Cea History
The Council of Economic Advisers has released a history of the CEA on its' 70th anniversary, as Chapter seven of the Economic Report of the President. This slice is real interesting for economists interested inward policy.
It's a prissy reminder on how much economical policy ideas accept changed. In the belatedly 1940s, when the CEA was laid up, financial policy was everything. Solow's increase model had non been invented, allow lonely Romer's. Monetary policy was a twinkle inward Milton Friedman's eye. Adam Smith had to a greater extent than or less been forgotten. Economic policy was widely thought to consist of simply setting the correct grade of financial stimulus, allow multipliers go their magic, to attain "full employment" as well as economical growth. The slice tracks good the rediscovery of microeconomics as well as regulation, every bit good every bit the shifts inward macroeconomic thinking.
It reminds us how much the phase has changed. In the early on years at that spot were actually no economists working elsewhere inward government, as well as at that spot were no holler upwardly tanks. Now every means has a main economist as well as a staff, as well as the CEA isn't (!) the only game inward town for producing policy-oriented research. Its purpose has changed every bit a consequence.
The CEA has long had many roles, adviser, estimator of numbers, cheerleader for the Administration's policies, spinner for the Dominicus speak shows, as well as interagency warrior.
One of its most of import as well as to the lowest degree appreciated roles is simply to halt dizzy stuff.
Joe Stiglitz:
There has ever been a tension, how much the CEA is at that spot to render disinterested advice, as well as how much it is at that spot to cheerlead the Administration's policies, though many of those are at to the lowest degree express past times political considerations, if non downright driven solely past times politics. Just how much fourth dimension should the chair pass on Dominicus speak shows spinning the latest numbers to demo how slap-up the Administration's policies are?
H5N1 large lesson is non to acquire an administrative agency:
But inaugurated past times the CEA, at that spot has been a much to a greater extent than active participation past times academic economists inward policy making. I holler upwardly policy is amend for it -- or at to the lowest degree non every bit catastrophically bad every bit it mightiness go otherwise -- as well as then is academia. Academics are also taking over from bankers as well as politicians at the Fed, amongst positive impact inward my view. Marty Feldstein's box speaks to this number nicely.
H5N1 prissy summary:
If y'all acquire the chance, go.
An don't worry nearly politics. At the staff level, it's pretty a-political. In fact, working for an direction whose full general philosophy y'all disagree amongst would go goodness for you. (See Martin Feldstein's piddling seek on this point. Quite a few of the Reagan-era staff were democrats.)
Update: "On Feb 11, the Hutchins Center on Fiscal as well as Monetary Policy at Brookings marked this anniversary past times examining the ways the CEA as well as other economists succeed as well as neglect when they laid about to advise elected politicians as well as tap the expertise of around of the “exceptionally qualified” economists who accept chaired the Council over the past times 4 decades."
Video as well as other links here. And hither is their photograph from the event, amongst many past times CEA chairs as well as economists.
It's a prissy reminder on how much economical policy ideas accept changed. In the belatedly 1940s, when the CEA was laid up, financial policy was everything. Solow's increase model had non been invented, allow lonely Romer's. Monetary policy was a twinkle inward Milton Friedman's eye. Adam Smith had to a greater extent than or less been forgotten. Economic policy was widely thought to consist of simply setting the correct grade of financial stimulus, allow multipliers go their magic, to attain "full employment" as well as economical growth. The slice tracks good the rediscovery of microeconomics as well as regulation, every bit good every bit the shifts inward macroeconomic thinking.
It reminds us how much the phase has changed. In the early on years at that spot were actually no economists working elsewhere inward government, as well as at that spot were no holler upwardly tanks. Now every means has a main economist as well as a staff, as well as the CEA isn't (!) the only game inward town for producing policy-oriented research. Its purpose has changed every bit a consequence.
The CEA has long had many roles, adviser, estimator of numbers, cheerleader for the Administration's policies, spinner for the Dominicus speak shows, as well as interagency warrior.
