No Economic Team of Rivals On Obama Staff: Rubin's Manic Neoliberals Dominate

No Team of Rivals on the economics side.

The deep ideological divide that is emerging in the economics profession between those who worried about manic neoliberalism and Bob Rubin-style turbo-charged tilts towards an increasing unregulated finance industry is not hitting the Obama administration - because it is only hiring one side of that divide.

As best I can tell Obama is stacking his team with those who George Soros disdainfully calls "market fundamentalists."

Liaquat Ahmed metaphorically profiles the Rubin-led financial ideologues in his Depression-focused new book, The Lords of Finance: The Bankers Who Broke the World.

George Soros has told me that there is a big difference between them, but honestly, I'm still straining to see the the difference between Hank Paulson's views and those of Lawrence Summers, though i know Summers is working hard to revise his views.

But take a gander at Joe Stiglitz's comments on the nation's financial crisis. His candid comments near the end of the piece that the U.S. must do something to better align the interests of failing financial institutions with American priorities and needs makes sense -- and his prescriptions make sense. . .but they are starkly different than what we are hearing from Obama Land right now.

Interestingly, I learned recently -- and this is a bit of a counterpoint to my argument -- that Lawrence Summers called Stiglitz privately to get some counsel on what was going on. Summers apparently made clear that he didn't want to be making the call to Stiglitz -- but had to. In other words, there is someone above Summers who wants diverse inputs into his economic policy thinking. The problem is that this interest in diversity is completely missing on his actual team.

There were names here and there who might have kept some balance between those who could think through the micro-economic dimensions of economic policy and the macro types who helped contribute to today's problems -- but Obama's selections have mostly been the latter type of Robert Rubin acolytes. I would count Council of Economic Advisors Chair Christina Romer in that mix as well as both National Economic Council Chair Lawrence Summers and Treasury Secretary Timothy Geithner.

Today, we hear the news that former Hamilton Project Director Jason Furman (good guy -- and friend of mine) who also served as Obama's campaign senior economic policy director is going to be one of the National Economic Council deputies. The other is McKinsey Global Institute director and former Goldman Sachs alum Diana Farrell, who admittedly is also a friend but tilts towards market fundamentalism like all of the others on the Obama team.

Obama has essentially brought in the same crowd of people or ideological fellow travelers who helped hatch the Clinton era manic finance fest that the Bush administration made worse.

Labor must be freaking out.

Obama chose in his decision for Commerce Secretary not to run with Leo Hindery, a Democratic CEO, who has vast experience in the broadband and telecommunications field but who helped animate many of John Edwards' progressive campaign ideas on rewriting America's domestic economic social contract.

Skipping over Hindery may have been the work of some others close to Obama who worship at the alter of Robert Rubin. And they too are part of the increasingly ideological incestuous pool of thinking on economic policy.

Now, word is that outgoing Symantec CEO John W. Thompson may be the next Commerce Secretary. I know Thompson only at a distance and have nothing good or negative to say about him -- other than it's great he knows something about American technology and high wage jobs given his deep roots in Silicon Valley.

But he should also know that while many IT software firms produced vast wealth in the middle of the internet industry bubble, the American job base did not get a high wage job trickle down from those sectors, at least not to the degree that was expected.

In fact, Silicon Valley -- while clearly a revolutionary place -- mimicked much of the pattern of Wall Street. Another go-go bubble with a few getting vastly wealthy while the rest of the country chugged along in the real economy, detached from the growth and gains of those sectors.

I realize that this is a bit of an overstatement unless acknowledging the many efficiencies American and global society absorbed from the IT boom, but still -- my point is that Obama has no one on board who essentially is considered an economic heavyweight who thinks that America's domestic covenant, or social contract, with its citizens must be redesigned.

Wait, there is one person -- former Economic Policy Institute labor economist Jared Bernstein, but he is assigned to Vice President Biden -- not to President Obama's economic slots.

Obama and Rahm Emanuel have hired a group of people who are going to make the rich stay rich -- and who are not designed to really change things for the middle class or the struggling lower end.

After all, it was they who said that the economy was booming, that offshoring was great, that manufacturing was not important, that those CEOs deserved that high pay and little could be done about it, and the reason that the middle class was being left behind is that they were becoming less globally competitive and/or they didn't have the educational background or fortitude to keep pace with the highest end earners.

John W. Thompson looks interesting - but at this point, he's not being considered as a core part of the "economic war room team" -- but I hope if he is good and reads this blog post that he will get in there and demand his seat at the table (if nominated and confirmed) and that he will take his Commerce Secretary job seriously. Few have in recent decades.

Thompson is an entrepreneur, an African-American, and a former "Bush Ranger" -- yep, it's all part of the bipartisan thing. . .but what is most important is someone who can get our "winner takes all economy" to really help all boats rise again. My choice would have been Hindery -- but if Thompson is going to get the job -- he must take on the cause of seriously wrestling with Obama's manic neoliberals to help promote American high wage jobs.

