Obama's new Ivy League economist
President Obama announced today he is nominating a similarly minded Ivy League academician, Alan Krueger, as a member of the Council of Economic Advisers (CEA). Once confirmed, Krueger will be designated as chairman of CEA, making him the President's top economic advisor.
Krueger has been an economics professor at Princeton University since 1987. He was chief economist of the Labor Department for one year during the Clinton administration and held senior-level positions at the Treasury Department earlier in the current administration.
Ominously, liberals heartily approve of the President's selection. Krueger has the blessing of the immutable Paul Krugman. Today Krugman wrote:
"Alan is a fine choice as chief economic adviser. He's done excellent work, he's a really good guy, whom I know pretty well...Now the question is whether anyone in the administration listens to him...[Krueger] knows macro[economics] and is pretty salt-water and activist by inclination, as far as I know..."
By "salt-water" Krugman is saying Krueger is an adherent of Keynesian economic theory, the school of thought underlying much of the mess we are in.
Treasury Secretary Timothy Geithner calls Krueger "precisely the right choice." Lawrence Mishel, head of Economic Policy Institute, a liberal think-tank, approves of the Krueger nomination too, but apparently believes that focus on the joblessness problem alone isn't enough. Mishel said Krueger will "have a natural inclination to being sensitive to issues of inequality and jobs."
Most of the legacy-media reports about Krueger cite his research regarding the minimum wage that found "surprisingly, that raising the minimum wage did not necessarily lead to higher unemployment among minimum wage workers."
Surprisingly, indeed. The study has been widely questioned and generally discredited by other, more rigorous academic studies, though business owners and managers -- people who actually hire employees -- already know that, all things being equal, the higher the wage rate, the fewer the hires. The politically popular minimum-wage laws, like many liberal policies, have opposite the intended effect. As the late, great economist Henry Hazlitt succinctly wrote:
"The major effect of minimum wage laws is to create unemployment, chiefly among the unskilled workers that the law is designed to help. We cannot make a worker's services worth a given amount by making it illegal for anyone to offer him less. We merely deprive him of the right to earn the amount that his abilities and opportunities would permit him to earn, while we deprive the community of the moderate services he is capable of rendering. We drive him on relief."