Alan Krueger speaks on serving 'in the nation's service' as the President's chief economist
Alan Krueger, the Bendheim Professor of Economics and Public Affairs at the Wilson School and former chairman of President Obama’s Council of Economic Advisors, reflected on the differences between policymaking and academia in a lecture this past Thursday.
Krueger served as chairman of the CEA from November 2011 to August 2013 and came back to teach at the University this fall.
Krueger explained that although some skills, including persistence and the ability to write and communicate, are necessary for both academia and policy work, policy makers need quite different skills from academics. Policy makers, Krueger explained, spend much more time in meetings than people involved in academia. Teamwork and listening skills are, therefore, much more important for policy makers.
He added that unlike professors, who quite frequently simply return to their offices after a meeting, policy builders tend to linger because productivity, such as a lot of agenda-pushing and compromise, continues to occur after meetings.
Furthermore, Krueger noted the importance of discretion in policymaking.
“If you’re an academic and discover something new,” he said, “you spread it to the world. In government, that could be fatal. It could be illegal.” For example, he explained, a policy maker might want to stall on announcing a policy to allow the President to receive credit for that policy.
With regard to the policy development, Krueger explained that while the policy process in general grinds slowly, development of specific policies occurs quite quickly. The rapidity with which policies are developed, he added, makes outside research input difficult to obtain and as a result, led him into policy realms with which he was not familiar. As an example, he noted that while he considers himself an expert on unemployment insurance, he had no idea of the tiers in benefit programs, which was a key component of the policy he was trying to develop.
Krueger also explained that “policies introduce constraints that we ignore in economics.” Economists, he added, quite frequently think in terms of marginal costs and marginal benefits without reflecting on how the two concepts might be related. As an example, he noted that the government quite frequently cannot get certain groups to agree to tax increases without also providing some sort of benefits to those groups.
During the presentation, Krueger also listed some of the policies he supervised during his time in the CEA, noting investment in infrastructure, housing policy and the Affordable Care Act as key examples.However, he added that the defining issue that confronted him as chairman of the CEA was that of inequality and opportunity. Krueger noted that since the 1980s, a divergence between productivity and compensation has caused middle-class income to stagnate and lower-class income to decrease, while the top one percent has done extremely well. This inequality, he said, is an even more pressing issue than the issue of unemployment.
“It’s unfortunate, it’s terrible for those who are unemployed, it’s a missed opportunity for the economy, but it’s something that the economy could recover from,” he said. “A rise in inequality is potentially irreversible.”
Krueger concluded his presentation by saying that he hopes that economists in government can bring something back to the professional community as well as contributing something while they are working in government.
“Of course,” he said, quoting former U.S. and University President Woodrow Wilson, Class of 1879, “it is not learning but the spirit of service that will give a college place in the annals of the nation.”
Krueger has held a joint appointment in the economics departmentand the Wilson School since 1987. Before joining the CEA in 2011, he served as assistant secretary of economic policy and chief economist of the U.S. Department of the Treasury in 2009-10 and chief economist of the U.S. Department of Labor in 1994-95.
He spoke on Thursday to a group of Princeton students, Princeton High School students and local residents in Dodds Auditorium in Robertson Hall.