Magazine

Convey the Economics

A CEA chair is not a political adviser. Just give the President the information he needs to make a good decision.

By Jason Furman

Tagged council of economic advisorsEconomicsGovernmentpolitics

Dear Council of Economic Advisers Chair,

Congratulations! You now have a prestigious job, a wonderful title, and a beautiful office. What you do not have is any statutory powers or responsibilities (okay, you have one responsibility: issuing the annual Economic Report of the President). No one needs to check anything with you or listen to you, let alone do what you say.

You do have one power: the opportunity to persuade. If people think you have some useful insights or inputs, might be right in what you say, and are generally a helpful member of the team, then you just might be able to shape some of the most important decisions the President will make and help to make positive policy happen. But nothing about this power is automatic or happens by virtue of the nice office you now have. It depends on how you use it. These five tips might help:

First, you were not hired for your political advice. If you are the sort of economist who gets hired as Chair of the Council of Economic Advisers (CEA), you are probably more politically knowledgeable and interested than 95 percent of economists. But you are not in an economics seminar anymore; you are at meetings in the West Wing. I sometimes tried to tell President Obama what tax policies I thought could and could not pass Congress, and I was slightly disappointed by how uninterested he was in my opinion on the topic. But then I appreciated the value of this attitude when I saw him ignoring what a political adviser might tell him about the economics of a tax policy.

Even if you genuinely know a lot of politics, you also know that one of the central insights of economics is comparative advantage. There are always a lot of political people around any decision table—including the President who actually was elected—so it would be a shame if you did not convey the economics. You do not want to be the sort of person who might seem powerful because they support winning positions in meetings but really is a powerless predictor and sycophant of wherever the decisions themselves are going.

What does it mean to convey the economics? Give the President and the team the sense that, based on economic theory and evidence, Option A would be a 10, Option B would be a 7 and Option C would be a 2. They might decide on Option A because it is the best possible. Or they might find that it is politically impossible or trades off against other objectives and go with Option B instead. Or they might even decide that Option C is better than nothing. There may be good reasons for any of these decisions. What is important is that they have the information.

I remember one time I thought a certain health policy would be the best option economically, but that people would not like it politically. I was going to drop it from a memo but was encouraged to keep it just in case. I was surprised when President Obama thought it was worth doing despite the political cost. Other times I saw him reject what I thought was the best policy because he thought the gains were small and would interfere with something else that was even more important. I had no problem “losing” on the issue. I did my job in providing the input into the decision.

One caveat: You do have scarce time, and in order to provide advice into better policy you need to use that time wisely. If you show up at every climate change meeting and tell people a carbon tax would be better than whatever they’re considering, that might be true, but it is not particularly useful when they are trying to develop a clean energy standard, figure out what to do about biofuels, or design wind power tax credits. So do read the room.

Second, it is better to plant seeds—but be prepared to pull some weeds. When I was in government, I knew one economist at Treasury who would look at every tax policy idea the White House came up with and say, “That is the stupidest idea I have ever seen.” When he said this for the fifth or sixth time, I asked if the ideas were actually each stupider than the last or if this was just a superlative. This embodies a mentality some economists have in government, which is that everything going on around them is imperfect, often motivated by some incoherent non-economic thinking, and thus should be opposed. In some cases these economists seem fine with the glorious loss: “I warned them, I told them it was an imperfect idea, but they didn’t listen—so it is not my fault and don’t blame me.”

Helping prevent truly harmful policies is an important contribution, but if you only spend your time ineffectually imposing imperfect ideas, that is hardly a good enough reason to upend your life and move to Washington. You should be more focused on the more satisfying and important job of planting seeds, coming up with good ideas that are responsive to the legitimate desires and goals of the person that got about 80 million more votes than you have ever gotten. Moreover, planting seeds can include helping to reshape ideas to make them better or less bad. And remember, many of the non-economists around you have substantial policy experience and just because some of the economic rationale does not make sense does not mean the idea itself should be rejected.

Third, often one of your best contributions is watering the plants. The President has a lot that he wants to accomplish. You are not just there to tell him what he should want to accomplish but also to help him get it done. You can do that by writing reports, helping to persuade the economic policy community, developing good arguments and killing bad ones.

This effort will only work to the degree it is credible. I sometimes said that at CEA we strove to do unbiased internal research as an input into the policy process but then to have a screen on that research for publication. If you think the data does not support an argument or a policy, you should make sure that those making decisions understand that, but do not release a report on it. I took a pass on a few issues (and sometimes it was even noticed; a friend once remarked to me that he noted one particular issue the Administration supported we had not defended in any CEA documents).

Moreover, to the degree you are seen as a plant waterer and a seed planter then you will be considered a more credible and committed part of the team and thus be more likely to be believed when you point out some weeds that need to be pulled. And there definitely are some weeds that sprout up from time to time.

Fourth, be glad when you can make small contributions to large issues or large contributions to small issues. Arguably the most important economic and domestic issue we faced in the Obama Administration was immigration reform (I say arguably because there is also a case for climate change). My economic (and moral) view on immigration is relatively simple: More is better. The complexities of the issue were not analytic or substantive but political—what groups go in what sequence and packaged in what way with other policies. I did not have much to add to any of that but to the degree I could do anything to help move the immigration ball forward a little I was happy to do it—making a small contribution to a big issue.

Conversely, I became interested in one of the smaller issues the country faced: a shortage of spectrum for mobile broadband. I put a lot of effort into a solution that involved broadcasters selling their scarce spectrum to mobile broadband. I would like to think that I made a big contribution on this small issue.

Finally, ideas matter—you can help to advance them. The CEA’s first claim on attention is the policy processes and the policy agenda. But it also has some characteristics of an internal think tank. Ideas matter, and you can affect them, both for today but also over the longer term, heeding Keynes’s advice that people in power are often listening to “defunct economists.” When I was at CEA, the majority of our work was not reports saying Administration Policy X is amazing but instead writing reports and giving speeches on topics like competition, labor force participation, inequality, productivity, high frequency macroeconomic measurement, and other matters. Many of these ideas got picked up by other researchers, by the policy community, and in some (but not all) cases directly shaped the Administration’s agenda.

Moreover, done right, advancing ideas complements your other work—as long as you do not do it in a political manner, use it to help plant seeds (the weeding is better left to internal memos), it makes you more credible in watering the plants, and lets you make contributions large and small to issues small and large.

Best of luck!

Read more about council of economic advisorsEconomicsGovernmentpolitics

Jason Furman is a Professor of Practice at Harvard University and was Chair of the Council of Economic Advisers from 2013-17.

Also by this author

Myth of the Macro Monolith

Click to

View Comments

blog comments powered by Disqus