President Obama's former economic advisor speaks out.
- By Benjamin Pauker
Ben Pauker is executive editor at Foreign Policy. Ben came to FP in May 2010 from World Policy Journal, where he was managing editor from 2007-2010. A native of New York, he grew up in Brazil, Australia, and Thailand and has written for Harper's, the Economist, and the Chicago Tribune, among other publications. He is the co-founder of the Gastronauts, the world’s largest adventurous-eating club, and, in the course of reporting but mainly to see if it was possible, has smuggled small arms out of Central Africa.
As chairman of the Council of Economic Advisers and a cabinet-level aide to fellow Chicagoan Barack Obama, Austan Goolsbee had a rarefied perch in Washington for an academic trained to write about recessions, not steer the country through one. He couldn’t wait to leave. “There was a lot of yelling,” Goolsbee says. Now safely back at the University of Chicago, he talks to Foreign Policy about the inside-the-administration fights, tired Republican trickle-down economics, and what he would do if he woke up one day as China’s central bank chief.
We had the most successful financial system rescue ever. It didn’t end up costing any money. Normally, a financial rescue of that magnitude costs about 5 to 10 percent of GDP, an astoundingly big number. But in the U.S. they paid the money back. That hasn’t stopped it from being massively unpopular, and it hasn’t prevented the worst recession in our lifetimes for the real economy.
The U.S. is still in a pretty good spot, especially relative to other advanced countries. The aging of our population is not as pronounced as almost anyone else’s. We start from a debt-to-GDP ratio that’s below most other advanced countries. Our tax and spending levels are pretty low. And we continue to be a highly entrepreneurial culture with a great deal of innovation. It’s not to say everything is perfect, but I’m pretty optimistic. Cautious but, medium to long run, heavily optimistic.
The primary reason it’s been such hard, slow, tough work to get out of this recession is that we fundamentally can’t go back to what we were doing before the recession began. There’s 6 million vacant homes now, so we’re not going to go back to massive construction rates driving economic growth. In several quarters in the 2000s, if you added up all the private savings of everyone in the United States, it was less than nothing. You can’t sustain that as a driver of growth.
You can understand why people are pissed off. The Occupy Wall Street crowd put on the table an issue, which is a pretty glaring one in the data, that hadn’t really been on the agenda: income inequality, tax policy, and whether the focus of our policies should only be saving corporations. And if you look at the Romney or Perry economic plans, they’re just in the same old trickle-down playbook.
Would I dump the dollar [if I were China’s central banker]? I don’t know. Look, if you accumulate $2 or $3 trillion of foreign reserves, you’re in a tough spot. George Stigler, a Nobel laureate here at the University at Chicago, used to wake up every day and give himself a D. But that made him feel good because he gave everyone else an F. For every criticism of the U.S. economy, whenever people go into a panic, they look around and say, “That’s the cleanest shirt I have. So I’m putting it on.”
I’m pretty happy not to be an insider anymore. There’s just no common ground. I don’t know if it’s distrust or that the politics is substantially more partisan than the public. But there’s no pressure to make a grand bargain on fiscal matters, on growth, on anything. The Republicans were like the East German judge at the Olympics: The president lands a triple flip, but they’ve already given him a 2.
Blake Hounshell is managing editor at Foreign Policy, having formerly been Web editor. Hounshell oversees ForeignPolicy.com and has commissioned and edited numerous cover stories for the print magazine, including National Magazine Award finalist "Why Do They Hate Us?" by Mona Eltahawy. He also edits The Cable, FP's first foray into daily original reporting, and was editor of Colum Lynch's Turtle Bay, which in 2011 won a National Magazine award for best reporting in a digital format.
Blake joined Foreign Policy in 2006 after living in Cairo, where he studied Arabic, missed his Steelers finally win one for the thumb, and worked for the Ibn Khaldun Center for Development Studies. Blake was a 2011 finalist for the Livingston Awards prize for young journalists for his reporting on the Arab uprisings, and his Twitter feed was named one of Time magazine's "140 Best Twitter Feeds of 2011." Under his leadership, in 2008, Passport, FP's flagship blog, won Media Industry Newsletter's "Best of the Web" award in the blog category. Along with Elizabeth Dickinson, he edited Southern Tiger: Chile's Fight for a Democratic and Prosperous Future, the memoirs of former Chilean president Ricardo Lagos, published by Palgrave Macmillan in 2012.
A graduate of Yale University, Blake speaks mangled Arabic and French, is an avid runner, and lives in Washington with his wife, musician Sandy Choi, and their toddler, David. Follow him on Twitter @blakehounshell.| Passport |