One of its most of import as well as to the lowest degree appreciated roles is simply to halt dizzy stuff.
Joe Stiglitz:
the coin saved from simply 1 of the many bad projects the CEA had helped halt ... would accept been plenty to render us amongst a permanent endowmentBen Bernanke, fifty-fifty better:
Economics is a highly sophisticated acre of thought that is superb at explaining to policymakers exactly why the choices they made inward the past times were wrong. About the future, non then much. However, careful economical analysis does accept 1 of import benefit, which is that it tin assistance kill ideas that are completely logically inconsistent or wildly at variance amongst the data. This insight covers at to the lowest degree ninety percentage of proposed economical policies.Some examples
...the Heller Council argued against a proposal during the Kennedy Administration to utilisation nuclear explosives to widen the Panama Canal. In the Nixon Administration, CEA played a leading purpose inward the analysis that led to the determination that the authorities should non subsidize the evolution of a supersonic carry or SST plane, dubbed the “sure-to-be-subsidized transport” (Schultze 1996). Under President Ronald Reagan, CEA participated inward a Gold Commission, which investigated the feasibility of returning to the gilt standard, as well as ultimately advised against doing so.In my brief fourth dimension at CEA spell real immature I got to see this purpose upwardly close. There would go an interagency coming together on something similar tariffs as well as quotas for goose down. Every other means would demo upwardly at a coming together all for it -- defense strength wants to brand certain at that spot are American suppliers of American goose downwards from patriotic American Geese, then our boys fighting the Russkies inward Canada someday volition remain warm. The American Goose Down production board is screaming nearly unfair dumping from China. The Goose Feather Plucker's wedding ceremony is all for it, along amongst the merchant marine -- nether the Jones Act, American geese must go on American made as well as staffed ships. State is all for it too, then long every bit nosotros tin carve an exception for special downwards from Berlin. The Congressional liaison says the Congressman from the 1 county inward the province that makes goose downwards is screaming nearly it as well as volition crusade all sorts of problem if nosotros don't practise it. And then on as well as then forth. It was the CEAs lonely purpose to stick upwardly for the pitiful consumer who mightiness desire a inexpensive warm jacket. (Note: I'm to a greater extent than frequently than non making all this upwardly every bit a composite of a large number of dissimilar cases.)
There has ever been a tension, how much the CEA is at that spot to render disinterested advice, as well as how much it is at that spot to cheerlead the Administration's policies, though many of those are at to the lowest degree express past times political considerations, if non downright driven solely past times politics. Just how much fourth dimension should the chair pass on Dominicus speak shows spinning the latest numbers to demo how slap-up the Administration's policies are?
As many commentators as well as erstwhile CEA chairs accept observed, at that spot tin go a tension betwixt CEA’s duty to advance the President’s agenda as well as its responsibleness to render skilful economical advice.Important: You can't go pure as well as also effective:
CEA chairs as well as members withdraw to go able to operate effectively within a political environs without it affecting the integrity of their economical advice.The Chapter offers goodness advice, coming from long experience:
Former CEA chairs, members, as well as staff offering several specific pieces of advice every bit to how to successfully strike this balance: they advise that CEA should non publicly advocate for policies that are non supported past times economical analysis, as well as that CEA should stick to giving economical advice, non political advice. CEA’s comparative wages is economics,H5N1 erstwhile chair told me a slap-up story of offering a president political advice, only to go told "you stick to the economics, as well as allow me practise the politics."
H5N1 large lesson is non to acquire an administrative agency:
Others advise that the Council should non acquire besides involved inward policy coordination. ... One episode that illustrates this lesson occurred during the Johnson Administration, when CEA was responsible for the day-to-day direction of wage-price guideposts to combat inflation.
