Max Sawicky or Dean Baker or Nathan Newman) in addition to the crowd of neoliberals he’s gathered. If he sticks with just Goolsbee and company we’re in for a continuation of Clintonism under a new name, which just isn’t good enough.

  2. Thanks, Jeet.

    Given your lingering concerns, perhaps you will find some reassurance in this description I just ran across (March 17 Time Magazine) of how Obama plays basketball:

    “A lefty, Obama keeps opponents off balance: fake right, then go left with a very quick cross-over dribble and a finish to the basket with his left hand.”

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