Obama Gets His Economic Advice from “Skull and Bones” and the Chicago School

Let’s take a close look at Obama’s key economic advisors and you can quickly understand why his policies fly in the face of most progressives.

First, meet “the Ghoul”:

Barack Obama’s top economics adviser is a member of the super-secret Skull & Bones society of Yale University, of which George H.W. Bush, George W. Bush, and John Kerry are also members, reliable sources confirmed tonight. Goolsbee is widely reported to have told Obama not to back a compulsory freeze on home mortgage foreclosures to help the struggling middle class in the current depression crisis, as demanded by former candidate John Edwards. Hillary Clinton has advocated a one-year voluntary freeze on foreclosures. Obama has offered counselors to comfort mortgage victims as they are dispossessed, citing the ‘moral hazard’ of protecting the public interest from Wall Street sharks… George Will, in an October 2007 Washington Post column saluted Goolsbee’s “nuanced understanding” of traditional Democratic issues like globalization and income inequality; he “seems to be the sort of fellow — amiable, empirical, and reasonable–you would want at the elbow of a Democratic president, if such there must be,” wrote the arch-oligarchical apologist Will.

From Wikipedia: ‘Austan D. Goolsbee is an economist and is currently the Robert P. Gwinn Professor of Economics at the University of Chicago Graduate School of Business. He is also a Research Fellow at the American Bar Foundation<1>, Research Associate at the National Bureau of Economic Research in Cambridge, Massachusetts, and a member of the Panel of Economic Advisors to the Congressional Budget Office. He has been Barack Obama’s economic advisor since Obama’s successful U.S. Senate campaign in Illinois. He is the lead economic advisor to the 2008 Obama presidential campaign.’… http://www.rense.com/general80/web.htm

Since welfare was gutted long ago, we can only presume that this reference was meant to establish Obama’s belt-tightening fiscal outlook. Although it is not widely understood, Obama is pretty much committed to the neoclassical economics outlook of his home-town University of Chicago. Since becoming Senator, he has relied on the advice of a professor named Austan Goolsbee, who calls himself “a centrist, market economist” (Washington Times, July 16, 2007).

Goolsbee has been a columnist for Slate.com and the NY Times, as well as a standup comedian. His economics are not meant as a joke, as I understand it. His columns are written very much in the same vein as fellow U. of Chicago neoclassical economist Steven Levitt’s “Freakonomics,” examining everyday problems such as “Why you get stuck for hours at O’Hare.” Most are fairly uncontroversial except for the swipe he took at Michael Moore’s “Sicko”, whose single-payer recommendations violate his free market principles… http://advant.blogspot.com/2008/01/obamas-economic-advi…

And David Cutler:

Another adviser with a particular interest in health care is David Cutler, a Harvard economist who was also an adviser to Bill Clinton–surprise, surprise. Cutler wrote an article for the New England Journal of Medicine in 2006 asserting that “The rising cost … of health care has been the source of a lot of saber rattling in the media and the public square, without anyone seriously analyzing the benefits gained.”

Anxious to show the good side of rising costs, Cutler and a group of other economists defend the idea that a powerful and profitable medical industry can serve as an engine of economic growth in the USA as the wretched Gina Kolata reported in the August 22, 2006 NY Times.

By 2030, predicts Robert W. Fogel, a Nobel laureate at the University of Chicago Graduate School of Business, about 25 percent of the G.D.P. will be spent on health care, making it ”the driving force in the economy,” just as railroads drove the economy at the start of the 20th century…

Other economists agree.

”We have to spend our money on something,” says Robert E. Hall, a Stanford University economist.

In a paper published in The Quarterly Journal of Economics, Dr. Hall and Charles I. Jones of the University of California, Berkeley, write: ”As we get older and richer, which is more valuable: a third car, yet another television, more clothing — or an extra year of life?”

David Cutler, an economist at Harvard, calculated the value of extra spending on medicine. ”Take a typical person aged 45,” he said. ”They will spend $30,000 more over their lifetime caring for cardiovascular disease than they would have spent in 1950. And they will live maybe three more years because of it.”… http://advant.blogspot.com/2008/01/obamas-economic-advi…

And Social Security Privatization Guru Jeff Liebman:

Another Harvard University to Obama is Jeffrey Liebman, a Harvard economist who co-authored a paper on the feasibility of privatizing social security when he was an adviser to Bill Clinton. Apparently, the momentum toward adopting such a proposal was halted after the Monica Lewinsky affair put the president on the defensive. Liebman has co-authored a book on social security “reform” with Martin Feldstein, another Harvard economist who was–appropriately enough–the chairman of the Council of Economic Advisors under Ronald Reagan. In an article titled “The Rich, the Poor, and the Economists” that appeared in the January 2002 Monthly Review, Michael Yates notes the following:

Before he became Reagan’s chief economist, he was an expert on the economics of social security. In published papers, he claimed to have empirically demonstrated that the social security system in the United States inhibited savings. Since savings are the source of capital investment, the implication of his research was that the social security system also reduced investment and thereby reduced the growth rate of the economy, since investment is the engine of economic growth.

Feldstein’s work fit nicely into the growing conservative movement which arose after the post World War Two boom came to an end in the early 1970s. The Keynesian economics that was gospel during my college years was giving way to a return to the pre-Keynesian theory that “freely” operating markets (free from the poison of government control and regulation) were the only solution to all economic problems. Led by the famous “Chicago Boys,” especially Milton Friedman, the anti-Keynesians carried the day in the economics profession and still do. No wonder, then, that when Ronald Reagan became president, he tapped Feldstein to chair the Council. For years, Reagan had been railing against social security from his General Electric radio pulpit. Now here was an economist who could lend professional credence to Reagan’s reactionary views. Social Security would be a tough nut to crack. It was an extremely popular program, run with great efficiency and effective in sharply reducing poverty among the elderly.

There was just one problem. Feldstein’s research was fatally flawed. Two staff economists at the Social Security Administration asked Feldstein for his supporting data. After three years of repeated requests, he sent the data to them. When they tried to use Feldstein’s numbers to replicate his results, however, they could not. They uncovered an error in the computer program Feldstein had used, and when they corrected the error, the results were exactly the opposite of Feldstein’s. That is to say, the social security system actually encouraged savings and, according to Feldstein’s cherished “free market” theory, facilitated capital formation and economic growth. (For more on this, see “‘Superstar’ Feldstein and His Little Mistake” in Dollars & Sense, Dec. 1980, pp. 1-2 and the citations therein.)… http://advant.blogspot.com/2008/01/obamas-economic-advi…

So, where does progressive fit into all of this?

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