Goolsbee and the Electorate

President Obama has named Austan Goolsbee to replace Christina Romer as chairman of the White House Council of Economic Advisers.  He has been a long time economic adviser to the president and is well qualified for the position.

Phil Izo of the Wall Street Journal writes on Goolsbee and his background in “Who Is Austan Goolsbee?”  It is not easy being an adviser.  As I observed in “Experts Vs. Partisans (Repost II)” an economist might show loyalty to her political employer rather than economic science.  One paragraph caught my attention because it highlights a second problem that advisers might face and that is loyalty to the president rather than the American people.

Goolsbee has been an advocate of free trade. During 2008, he took some lumps when a Canadian government memo surfaced, citing Goolsbee saying that Obama statements on scaling back the North American Free Trade Agreement amounted to “political positioning.” Obama took a hit from then-opponent Hilary Clinton, but many economists were relieved.

What a web of deceit.  Here is my interpretation.  The Canadian government was concerned about trade policy statements made by candidate Obama.  Goolsbee, Obama’s economic adviser informs Canadian officials that Obama’s rhetoric is “political positioning,” or lying to the American electorate for political gain.  That’s nothing new, but it is wrong and it isn’t endearing and thus the hit from Hilary.  Many economists were relieved that Obama was lying to the electorate rather than adopting protectionist policy.  That paints economists as elitist who prefer good policy to an honest description of their candidate’s true beliefs. 

In “The Views of Economists and Non Economists on the Economy (Repost I),” I describe four biases about the economy held by the public.  One is antiforeign bias, a systematic undervaluation of the value of trade.  It is logical for politicians who know that trade is good for the economic wellbeing of a country to lie, feigning to support protectionist policies.  The lying and demagoguery will end when voters better understand the benefits of trade.