Economy of words

Austan Goolsbee has left behind his DC battle armor, but he can still mail in a good barb or two.

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It’s 2005, Professor Austan Goolsbee informs his class, and Pixar is worth around $7 billion. “You’re the board of Disney. How many of you think you should buy them?” There are roughly 65 students in the classroom; around 55 hands pop up.

Disney did buy Pixar in 2006, after a protracted courtship, but that’s beside the point. This is a case study for Goolsbee’s spring-quarter course Economics and Policy in the Telecom, Media, and Technology Industries, and his goal is to get at all sides of the issue. “Now you’re the board of Pixar,” he tells the students and asks how many would agree to the sale. Only a few hands rise, and slowly, as the class rethinks the value of that price tag.

Goolsbee stepped down a year ago from his job as chair of the Council of Economic Advisers (CEA) so he could return to his “dream job,” as he described it in one interview: at the University of Chicago Booth School of Business, where he pushes MBA students to think about market forces and government policy in cases like Disney/Pixar or NBC’s sale to Comcast.

Lanky and genial, well liked by his friends and colleagues, Goolsbee left the CEA last August, having also finished his time as staff director and chief economist of the President’s Economic Recovery Advisory Board, a group of business executives, professors, and others convened to brainstorm how to jump-start the economy. The Robert P. Gwinn professor of economics was happy with his term in Washington and happy to say he’s done with official politics—and trying to stave off the financial crisis—for at least the near future.

Nevertheless, Goolsbee remains something of a politico among the policy wonks using new media to connect with each other and weigh in on breaking news. He keeps a lively Twitter feed, in which he distills his experience crunching the nation’s raw economic numbers. It’s a way to speak about politics while avoiding the partisan bickering of Washington. “You can’t help but look at the circumstance in Washington and most of the time think, ‘Oh, thank God we’re not in the middle of that,’” Goolsbee says. “There’s no policy happening; it’s just a lot of arguing.”

 

Not that arguing was new to Goolsbee—he’s been on the Chicago faculty since 1995, the year he defended his economics dissertation at MIT. Before that the Texas native earned a BA and MA in the field at Yale. During his first year in New Haven, he worked as a research assistant for Nobel laureate James Tobin, who served under JFK on the Council of Economic Advisers 48 years before Goolsbee would join. Besides studying and taking care of Tobin’s Keynesian research (and sometimes his house), Goolsbee argued: As a Yale junior he was runner-up in the national intercollegiate debate championship. The next year he won it.

Goolsbee speaks in homespun, vivid analogies and metaphors that wrap up an issue neatly and seal it with a gentle told you so. A government program meant to spur innovation through start-ups bridges a “valley of death,” as he put it, where good ideas often fail. The government’s excessive deficit is like being out of shape, he once told the Daily Show’s Jon Stewart. Put the government on a diet; don’t cut off a finger to lose eight ounces.

“Austan has the mind of a brilliant economist and the voice and affect of the voice-over of a beer commercial,” says David Axelrod, AB’76, with whom Goolsbee worked on Obama’s Senate and presidential campaigns. “He’s just a very down-to-earth guy, and he can take these complicated economic concepts and explain them in ways that everyone can understand and relate to.” Goolsbee was an asset on Obama’s campaign trail in 2008, when the senior economic adviser took to TV to defend Obama’s platform or debate Republican John McCain’s advisers.

When he moved to Washington after the election, he brought a reputation as a data-first economist up on trends in public finance and the nascent study of e-commerce, both a liberal and free-market thinker. In the capital Goolsbee received genuine, if not consistent, bipartisan esteem. Conservative Washington Post columnist George F. Will wrote in 2007, “He seems to be the sort of person—amiable, empirical and reasonable—you would want at the elbow of a Democratic president, if such there must be.” In 2010 Douglas Holtz-Eakin, economic adviser for McCain’s campaign and Goolsbee’s former CNN sparring partner, said, “There are not many people who are smart, who are well trained, and at the same time can take off the gloves and be extremely populist on the airwaves and the campaign trail, and then win a comedian of the year award.” That last plaudit was a slight embellishment: a 2009 stand-up routine won Goolsbee the title of Funniest Celebrity in Washington.

That he was doing stand-up in a year when the GDP dropped 3.5 percent and unemployment careered to 9.3 percent belies the work that went into the stimulus. Goolsbee’s view was that any proposal that cost $10 billion or more on which there was dissent ought to have a hearing before the president. “Then the president needed to have a serious case put forward of the opposite,” Goolsbee says. “Somebody should phrase it in the best possible way to make sure the president’s OK with what everybody else concluded. And so a lot of times I’d play that kind of role, not the gadfly but the foil.”

