On Alan Krueger, Obama's Nominee to Chair the Council of Economic Advisers
Today August 29, 2011, Obama announced the nomination of Alan Krueger as chair of the Council of Economic Advisers. Krueger is a labor economist at Princeton since 1992. He was chief economist at the Department of Labor for a year from August 1994 to August 1995 under Clinton. He wrote one study which found that a higher minimum was associated with higher employment and a lower minimum wage with lower employment.
But who is Alan Krueger? Have any of us in the hoi polloi ever heard of him before today? What does he really think about employment and economic policy?
Perhaps most importantly, he was Assistant Secretary for Economic Policy at the Treasury Department from May 2009 to November 2010 and its chief economist from February 2009 to November 2010. This put him at ground zero of Obama policymaking during the first two years of Team Obama's efforts to bail out the banks on the backs of ordinary Americans, with no help for jobs and cruel jokes, like HAMP, for struggling homeowners.
We should all know by now that Obama would not let a progressive within a million miles of his White House. We should also take it as a given that no real progressive would associate him-or herself with this Administration. Now this might seem unfair and too blanket a condemnation, even though empirically it works just fine.
So I tried via the google to find out what I could about him. I started with his home page at Princeton and his CV. The first thing I would like to note is that his tenure at Princeton overlapped with that of Ben Bernanke. At the time of Krueger's hiring in 1992, Bernanke was not yet chair of the economics department but he could have had a hand in Krueger's hiring. I really don't know. But I do know that Krueger entered into a department where Bernanke was the rising star, the heir to the throne as it were.
At any rate, I scanned through the titles of Krueger's papers, books, and posts. For a labor economist, he has spent remarkably little time studying the massive unemployment that came with the December 2007 recession. There are a couple of papers to be published that might touch on this but nothing direct and nothing already in print. The housing market blew up 4 years ago. The meltdown hit 3 years ago. It's not like Krueger didn't have the time or the material to work with.
The closest he came was a paper entitled "Did Active Labour Market Policies Help Sweden
Rebound from the Depression of the Early 1990s?" In this paper, Krueger argued that keeping unemployment benefits high or extending them meant that the unemployed could afford to stay unemployed longer.
From an American perspective it would, perhaps, seem natural to lower the levels of the social safety nets and in this way make the unemployed persons seek, find and accept new job offers more rapidly.
He conceded that for Sweden this approach would meet with resistance so he stressed the importance of job search and counseling services. He opined
While it is unclear why job search assistance is such a cost-effective strategy, one possibility is that such programs provide the unemployed with a more reasonable expectation for the type of jobs that they might be able to obtain (which has the economic effect of lowering reservation wages [that is the lowest wage at which someone will accept a job]).
So there you have Krueger's "jobs" strategy either cut the safety nets until the unemployed are forced to accept low paying shit jobs or provide counseling to direct them into such jobs.
Krueger's approach meshes well with Obama's corporatist entitlement cutting agenda. It does not begin to address what happens when there are no jobs or the effects of his race to the bottom wage policies would be on wages generally. And of course not a whiff of an acknowledgement that our economic system is a kleptocracy which has resulted in extreme wealth inequality. But again we know that Krueger would never have been selected if Obama thought for a moment he would raise these issues.
I also found one article from April 28, 2005 on bubbles. It revisits the precedent of the South Sea bubble of 1720 and relates it to the dot com bubble of the late 1990s. Krueger's prescription is greater disclosure. What is interesting about this is that in 2005, Krueger was sitting on top of the biggest bubble in world history, the $8 trillion bubble in US housing. Not one word about it. Apparently Krueger thought that bubbles could only occur in stocks.
Given Krueger's pedigree in an elite system based on credentialism, he is definitely Establishment and so will not challenge or disturb his kleptocratic masters. From what I have seen of his writings, both what he writes and does not write on, I would say that he is considerably to the right of Establishment liberals like Paul Krugman and Robert Reich. I would not expect much from him on the jobs front, maybe some subsidies to employers, and some training or counseling for the unemployed to match skills to employers, but nothing very big or effective, and likely at the cost of cutting unemployment insurance or entitlements.