Obama. Galbraith. Hope.

It’s not often that I get my hopes up about a potential volte-face in the way we talk and think about economics at the policy and political level but this is by far the best news I’ve heard in a long long time. It seems that our very own Jamie Galbraith, scion of John Kenneth Galbraith and keynote speaker for the PEF at last year’s Canadian Economics Association (and participant at this year’s inaugural PEF-Galbraith prize) has been named as one of Barack Obama’s economic advisors.

What does this mean? It means, as Warren Mosler points out, that we may end up with a president who is at least exposed to some unconventional economic ideas, including the following (cribbed, pared and adapted from Mosler’s list — see link above):

• the criticism of Bush leaving the debt to our children is absurd (just as it was in the early 1990s debate in Canada);
• there is no operational risk of social security ‘running out of money’ (not directly relevant to the Canadian context but still worth knowing when reading about the impending “social security crisis.”)
• the Fed (and the Bank of Canada) is about price, and not quantity;
• that loans create deposits and reserves (key heterodox proposition, i.e., endogenous money);
• that savings is not needed to have funding for investment (see above);
• that advantage pension and retirement systems and programs reduce demand and cause the need for the government to run deficits to add that demand back (key Keynesian proposition);
• the Saudis (and maybe Russians) are setting the price of crude. This is causing a cost push ‘inflation’ that is punishing working people disproportionately (Mosler has written about this, and the influence of speculators on commodity prices, extensively);
• that inequality is a serious societal ill (my addition — see Galbraith’s work hosted at the University of Texas at Austin);
• biofuel policy is converting the world’s food supply to fuel and starving millions to death (a small exaggeration to my thinking but very important point nonetheless);
• the others on the Obama economic adviser list either don’t know, pretend to not know, or have long forgotten all the above (too true…see below); and
• Obama’s vision can only accidentally be achieved with his current economic rhetoric (this follows from the above).

Of course, optimism about this news needs to be tempered by the fact that Galbraith is but one (albeit very articulate) voice on the team of advisors that includes, amongst others, the infamous Austan Goolsbee, he of the horribly-named “NAFTA-Gate” affair (incidentally, Mosler also does a nice job of (to my thinking) deconstructing Goolsbee conventional take on deficits & debt).

Still, when all is said and done, we can only be thankful that this is happening in the United States. Now if we could only figure a way of getting Jim Stanford to advice on economic issues for the next Prime Minister…