Today, Christina Romer, chairman of President Obama’s Council of Economic Advisers, gave her farewell speech before returning to Berkley to teach. In that speech we learn that she still doesn’t understand exactly “why it was so bad”. It’s good that Romer is returning to academia because she wouldn’t be hired in the private sector. In places where people actually have to create wealth, results matter. Romer helped develop a policy where unemployment reached nearly 10% and her excuse was “almost all analysts were surprised by the violent reaction.” This is an example of the Obama team that was billed as “the best and brightest“
The speech’s lack any sort of reflection on why the horrible economic results was striking, and underscores 2 story lines;
As an adviser, her dumbfounded response makes clear that she was out of her depth in the real world. Economist from the Austrian School of economic theory seemed to be able to predict what would happen and understand the mechanisms that contribute to the actual results seen today. Therefore her plea that “almost all analysts were surprised by the violent reaction.” rings hollow. The end result of the speech is that we can say with utter certainty that Romer was wholly unqualified for the position for which she was chosen.
The other story is that of Romer the professor, a learned professional that is supposed to follow the scientific method in understanding and teaching the science of economics. It is apparent from her words and actions that she has failed to consider that her theory may be incorrect. She is so enamored with her failed theory that she refuses to consider the fact that her hypothesis might be fundamentally unsound. Even the least astute economist can digest the latest economic numbers and say without hesitation that the policies implemented didn’t work. After reading about Romer’s comments I’m left with the image of a 17th century doctor who has bled his patient to death, all the while saying to himself “it should have worked” over and over again.