Wednesday, August 31, 2011

No! Not Another Academic Economist In the Obama Administration

On Monday, Obama announced his choice to lead his Economic Council: Princeton Professor, Alan Krueger. While doing so, Obama claimed he was some kind of "superhuman" labor economist.

But, Krueger, like a lot of appointments in the Obama's Administration, has some pretty quirky, academic beliefs that don't hold water when scrutinized.

First, there was Krueger's supposedly famed and ground breaking study in support of increasing the minimum wage which contradicted almost every other economist's belief that an increase in the minimum wage killed jobs. Krueger, along with another Princeton economist, David Card, conducted phone surveys of fast food restaurant managers in both New Jersey (where the minimum wage had just been raised) and in Pennsylvania (where no such raise occurred) and found that New Jersey hired more people after the rise in the minimum wage; while, in Pennsylvania, the level of jobs actually declined. However, since publishing their so-called study, the results were peer-reviewed and the conclusions were found to be substantially flawed (Click here to see the results of the Employment Policy Institutes' Counter-Study: The Crippling Flaws of the New Jersey Fast Food Study).

Then, there was Krueger's brilliant idea to increase tax revenues so that Obama could just keep spending: A National Sales Tax of 5%. While, yes, there might be an immediate increase in revenues, the long term impact would kill the economy because that tax would completely rob it of 5% of its consumer spending activity; which normally drives more than two-third of this country's economic activity. On top of that, the hardest hit by this tax would be the poor and working poor and those on fixed incomes; resulting in higher food stamp activity and other welfare support.

To me, Krueger is not a superhuman; he's a super-ideologue who is willing to bend normal rules of economics to support a progressive agenda. Certainly, that's the only reason why Obama really wanted to hire him. The President must think, that by hiring someone with the title "labor economist", Americans will believe, falsely, that he's keenly focused on labor; as in jobs. Sadly, Krueger's philosophies are mainly job killers. That's why some have already taken to calling him "Freddy Krueger": That disfigured killer from the horror movie: "Nightmare on Elm Street". Except, in the case of this Krueger, the nightmare will be on both Main street and Wall Street.

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