Here is an interesting profile and Q&A of Thompson that a friend just sent me from the Silicon Valley Community Foundation.

Because while business is important to have in the room -- so too must people think about how the whole operation -- not just capital works. That means workers, families, technology, firms, and government. Hilda Solis from Labor should be in there too -- but Labor always seems to be just outside the door when the big economic guns are making their plans.

-- Steve Clemons publishes the popular political blog, The Washington Note

Comments

[veracity]

Great column that should be bookMarked!
Until... President Obama GETS HIS HEAD _OUT_ of the NEO-CON FOG, & gets some expert advice from NON -neo-cons, NON Citi/Goldman-Sachs crew, NON Wall Street enttitlement, BAILOUTS-DEMANDING ingrates.

On Feb. 6, David Sirota put it even simpler & more explicitly: "[Obama's] economic team — a squad of corporate lackeys disguised as public servants"
http://www.creators.com/opinion/david-sirota/a-team-of-zombies.html

and even MORE explicitly:

Obama may have PROMISED voters "CHANGE", BUT -
"Washington is [STILL] the same one-party town it always has been — controlled not by Democrats or Republicans, but by Kleptocrats (i.e., THIEVES)."

Obama has GOT TO BREAK HIS ADDICTION to this Neo-Con (economic & war) INSANITY, because the American public intuitively understand that THEY HAVE BEEN RIPPED OFF by BAILOUT TRILLIONS!
While the corporate media will COVER UP those facts for Bush, GOP, & the Neo-Con war party (Wolfowitz still quite the man about Washinton - despite his botched wars & WorldBank attempted strongArm cronyism) they WILL NOT give OBAMA the same free pass.

And Obama should NOT GET a Free Pass, IF he CONTINUES TO DISH OUT TAXPAYER BILLIONS to FRAUDULENT banksters & Hedge-Fund Ponzi schemers.

(who, btw., will HATE & DESPISE Obama no matter what he does. IF the economy roars back, THEY will TAKE THE CREDIT & SNEER at "big government,"
IF the market goes DOWN, they wilL BLAME the Fed and Big Government­... as they are already doing!)

[Geria]

You see what nobody on the Obama team wants to do is the only thing that will work: rebalance the gross economic inequity in the US today by redistributing income from the anti-democratic wealthy to the rest of us. There isn't any other solution. Democracy dies when there is a huge disparity between what one class has and what the rest have. If you have all the wealth in the country, it must be hard to give up even a little bit of it, but it is not that the pain can't be tolerated. How you get the rich to recognize the wisdom of the principle of the general welfare I can't say; it may not be possible. If not, we must take it by force or we die.

[blondesprite]

Obama will be a one term President. Feingold and Kucinich should replace Obama and Biden.

[twofish]

From time to time new actors put on the uniforms and wave to us from the bridge, but the ship of state stays on course -- to keep them rich and the rest of us baffled, divided and fighting over the life preservers ("How to Make Money in the Coming Crash," etc). Someone ought to tell them we've already hit the iceberg and a new strategy is required -- wait, is that the crew rowing away in the lifeboats?

[klevenstein]

Meanwhile, Obama signs executive orders to level the playing field for labor:

http://hosted.ap.org/dynamic/stories/O/OBAMA_LABOR?SITE=WYCHE&SECTION=HOME&TEMPLATE=DEFAULT

Maybe his team really is composed of rivals, with Obama having the approach I like, and his team having the opposing view. In that case, I just hope Obama's approach wins out.

[klevenstein]

Well, from what I'm reading here, we might as well just declare the entire Universe a failed experiment, and just go sit in a tree and play the flute.

No sense trying to fight our Destiny. Might as well not even write anything else about it either; it would just be flogging a dead horse.

[Helzapoppin]

I have truly lost any faith that this economic team will fix anything. The entire structure of these "bailouts" is completely wrong, and I see no indication that the administration will detour from this misguided top-down market fundie approach.

Now I know how New Yorkers must have felt standing helplessly watching the towers fall.

[marthainmaine]

Larry Summers is general manager of D E Shaw Group heavily tied into wind farms . 3,000 miles of new transmission lines. Saves him money. Wind farms don't produce if the wind doesn't blow...so now we need new transmission lines for those special times the wind blows. Just like the Bushes and oil.

[Geria]

The only reliable form of power that can replace fossil fuel energy is nuclear. We must get over our fears of nuclear technology; it has advanced since the US stopped building any nuclear reactors 30 years ago! Only nuclear power and hydrogen-based fuels cost less than oil and coal to produce and are non-polluting. Nuclear waste is recyclable; it doesn't have to pile up. This wind and solar won't do it.