It’s tougher to change minds across the aisle, and like many others, Goolsbee was bothered by the deep entrenchment of Beltway politics, especially when he believed the data pointed to a clear solution. He is sure, for example, that the tax record has never demonstrated a Laffer curve, which in theory proves that lower tax rates increase revenue for the government—the graph is often associated with supply-side economics. Unlike his equally argumentative colleagues in Hyde Park, politicians prefer to fight on the strength of received wisdom rather than reevaluate the data. “You know, that’s a frustrating aspect of Washington ... that it’s more like, put on the battle armor and the two sides go fight,” Goolsbee says. “It doesn’t seem to sway the debate that you say, ‘Hold on, that’s not true!’”

He found more success speaking to a “policy-minded, educated civilian audience,” as he put it, “not policy makers but people who, if we’re talking about tax policy or patents or the auto industry, they followed what happened. They’re interested in how it’s going, and they watch people yelling at each other on cable TV and they don’t really get that great of a sense from it.” Goolsbee made the rounds on TV, from Sunday-morning talk shows to Charlie Rose and Jon Stewart. He tried communicating with laypeople more directly, inaugurating a White House–produced video blog in which Goolsbee and a handful of others argue the president’s financial policy in plain language. Called the White House White Boards, half of the videos feature the CEA chair explaining simple graphs meant to convey economic trends, like unemployment rates or the value of General Motors over time. Often he used data to argue that Republicans were wrong about some policy or assertion. “You can do about ten times more content in that than you can in a sound bite kind of environment or going on TV,” Goolsbee says.

The White Boards didn’t always stimulate productive discussion. In a video rebuttal to a post in which Goolsbee argued against renewing the Bush tax cuts for those earning more than $1 million, a six-year-old boy asked, “Mr. President, didn’t you take math in school?” But Goolsbee also remembers being stopped on the subway by strangers who wanted to discuss the merits of Obama’s proposals, like the Startup America Initiative. “I was like, hey, this thing is working; we’re having a substantive conversation about policy on the subway. That’s a good sign.”

 

The conversation continues into Goolsbee’s retirement from politics. He first began tweeting this past January with a political stumper, a Sarah Palin joke, and a thought about data reporting in public finance. Barring detours into sports or personal anecdotes—he remarked once about taking his daughter out fishing—or jokes with DC reporters, those first few tweets represent a fairly accurate distribution of the more than 800 Goolsbee has posted in the interim.

Mixing commentary and comedy, @Austan_Goolsbee channels its author’s personality. He tweets jokes about famous economists, including Milton Friedman, AM’33, or alerts his friend, BuzzFeed editor in chief Ben Smith, that Lindsay Lohan shoved past him at a Washington gala. He sounds off on the day’s econopolitical news, as in this February 24 tweet aimed at Mitt Romney’s campaign: “To the folks saying trillions lower taxes at the top will dramatically fuel growth: would that be the same ‘growth’ we had when W did it?” As Valentine’s Day approached, he teased people who buy up gold: “Roses are red. Violets are pink. Don’t listen to goldbugs. No one cares what they think.”

Goolsbee often writes directly to reporters or lobs friendly critiques at colleagues in other schools. When jobs data get released or China announces a surprisingly low GDP, Goolsbee will comment, clarify, or spin in the space of a few minutes. It’s the same dynamic that used to go on in talk radio and, before that, in newspapers’ editorial pages—just faster and faster still. His online relationship with news is no accident; it was New York Times conservative columnist David Brooks, AB’82, who inspired him to try Twitter. Over dinner with a few economists, Brooks said he got a tremendous amount of news that way, and later an influential blogger told Goolsbee tweeting had taken the place of blogging. He started following people in order to keep up, then began to tweet himself.

Twitter isn’t an end in itself: in April Goolsbee started a blog, GoolsBlog, explaining in the first post that “some things need a bit more treatment than 140 characters.” In the handful of posts so far, he’s discussed the federal budget and the Euro Zone. The blog prompted an article in Politico, which touted it as a way to get the same advice Obama did. But his principle of engaging with the news remains. “He lives in this very contemporary world of communications and politics, and he’s very steeped in academics and in theory,” says Axelrod. “He’s a guy who easily moves between both worlds.”

 

In the class on Disney and Pixar, Goolsbee’s loose suit rustles like drapes whenever he gesticulates—when Goolsbee speaks, his hands shape lines and squares in front of his face, as if he’s fitting together a box for his ideas. Goolsbee prompts his students to list what the companies sell, what they trade in, the size of their markets; the conversation isn’t lofty, but it is informed, and only one student seems to be browsing Facebook as the professor speaks. “That shows you that he keeps the class engaged, he’s interesting, he’s entertaining,” says MBA student Herman Tkach.

