Over the weekend I read a very enlightening article in New York Magazine (I admit it. I was in a waiting room). The article was a think piece on the three main minds in Obama’s economic think tank, namely Geithner, Summers, and Volker. The article was pretty fair in my opinion, although disturbing in it’s omission to point out the serious implications regarding the problems of these three. It may seem moot since they are already in their positions, but I wanted to give account to those whom have Obama’s ear.
I was originally going to go through each of these guys’ resume, but realized that I would only be repeating myself. Therefore, I will enlighten you on the important aspects on or missing from their truly impressive resumes. The first of which is their resumes themselves.
I’m not going to give you spin on this one. These men have impressive resumes. Volker a former FED Chief, Summers a former President of Harvard, and Geithner one of the youngest FED Chairman of New York, the most important FED location. What’s most important about their resumes is not what is in their resumes, but what is missing. Neither Geithner, Summers, nor Volker have any experience in the private sector. They all are academics, who worked for universities and government agencies since graduating college and all with a degree in government economics. Now I have a degree in economics and am quite familiar with the academia behind the study. It is one of the most fractured fields of study you can find. You’ll find those that believe in fiscal and monetary policy, those that believe in monetary policy only, those the believe in fiscal policy only, those that believe in demand side fiscal policy, those that believe in supply side fiscal policy, and those that believe in no fiscal or monetary policy. All of these schools of thought with their own Nobel Prize Laureates. You can see already the trouble in picking a winning economic model to follow. That is why it is important to understand economics from the market perspective by taking place in the market. Those on the outside can only guess, but in the end economic theory needs to be applied and you only get to understand that where the rubber meets the road. How is Geithner supposed to run the Auto Industry and the Banking Industry? At the same time no less? He has never been at the reigns of similar companies, nor does he have any understanding outside his governmental paycheck.
New York pointed out that Summer’s is almost solely Obama’s economic brain. Regardless Obama’s think tank has some serious issues with group think. Volker was a Harvard professor and so was Summers. Geithner served under Summers when Summer’s was Treasury Secretary in 1999. With all of them from the same school of thought, is it any wonder why the same idea is being trumpeted? The idea of control more and spend more, is a product of academics overconfident with their theories of economics. Think USSR here. No government controlled industry has ever proven efficient. We’ve already seen it ourselves over the last six months.
Geithner’s a completely new face, but Summers and Volker have been around. Volker may have been one of the worst FED Chiefs we’ve ever had. He’s the one that sent interest rates up to 20% to stop inflation, sending the country into a recession. It is no surprise that the government is not worried about inflation with all the spending going on. You can be sure that Volker style inflation fighting is likely in the future from this administration. Don’t worry though, Obama is not giving Volker or his vaunted economic council the time of day. It’s all on Geithner and Summers. Summers wanted to be Treasury Secretary, but was denied because of his well known ego. It was this same ego that cost him his Presidency at Harvard for his sexist comments regarding how women can’t do math.
Now Obama does not have a clue about how to run an economy. There can be no denying it. I’ve been told that Obama is great at holding sessions where he gets multiple opinions on the economy, but I’m not impressed. I’m not impressed, because the private sector is far better than Obama at creating these sessions. Any corporation in the US will have a diverse group of ideas when making decisions. Ideas from executives in law, accounting, finance, engineering, economics, law and business are all easy to find in the board rooms of your standard company. It’s no wonder why US private companies are so much better at running things then the government. The CEO of one of my own company has a music degree from Julliard and an MBA as well as 30 years of experience in the industry. Our CFO’s are accomplished CPAs. Where are these points of view in Obama’s think tank? Obama has three academics in the field of government economics. It is not only likely good ideas will be missed, it is a certainty.