You wouldn't consider Barack Obama an economic moderate with a healthy respect for the sanctity of markets, would you? More likely, you think of him as a hardcore liberal with distinctly protectionist tendencies and an instinct to overregulate.
In a fascinating recent piece in The New York Review of Books, however, writer John Cassidy locates the roots of Obama's thinking on finance and economics elsewhere—at the University of Chicago, where he served as a constitutional law professor for a decade, to be precise. While he isn't as far to the right as the U of C's late monetarist Milton Friedman, he certainly sounds less interventionist than Hillary Clinton.
As Cassidy points out, Obama's economics are influenced by two of his old chums at the university. Austan Goolsbee, his senior economic adviser, "is not a member of the 'Chicago School' of Milton Friedman and Gary Becker, but he is not well known as a critic of American capitalism either. As recently as March 2007, he published an article in The New York Times pointing out the virtues of subprime mortgages," the writer notes. Goolsbee says Obama's skeptical about such Keynesian moves as using tax policy to boost savings.
The candidate might also be more inclined to give the economy a little "nudge" once in a while, rather than a strong, proscriptive kick. Such nudges are the subject of a new book co-authored by another Chicago buddy, Cass Sunstein, whom Cassidy calls an exponent of behavioralist economics — a school typified by moderate skepticism about the markets and a middle-of-the road approach to policy.
One example of a nudge is for employers to automatically enroll employees in company 401(k) plans, thereby overcoming worker inertia about signing up and gently moving them to save for retirement—thereby kicking up the savings rate. The July/August issue of CFO will run a story by Russ Banham on that very subject. Perhaps Obama will approve.
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