Some professors treat students like young boxers, letting them exhaust themselves with their own thoughts before working out the right line of questioning. Or they allow them, like sponges, to take in what knowledge they can. But Goolsbee is spitballing. One minute he has his students laughing with a story about his father-in-law being forced, with handcuffs, to sit through a Broadway musical; another he clarifies the “kind of bogus” surplus effects of vertical integration with the only graph he draws that evening. There is no mention of politics besides a knock on Congress for working so slowly.

After an hour and change of discussion, Goolsbee reveals the points he wants students to take away from the case—all of which the students have brought up themselves—like why it might have been better for Disney to sign a long-term contract with Pixar rather than acquire it for so much money. Even then there was no synthesis, no greater point, no standard of truth or good practice—he lets the students think the issue through, and then they have to decide for themselves if Disney spent its $7 billion wisely.

Moving from a partisan for President Obama to an unbiased instructor for his students didn’t faze Goolsbee. “It really wasn’t weird at all,” he says, recalling the devil’s advocate debates he took part in at the White House. “That’s kind of like the old case method in action.” In class he seems to enjoy having the data out there. When a student suggests that Pixar could take advantage of the “one-stop-shop element” of Disney’s vertical integration, Goolsbee says the comment is “like the level in video games where you’re picking up all the coins and you can’t die.”

Goolsbee isn’t the only former high-level economist at Chicago Booth; in fact, Randall Kroszner, the Norman R. Bobins professor of economics, served on the Council of Economic Advisers from 2001 to 2003 (he later served as governor of the Federal Reserve), and assistant professor of economics Brent Neiman was a staff economist at the CEA. Goolsbee consulted with former council chairs about how they transitioned back to academia and spoke with his friend, Raghuram Rajan, the Eric J. Gleacher distinguished service professor of finance, who served as the chief economist at the International Monetary Fund from 2003 to 2007, about the political-decompression process.

Rajan says a public servant returning to academia must make three major adjustments: to a lower profile, to resuming his or her research, and to “the seeming narrowness” of academic discourse. Most important is how Goolsbee deals with “going into the seminar room and listening to people debating at great lengths on issues that might seem in some situations as recasting [the question], ‘how many angels are dancing on the head of a pin.’”

Still, when public servants return to academia, things shouldn’t simply revert to how they were before, Rajan says. Their government experience should inform their research, creating a competitive advantage against junior professors more proficient in the newest techniques. “There’s sort of a saying at Chicago: ‘you’re only as good as your last paper.’ And that holds for everyone.” For his part, Rajan finds time to balance teaching, writing, and editing with an “unpaid job” as an economic adviser to the prime minister of India.

Goolsbee is finding his own balance: tweeting and teaching, consulting on ABC News while collaborating on a project with Anil Kashyap, the Edward Eagle Brown professor of economics and finance, about companies wary of investing after the economy and their cash flows take a dip. “He’s a little bit more externally focused,” Kashyap notes, “and motivated both by policy stuff and economics.”

As part of a small migration of advisers and officials from Obama’s first term heading back to Chicago—including Axelrod, Chicago mayor Rahm Emanuel, and University vice president for civic engagement Derek Douglas, a former Obama urban-policy adviser—Goolsbee is not alone in looking to affect policy from afar. He’s slated to join the Axelrod-led Institute of Politics, a University initiative to encourage students aspiring to public and social service careers.

 

Still a supporter of his old boss, a long-term career in politics wasn’t in the cards for Goolsbee. “There’s really not that many people who go and stay for a really long time,” he says. He knew it back in September 2009, as he stood at a microphone in front of the iconic brick wall at DC’s Improv comedy club, vying to be funniest man in Washington.

Goolsbee’s bit was mostly explaining who he was and what he’d learned since entering politics. That he was part of an “all-star team of economists” in DC to address the recession made him feel better, he said: “We basically knew what to do.” Then he added, in rapid sotto voce: “Panic.” He was borrowing from Kevin Nealon’s 25-year-old Saturday Night Live act, Mr. Subliminal, a guy who lets slip what he’s really thinking when he talks. Explaining how easily he and Obama got along when they first met, he said, “I’m not saying that in 1961 we were, like, separated at birth (in a village in Kenya); what I’m saying is that we’re friends.”

The 11-minute routine covered bank bailouts, big names in politics, and how to learn from people you disagree with. The political digs make it funny, but take out the subliminal messages and it’s just a straightforward account of Goolsbee’s feelings about his temporary home. It wouldn’t make sense without the context of his experiences in Hyde Park, where he and his family packed up “like the Beverly Hillbillies” for the move to DC. Later in the routine, he adds, “I’m just a guy from Chicago (future Fed chair), and the thing is, I am proud to have played even a small part to help get Barack Obama elected president.”

Updated 07.13.2012

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