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Obama’s Stand-Up Economist

For Austan Goolsbee, PhD ’95, doing his bit for the country meant helping tackle the recession—and performing a little comedy on the side.
December 20, 2016

It’s the day after the first presidential debate, and ­Austan Goolsbee is working in his office at the University of Chicago’s Booth School of Business. It’s adorned with a few key mementos of a remarkable time in his life: in 2010, at age 41, Goolsbee became chairman of the Council of Economic Advisors, making him the youngest member of Barack Obama’s cabinet. On his desk is a framed photo of Obama giving him a fist bump. A few feet away is an upholstered chair with a small nameplate that reads “Mr. Bernanke.” Ben ­Bernanke, PhD ’79, left the chair behind at the Council of Economic Advisors’ offices when he became chairman of the Federal Reserve and said Goolsbee could have it. “Whenever I interview someone for a job, I always ask them whether they want to sit in Bernanke’s chair,” Goolsbee says. “The only wrong answer is, ‘Who’s Bernanke?’”

At the moment, Bernanke’s chair is occupied by a graduate student who is busily taking notes as Goolsbee and a coauthor discuss a paper they’re writing on the economic impact of labor regulations. The conversation, barely intelligible to a non-­economist, is exactly what you might expect of a star professor at a prestigious business school. But one hour later, Goolsbee will do something unexpected: take the elevator down to the basement of the Booth School, slip on a button-down shirt and dark blazer over his T-shirt, and sit down for an appearance (via a fiber-optic hookup) on Sean Hannity’s Fox News show.

If it’s surprising that a former member of the Obama administration is willing to appear on a show reviled by most Democrats, more surprising still is that Goolsbee appears to enjoy every minute of it. Never mind that Hannity introduces him as the man responsible for America’s current economic woes, or that, a few minutes later, he claims Goolsbee’s policies put 12 million more Americans on food stamps. Goolsbee, tall and lean, with a receding hairline and angular features, smiles his way through the entire segment. Every time Hannity insults him or attacks Hillary Clinton, he is ready with a rejoinder. “They set a low bar for Donald Trump, and he banged his head on it,” Goolsbee says of Trump’s performance in the first debate.

Austan Goolsbee discusses the economic outlook at the University of Chicago’s Booth School of Business. But he’s equally comfortable going toe to toe with ultraconservative hosts on Fox TV. “I don’t mind playing smashmouth football,” he once told Chicago magazine.

As Goolsbee sees it, millions of people watch Fox, and if no one presents them with a respectful alternative perspective, they’ll be left with a one-sided view. His hope, he says, is that the Fox viewers who watch him on Hannity or The O’Reilly Factor, on which he also appears, will go from “despising the president and wanting to burn down the government” to merely disliking the president and recognizing that there are legitimate grounds for disagreements. “Every time I see Austan on TV trading blows with talking heads, I bow my head in thanks that it is him, not me,” says Goolsbee’s University of Chicago colleague Steven Levitt, PhD ’94, of Freakonomics frame.

Not only does Goolsbee not seem to mind the insults the Fox News hosts hurl at him, he has struck up what he refers to as “an improbable friendship” with Hannity. When Hannity happens to be in Chicago, the two of them will go out for a beer and bicker “like old guys at the nursing home.” ­Goolsbee explains that he’s always believed “there is more to people than their politics.” Hannity seems to agree. “Austan is one of my favorite guests on the show,” he wrote in an e-mail. “He is smart, funny, and extremely likeable, and I forgive him for his role in the worst recovery since the ’40s.”

After an appearance on Hannity, Goolsbee is regularly mocked (often in very crude terms) on Twitter. He seems amused by these attacks as well, and often retweets them. “I’m not afraid to take a punch,” says Goolsbee, whom Jon Stewart once described as “Eliot Ness meets Milton ­Friedman.” The nastiest viewer feedback of all tends to arrive via e-mail, and Goolsbee is in the habit of responding to those who send him hateful notes, stating that while he disagrees with their position and is sorry to hear the hostility, he appreciates that they took the time to write. He estimates that about three-quarters of the angry e-mailers will then write back with an apology for being rude. “That makes you feel like, yes, humanity will survive,” Goolsbee says.

Data dog
Even if they desired to do so, few academic economists would have the skill to go toe to toe with experienced TV personalities like Hannity and O’Reilly. Goolsbee had the necessary preparation. In high school he won a national extemporaneous speaking contest. At Yale, he and a partner won the 1991 National Debate Team of the Year award, defeating Ted Cruz in the process. Goolsbee also joined an improvisational comedy group, Just Add Water, at Yale. (The group’s appearance at the famous Second City comedy club prompted his first trip to Chicago.) The comedy training would pay off in 2009, when Goolsbee won the “D.C.’s Funniest Celebrity” contest, after delivering a stand-up routine in which he delivered punch lines as under-the-breath admissions amidst a deadpan speech:  

As we took office, you know, it was an all-star team of economists and we basically knew what to do—panic … I mean, it’s been a long, long time since things were this bad. So we kind of had to go back and look at the old textbooks—Karl Marx, Trotsky.