[marthainmaine]

Larry Summers general manager of D E Shaw Group bought up a lot of Enron assets. He invested heavily in wind energy..on­e crooked corporation named First Wind(full of former Enron empoyees). First Wind is trying to build wind farms all over the state of Maine. The transmission lines are not set up for energy just when the wind blows. So our Central Maine Electric wants to put in 2 billion dollars worth of new transmission lines just for the wind farms. New stimulus package...­.3,000 miles of transmission lines at tax payer expense. So there is a conflict of interest.P­rivately owned power plants should pay for their own transmission lines. Jimmy Carter helped his friends in Big Agriculture . When all of the family farms were going into foreclosure ...big ag bought them up.The real reason the democrats lost the south. George Bush helped his friends in the oil business. Larry Summers is definately helping make policy/feeding at the trough. Obama should get rid of Larry summers.

[Geria]

Wouldn't you know the politicians are invested in the policies they try to sell us. Everybody gets their paws on the loot first. If Obama is an honest man, he must look at what the country really needs to replace oil and coal and that is nuclear. Out with Larry Summers and in with whom? Of course, the nuclear businessmen will be in the forefront of any pursuits along those line, so there is no visable end to politics washing the hand of business for the foreseeable future. There is always conflict of interest--that's government in America! Lesson learned: It was deregulated sociopathic capitalism that destroyed our democracy and our Constitutional republic; so stop looking for scapegoats among minorities, immigrants, liberals or other victims. Oh incidentally, when family farms were facing foreclosue, allowing Big Ag to buy them up destroyed the family farm altogether. Without breaking up the agriculture cartels, the family farm cannot make a resurgence, either. It is so much easier to destroy than it is to build something!

[paixa3]

Steve, you are absolutely spot on. It seems when American's think economics, very very Americans "get it". I am disappointed that President Obama does not get it either.

[JudgeMoonbox]

Back during the Clinton administration, the economic team of Larry Summers, Robert Rubin, and Brooksley Born were debating whether to regulate derivatives. The two men outvoted Ms. Born and derivatives were not to be regulated. Had Born won, the current crisis might not have happened, and would certainly not threaten such severity.

During the past election cycle, Barack Obama sought an edge against Hillary Rodham Clinton on the grounds that she had voted for the Iraq War, and he offered himself as someone who had not gotten that wrong. I think that Obama should listen to himself. He should have Born and Joseph Stiglitz on his team in important positions, since they did not vote wrong on the issue of derivatives.

[Geria]

President Obama's choice of advisers and cabinet members indicates he doesn't have a clear idea on what to do about the crisis. To save the country, you must do what none of these fat cats wants to see done; rebuild the real economy and sink this "New Economy" and "free trade." He must withdraw from NAFTA, CAFTA, the WTO, the works; the global economy is anathema to US economic recovery. Prosecute all neo-cons to the limit of the law; if Obama does nothing about them, they will be back trying to give us fascism. If nobody knows the value of all this bad paper,why not just give it a value, say a penny a ton and buy it up. If that seems cheap, remember that the derivatives outstanding number one Quadrillion dollars! There isn't enough money in the world to buy them at their imaginary value, so one must either write them off or buy them cheaply. The US has given the Fed the power to print currency, but retains the power to strike coins. Why not strike 10 trillion dollar coins and pay off our debt? Why must we sink under the absurdities of the last 28 years. Let us get out of this mess and start over!

[RonMar]

Obviously Clemons is among those now questioning Obama's actions vs. Obama's "campaign rhetoric" as Obama called it.
This relates to my post in response to the previous article, "Bob Cesca: Obama Versus the Republicans: Chill Out, He's Got This."

[writerroz]

My,! My,! but I believe Steve Clemons either got out the wrong side of his bed or made a wrong turn on his way to work the day he wrote this Republican-like article. No wonder we get so many naive supporters of Limbaugh and Fox on this site. This is what they're looking for. Clemons, we who think for ourselves know better than listen to your garbage that appears to have come out of the mouth of someone of the Bush era OR, perhaps you're so dense as to be believing Fox, Limbaugh or Obermann. We who use our brain power will challenge you fiercely and in spite of the unusual number of naive who fell in line with your propaganda today. Please crawl back under or into whatever slimey muck you slithered out of.

[paixa3]

I question whether you know economics. President Obama has a crappy economic team, the pits.

[antirepublocrat]

Anybody who would equate Limbaugh and Olbermann obviously has no idea at all what he's talking about.

[isonomist]

I noticed that Laissez Fair capitalism got drug into this discussion somehow. As for Adam Smith (generally regarded as the father of Laissez Fair capitalism) Banking (and large projects such as canal building which were capital intensive enough to justify the issuance of joint stock) ought to be "reducible to strict rule and method" So much for the neocon/neolib mythologies. Oh and don't forget the influence of "chicago school" on Obamanomics (See also Goolsbee, Austan)

[SACVET]

Ah yes, there's a "Golden Rule" for the super-rich. You guessed it: those that have the gold make the rules. What has the Wall Street and banking debacle revealed about laissez faire capitalism? The three pillars of that model have been revealed 1) greed, 2) corruption, and 3) preying on the ignorant who think all that glitters is gold because of their greed. A vicious cycle eh?