Stuart Eizenstat, President Carter’s domestic policy adviser, argues that “[t]he CEA cannot render both detached, Olympian economical advice as well as acquire enmeshed inward the daily, inter-agency compromises as well as political log-rolling” (1992).In 1993, President Clinton created a National Economic Council within the White House. It seemed to me a variety of parallel CEA. Governments frequently don't cancel an agency, they simply create a novel parallel one, as well as allow the old 1 rot. The study handles this enquiry carefully, but seems to suggest that the scheme is working, amongst the NEC allowing the CEA to practise less political go as well as amend economical work:
Since 1993, the National Economic Council has been responsible for coordinating economical policymaking. These arrangements accept largely served to augment CEA’s effectiveness past times permitting it to focus on providing economical advice as well as analysis as well as giving the Council greater exposure to the PresidentThe CEA is, rather unabashedly, the representative of the economic science profession inward the government. The chapter covers it well.
The terminal purpose of CEA is to engage amongst the economic science community, past times staying abreast of the latest academic enquiry as well as past times sharing novel insights amongst policymakers, as well as inward turn, past times communicating the administration’s actions as well as plans to the economic science community. This purpose helps to back upwardly the administration’s efforts to develop economical policies as well as to articulate as well as advance the President’s agenda. While the academic graphic symbol of CEA may non accept been originally intended past times Congress when it created CEA, this engagement has arguably made the Council a to a greater extent than effective as well as durable institution.I'm a piddling leery of this paragraph. I holler upwardly the distance from enquiry to policy mightiness productively go a piddling greater -- let's brand certain the latest enquiry is company first. And the vision that the CEA is at that spot to sell a political agenda to economists is a flake frightening.
But inaugurated past times the CEA, at that spot has been a much to a greater extent than active participation past times academic economists inward policy making. I holler upwardly policy is amend for it -- or at to the lowest degree non every bit catastrophically bad every bit it mightiness go otherwise -- as well as then is academia. Academics are also taking over from bankers as well as politicians at the Fed, amongst positive impact inward my view. Marty Feldstein's box speaks to this number nicely.
H5N1 prissy summary:
Many of CEA’s contributions are due to its unique institutional structure: that it is a pocket-sized organisation amongst no regulatory control of its own, few straight operational responsibilities, as well as populated past times academic economists. Yet its contributions are also subject on the powerfulness of its staff to residue operating effectively inward a necessarily political environs without beingness overly influenced past times politics, as well as to go effective inward advocating for their positions spell providing objective economical advice. All inward all, given the divergent objectives reflected inward the Employment Act of 1946, CEA’s turbulent early on years, as well as its odd institutional structure, CEA has proven to go a durable as well as effective advocate for Earth interest.H5N1 pocket-sized personal note: I got the lucky adventure to go a junior staff economist -- basically an RA -- spell I was inward graduate school. It was a slap-up experience. I worked on a novel projection every 2 weeks, largely nether Bill Poole. Unlike my academic training, nosotros rapidly went from idea, to data, to study or memo as well as on to the next. Bill taught me a lot. I saw quite a flake of how policy is made. I learned that most of the people inward Washington are actually smart, difficult working, informed, as well as world spirited. It cured a lot of cynicism. And it got me to go on much amend ideas for my research, to suspension out of the literature-driven basis 3d twelvemonth graduate students alive in, as well as to brand certain my enquiry ideas thing to the larger world.
If y'all acquire the chance, go.
An don't worry nearly politics. At the staff level, it's pretty a-political. In fact, working for an direction whose full general philosophy y'all disagree amongst would go goodness for you. (See Martin Feldstein's piddling seek on this point. Quite a few of the Reagan-era staff were democrats.)
Update: "On Feb 11, the Hutchins Center on Fiscal as well as Monetary Policy at Brookings marked this anniversary past times examining the ways the CEA as well as other economists succeed as well as neglect when they laid about to advise elected politicians as well as tap the expertise of around of the “exceptionally qualified” economists who accept chaired the Council over the past times 4 decades."
Video as well as other links here. And hither is their photograph from the event, amongst many past times CEA chairs as well as economists.
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| Source: Brookings institution. |
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