Goolsbee is quick to deflect praise for his comic talents. “I have always said that the central question of economics is ‘Compared to what?’” he says. “The runner-up was Grover Norquist.”

Though he was born in Waco, Texas, Goolsbee spent most of his childhood in Southern California, where he performed in children’s theater productions. His father worked as finance director for a company that made truck trailers, his mother as a trainer at Pacific Bell. After retiring, the elder Goolsbees returned to Texas, settling in Abilene, which has been ranked among the three most conservative cities in the country. Yet his mother, Linda, says that her friends in Abilene are proud to claim Austan as one of their own. “I have lots of Republican friends who will tell me, ‘I saw Austan on Hannity last night, and Hannity didn’t let him talk enough. They need to be nicer than that to our boy.’”

“They’ll come to my parents and they’ll say, ‘Obama’s terrible. He’s a socialist. The country’s going down the tubes. We saw your son on Fox. He’s doing a great job. You should be so proud,’” Goolsbee says, smiling. “That’s the Abilene way.”

“Every time I see Austan on TV trading blows with talking heads, I bow my head in thanks that it is him, not me.”

Goolsbee attended Milton Academy in Milton, Massachusetts, for high school before moving on to Yale, where he was mentored by the legendary Keynesian economist James Tobin. At MIT, where he earned his PhD in 1995, he studied with Robert Solow, HM ’90, Stanley Fischer, James Poterba, and Paul Krugman, PhD ’77, among other giants in the field. His dissertation, overseen by Poterba, helped demonstrate why investment subsidies often don’t do much to stimulate new investment. “That was a golden age in economics at MIT, and I felt lucky to be there,” he says.

Goolsbee’s research interests include industrial organization and government policy—often where they intersect with new digital technologies. In a 2002 paper he used data from Amazon and Barnes & Noble to explore how online competition influences prices. A number of his papers have demonstrated that steep income tax cuts fail to pay for themselves by expanding the economy and generating more taxable income, as the supply-side economics favored by conservatives say they should. Yet he claims no ideological leanings beyond a “fierce commitment” to the numbers, sometimes referring to himself as a “data dog.” The emphasis on empirical research speaks to the influence of MIT, where Goolsbee’s professors drilled home the importance of moving beyond correlations to tease out the true causes of an effect. If you want to know whether monetary policy caused a bubble, Goolsbee explains, it’s “not enough to know that interest rates were low” when the bubble happened. Rather, you have to ask, “Can we identify the mechanism by which A leads to B?”

It was also at MIT that Goolsbee became close friends with Steven Levitt, now his colleague. The two joined forces to manage a fantasy baseball team, employing their considerable prowess at gleaning insights from large data sets. “Everyone else in the league knew something about baseball,” Levitt recalls. “Austan and I knew nothing. To us it was just an application of economic modeling. We could have just as easily been modeling grain futures or bond returns.” ­Levitt and Goolsbee won the championship two years in a row before deciding to retire on top.

In the 1990s, Goolsbee’s influential papers on the economic impact of the Internet would make him a rising star in the field. At the time, some economists believed the Internet would make it easier for companies to offer different prices for the same products or services. Goolsbee correctly predicted that the Internet would be “the great equalizer,” making markets more competitive and consumers far more sensitive to prices. By 31, he was already a tenured professor at the University of Chicago. Though MIT and Chicago are often viewed as opposite poles of postwar economics in America, Goolsbee says the divides are now largely outdated, and that he is thrilled to have landed where he did: “What Disneyland was to my kids at age 10, that’s kind of what Chicago is for economists.”

Two skinny guys with funny names
As Goolsbee’s name became increasingly well known in economics circles, a University of Chicago colleague named Barack Obama took note. Obama first turned to Goolsbee, via e-mail, for guidance on economic issues as he prepared to face off against Alan Keyes for an Illinois seat in the U.S. Senate. The two met in person for the first time in October 2004, at the second Obama-Keyes debate. Goolsbee recalls that first meeting like this: “He said, ‘What? You are Professor ­Goolsbee? I thought I had a 60-year-old guy in a tweed jacket. You look nothing like a professor. And what is with ­“Goolsbee?”’ And I said, ‘You’re going around telling everybody you’re the skinny guy with the funny name, but you stole my bit.’”

