Technology and the economy
KEY ECONOMIST | Wunderkind Austan Goolsbee has the president-elect's ear on fixing U.S. finance
A Chicago economist who foresaw the market-driven advantages of the Internet and who is among President-elect Barack Obama's brain trust is expected to head the White House Council of Economic Advisers.
Austan Goolsbee, 39, is a University of Chicago Booth Business School professor and political newbie who describes himself as a research academic and a Jon Stewart Democrat. Goolsbee helped shape Obama's technology-centric campaign and positions, and is part of the University of Chicago's new generation of economists who focus on data-driven, empirical theories.
(John H. White/Sun-Times)
Goolsbee's appointment is expected to occur within a few weeks, after Obama names his treasury secretary and the head of the National Economic Council. Goolsbee would take a leave of absence from the university.
Goolsbee and the new generation of university economists respect classical Milton Freidman-style economics but have turned to the study of people's behavior to help explain what was long thought to be a rational science. He is good friends with colleagues Steven Levitt, author of the best-seller Freakonomics, and Richard Thaler, co-author with Harvard law professor Cass Sunstein of Nudge: Improving Decisions about Health, Wealth and Happiness.
Goolsbee understands that many people won't save for retirement on their own, so it makes sense for employers to automatically enroll them in savings plans, with the option of opting out.
"For people who don't have savings now, that's the most effective" way to get people to start saving, said Goolsbee, who made headlines during Obama's campaign for reportedly saying that Obama's criticisms of the North American Free Trade Agreement amounted to "political positioning" and not policy. The Obama campaign denied the stories.
Goolsbee was also influential in Obama's advocacy of an income tax break for 95 percent of workers and their families.
Goolsbee gets that the Internet plays a democratizing role.
"The role of technology [in Obama's policy platforms] comes out of the role of the Internet, allowing people to gather information about prices, about competitors and making industries more competitive to the benefit of consumers," Goolsbee said. "That ethos underlies the idea that we can count on the spread of information to improve the function of government."
John McCain's campaign had called upon Chicago economists such as Gary S. Becker and Steve Davis at the University of Chicago and Martin Eichenbaum, economics department chairman at Northwestern University, but their roles paled in comparison with Goolsbee's influence.
Goolsbee, who graduated from Yale in 1991 and earned his doctorate from the Massachusetts Institute of Technology in 1995, initially knew Obama as "Michelle's husband," because Michelle was the better known of the two at the University of Chicago. Goolsbee heard through a friend at Harvard that Obama, then a little-known candidate for the U.S. Senate, needed an economist who understood public policy.
Goolsbee and Obama got along immediately.
"It was clear for anyone who knew [Obama], even back then, here's a guy with immense talent who is trying to do something different and who is committed to ideas," Goolsbee said.
Goolsbee, a native of Waco, Texas, who grew up in Whittier, Calif., was named after Stephen F. Austin, leader of the Alamo and the founder of the modern-day state of Texas. His father decided to spell Austin with an "a" because he was convinced that Austan would be a unique person.
The lanky guy with the funny name isn't afraid to say that this country needs help.
Goolsbee advocates investing in improving Americans' skills in emerging fields such as computing, biotechnology and medical science.
"The economic mess we're in is very strongly tied to the hollowing out of America," Goolsbee said. "The struggles of regular folks have deeply undermined consumer confidence and consumer spending and is one reason Obama talks about how we've lost a certain balance."