Obama's Economic Appointments

A close friend of mine told me this morning that he “wished he had voted for Hillary.” Why Hillary? “At least we would have known what to expect,” was his answer. He was upset at Obama’s recent appointments to high level economic positions within his administration. "Where is Krugman?" my friend wondered. He believes that Bill Clinton bears a portion of the blame for the current economic disaster. After all, his main economic advisor was Alan Greenspan and if we’re going to blame “the last 30 years” of economic policy for our current predicament, we can’t arbitrarily ignore eight of them.

Because Clinton and his faintly neo-liberal economic team bear at least some blame for our current mess, my friend argued, then the last thing we should be doing is putting the same guys back in power to fix the problem that they had a hand in creating.

That’s a fair point, but only if you believe that economic policymakers are the ones who are going to fix the economy by themselves. As my Dad pointed out, one of the primary responsibilities of political leadership in a crisis is to instill confidence, and to banish fear. It was FDR who said in 1933, after all, that the only thing we had to fear was fear itself. Even if you have a sound economic framework, it’s not going to be ok unless people are willing to spend and invest their money. And they’re not going to do that unless they’re confident that they’ll be protected.

So Obama has two priorities for the next several months: first, to ease people’s fear; second, to appoint people who are capable of fixing the structural problems.

The calm and deliberate manner in which he’s made his economic appointments will go far in easing people’s fears. When Joe Shmoe turns on the TV and sees that several Clinton advisors are back in power, he’ll think “well I didn’t do so badly during the 90s. Maybe things aren’t as bleak as I had feared.” The hope is that at some point in the not-so-distant future, Joe Shmoe and the rest of us will start investing and spending again.

That being said, my friend’s concerns about the structural changes that will be made to the economy in the next six months are well-founded. As my friend put it, if your drunk friend just drove your car into a wall, you wouldn’t let him drive it again just because he promised he was sober. You’d get the DD.

So is it a good idea to bring in the people who helped screw things up to help fix everything? Obama seems to think so, and from what I’ve read in interviews and short biographies, these guys seem to recognize that times have changed and that their economic ideologies need tweaking. Will it be enough? Or will we shortly revert to free-market ideologies that help the rich and screw everyone else? Who knows, but I’m 100% certain that we have a better chance with Obama than we ever would have had with McCain. Or Hillary for that matter.

At the very least, I hope I persuaded my friend to give Obama a chance to be inaugurated and make policy before he jumps ship. Was I successful? And are there other already-disillusioned Obamacons out there? We’ll see on both counts.