The Best and Brightest

Standing in Obama’s Cabinet is a collection of Ivy Leaguers. Treasury Secretary Tim Geithner—a Dartmouth grad—heads an economic-policy team that boasts four Harvard professors, whose students praise Obama’s picks. But the president should be leery of advisers who come from the same universities and work for the same administrations. Such similarity causes groupthink, and Obama may have assembled a set of bobbleheads.

The trouble with policy wonks is that they solve yesterday’s problems. Though policymakers should learn from their experience, they warp their judgment by learning too much from the particular crises they handled when they were last in office. As a result, they often ignore criticism in their attempt to prevent previous plights from recurring. And, when everyone in the room has the same nightmare, each in his lookout watches the same bogeyman.

For Obama’s aides, the nightmare is a depression like the one that struck Japan in the 1990s, and a slow government response is the bogeyman. Geithner and National Economic Council Chairman Larry Summers were Clinton officials when a real-estate bubble in Japan burst, dragging the country into a decade-long slump. Alarmed by the downfall, they watched Tokyo gradually approve stimulus spending and scatter funding across projects—to no avail.

The takeaway for liberals was clear: In such a situation, government must spend rapidly and lavishly to avoid a similar fate. This month, Geithner pledged that the administration was “going to do our best” to eschew Japan’s example. Last October, Summers compared the downturn to our current recession in a Financial Times column. And, in his first White House press conference, Obama warned that if Washington dithered, the U.S. might suffer a “lost decade” like Japan.

But, in their haste to dodge Tokyo’s mistakes, Obama and his advisers are making their own. Thinking government must spend something—anything—to boost the economy, Democrats scraped the pork barrel for ideas: $650 million for digital TV converter box coupons, $150 million for Smithsonian museum facilities, $100 million for reducing the hazard of lead-based paint.

Ironically, Obama’s strategy of “act now, think later” repeats Japan’s mistakes. Tokyo spent $2.1 trillion between 1991 and 1995, yet the economy stagnated. Politicians built roads to nowhere, starving businesses of capital and workers of jobs. Washington should fund some infrastructure repairs, but such projects should undergo cost-benefit analyses. Lacking such oversight, the bill recently rushed through Congress will breed fraud and waste.

Consider a thought experiment proposed by Greg Mankiw. The government could send each person in the country a check with which he could pay his neighbor to dig holes in his backyard. Unemployment would fall, but so would welfare. Consumers could buy more useful goods if government allowed them to keep their money. Unfortunately, Japan casts such a long shadow that Obama and his advisers think the economy will tank by the time consumers spend or businesses reinvest.

Obama isn’t the first to decorate his Cabinet with narrow-minded academics. In 1933, Franklin D. Roosevelt appointed several professors to his administration, including the University of Chicago’s Paul Douglas and Columbia’s Rexford Tugwell. Like Obama’s aides, these scholars shared a common nightmare: a depression like the one that devastated Midwestern farmers in the 1920s.

Following World War I, new technology made farms more efficient, creating large crop surpluses, low grain prices, and slim agricultural profits. Farmers suffered the fallout, convincing Roosevelt’s future advisers that capitalism had failed and only government could prevent further hardship. A decade later, these professors-turned-bureaucrats saw the bogeyman of the 1920s as the cause behind the Great Depression: an unregulated market.

Once in power, Roosevelt and his aides tried to end the depression by replaying the 1920s. Assistant Agriculture Secretary Tugwell promised farmers pre-WWI prices, paying their competitors to grow fewer crops, thereby lowering surpluses. But these policies raised food prices at the very moment they needed to drop. For instance, the government orchestrated the death of six million piglets to support pork prices—at a time when the urban poor could not afford bacon.

These Ivy Leaguers fiddled with the economy for years, but it didn’t budge; double-digit unemployment continued until World War II. Applying the lessons of the 1920s to the 1930s, the policy wonks failed to consider other solutions. Today, Obama’s policymakers are applying the lessons of the 1990s to the 2000s. And they expect success?

Presidents shouldn’t appoint just anyone to their administrations, and Harvard offers some great talents. But no matter how smart they are, professors are still human. Groups of likeminded people fall victim to groupthink—sometimes with disastrous results. Indeed, when David Halberstam wrote his account of the Johnson administration’s bungling of Vietnam, he entitled it, “The Best and the Brightest.”


Brian J. Bolduc ’10, a Crimson editorial writer, is an economics concentrator in Winthrop House. His column appears on alternate Tuesdays.