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Tuesday, February 10, 2009

Obama thinks like an economist

I have finally put my finger on why I like Obama so much (other than the obvious): he thinks like an economist. Specifically, he understands how to separate the positive from the normative. For example, this is from last night's press conference:
"When people suggest that, what a waste of money to make federal buildings more energy efficient -- why would that be a waste of money? We're creating jobs immediately by retrofitting these buildings, or weatherizing 2 million American's homes, as was called for in the package. So that right there creates economic stimulus. And we are saving taxpayers when it comes to federal buildings potentially $2 billion. In the case of homeowners, they will see more money in their pockets, and we're reducing our dependence on foreign oil in the Middle East. Why wouldn't we want to make that kind of investment?

Now, maybe philosophically you just don't think that the federal government should be involved in energy policy. I happen to disagree with that. I think that's the reason why we find ourselves importing more foreign oil now than we did back in the early '70s when OPEC first formed. And we can have a respectful debate about whether or not we should be involved in energy policymaking, but don't suggest that somehow that's wasteful spending. That's exactly what this country needs."
The first paragraph outlines a positive argument: one can disagree about how many jobs will be created but ultimately, it is an objective question that can be answered with data. Obama mixes in some normative rhetoric but the argument itself is a positive one. The second paragraph identifies the normative argument, what Obama refers to as a difference in 'philosophy': whether or not you believe the federal government should be involved in energy policy is a matter of opinion.

What's fascinating to me is that thinking about issues like this - separating the positive from the normative - is so rare in Washington that people are completely confused about what Obama is doing.

On a related point, Tyler Cowen points out that there is actually more consensus among economists than it may appear from the mainstream media and the blogosphere.

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