Goolsbee has been an Obama loyalist ever since. As the senior economic advisor for Obama’s first presidential campaign in 2008, he worked on everything from debate preparation and crisis management to helping craft policy positions on taxes, energy, health care, financial regulation, and the housing crisis. Along the way, Goolsbee would speak at more than 200 events in 30 states.

But when Obama, upon being elected president in 2008, asked Goolsbee to join his three-person Council of Economic Advisors (CEA), Goolsbee initially turned him down.

He loved his job at the University of Chicago, and ­Goolsbee, who is married and has three children, now faced a minor housing crisis of his own. The family had purchased a new house and begun renovations, anticipating that their old house would sell quickly. But when no buyers emerged, they were forced to rent out their old house, leaving them owning two houses and renting a third as they waited for the renovations to finish. Going to Washington would mean finding yet another house.

The president wasn’t about to give up. Goolsbee had been his go-to economics expert throughout his political rise. And Goolsbee’s expertise on the economic impact of the Internet and digital technology—another of his early papers had documented how price comparison sites in life insurance markets had increased competition and driven down prices—made him a natural fit for a young president intent on introducing cutting-­edge policies.

When Obama called Goolsbee again, insisting that he join him in Washington, Goolsbee could no longer say no. As his first term began in 2009, the economic situation remained tenuous at best, and the possibility of an even greater economic catastrophe still loomed. “The prospect that we could enter a depression if we, the nation, screwed it up was absolutely real,” says Goolsbee. He remembered that James Tobin, the man who had first turned him on to economics, had served during Kennedy’s administration and frequently spoke of the critical role economists play when the country faces a crisis. Tobin’s message, as Goolsbee understood it: “We study economics not just because it’s fun, or not just because of the academic curiosity, but because it really matters.”

Austan Goolsbee joins fellow cabinet members in the Rose Garden at the White House as President Obama urges Congress to pass a bill extending middle-class tax cuts in September 2010.

Over the next two and a half years, Goolsbee would help steer America away from a devastating recession, eventually taking over as chairman of the CEA and joining Obama’s cabinet. He was directly involved in all the administration’s economic policies during the first years of the recovery, advising the president on the stimulus bill (he helped design the middle-class tax cut), the auto industry bailout, housing policy, and new regulations on Wall Street: for example, he championed the Dodd-Frank rule that prohibits banks from speculating in the markets.

Goolsbee recalls the very first meeting Obama had with his economic team, in December of 2008. One by one, the economists presented Obama with terrifying reports of economic disasters still to come. When it was his turn, Goolsbee spoke about the threat of a total housing collapse: “If everybody just starts walking away from their mortgages, we’re done for.” After the meeting, Goolsbee approached Obama and told him that it must have been the worst briefing an incoming president had had since Franklin Roosevelt in 1932, or perhaps even Abraham Lincoln in 1860. Obama turned to him and said, in complete seriousness, “Goolsbee, that was not even my worst briefing this week.”

“That moment was my first experience, which I had many times in the White House, of thinking, ‘Thank God you do not have this man’s job,’” he says.

The economic initiatives Goolsbee helped the Obama administration craft during his tenure on the Council of Economic Advisors weren’t without their critics. But Goolsbee maintains that the critics at the time weren’t always using the right standards. “When we came in, the entire hotel was on fire,” he says. “We were busting in and throwing people from the windows down to the pool to save their lives.” Yet despite the chaotic circumstances, they seemed to be “judged like it was the Olympic diving contest: ‘Your flip wasn’t precise and the splash was too big,’” he says. “I still feel there’s a little bit of that.” But those policies did help avert a depression, and Dodd-Frank, says Goolsbee, “does a lot of really important things that make the financial system much less risky going forward.”

In June of 2011 Goolsbee announced he would be leaving Obama’s cabinet and returning to the University of Chicago, citing concerns about losing his tenured position. By that point, he had spent two years working on Obama’s campaign and three more years in Washington. “It was time,” he says. “Going to Washington, for me, had been like getting to go to the moon. How many people ever go to the moon? How amazing, unforgettable. But you can’t live on the moon.”

Goolsbee’s departure was by no means a reflection of his feelings for Obama. “He believed—and still believes—so deeply in the president,” says Levitt. “I remember Austan saying he didn’t care what his job was in Washington, he’d do whatever the president asked.”

The respect is mutual; in his official statements, Obama has praised Goolsbee as a “brilliant economist” and “one of America’s great economic thinkers.” But the depth of Obama’s appreciation for Goolsbee is clear in the photo of the two men touching fists that sits on Goolsbee’s desk. “To Austan,” Obama wrote. “Thanks for always being there for me!”

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