While we mourn the exit of Ron Bloom as the administration's point man on manufacturing (who was not permitted to utter the dread words "industrial policy"), we can welcome the appointment of Alan Krueger to chair the Council of Economic Advisers.
Given the administration's penchant for naming Wall Street people to key economic posts, Krueger is rather better than we dared hope for. He is thoroughly mainstream in all his credentials, coming from a senior post at Princeton. But with two notable differences:
First, he was editor of the Journal of Economic Perspectives from 1996 to 2002. This is the most heterodox of the major economic journals, hospitable to dissenting viewpoints.
Second, Krueger is a labor economist, not a macro-economist. One of his most important books was a study co-written with David Card titled Myth and Measurement (1995), published when he was in his mid-thirties, challenging one of the most cherished sacred cows of conventional economics -- the idea that increases in the minimum wage must raise unemployment.
Krueger and Card compared restaurant jobs in New Jersey, which raised its minimum wage, with those in Pennsylvania, which did not. The book demonstrated that the animus against the minimum wage as a job-killer was a red herring.
For a young economist pursuing a mainstream career at an elite economics department, this study was a brave and risky enterprise. He went where the data led him. And nobody laid a glove on his conclusions. At the time, the Prospect reported on the fast-food industry's rigged attack on their study.
As a labor economist, Krueger believes in upgrading the skills of the labor force but doesn't view that need the way many conservative economists do, as a simple silver bullet. And, judging by his past work, he actually cares deeply about unemployment. Having him providing expert advice to President Obama will be a change for the better.
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