President Obama reportedly plans to name Austan Goolsbee to head his Council of Economic Advisers. This appointment is good news for advocates of expanded international trade. One of the world’s leading trade economists, Jagdish Bhagwati, described Goolsbee as a valuable source of free-trade advice over almost a decade. During the presidential campaign, Goolsbee described his views on trade in the following way:
I do believe there’s no one more in favor of open markets than me and that said, if you look at a free trade agreement—if you have never read a free trade agreement I encourage you to go read it—because it is as close to the economists’ case for free trade as our tax code is to the economists’ case for the ideal tax system. If you look at these 900-page agreements, they’re two pages of what every economist says “yeah, that’s great”—opening tariffs—and then 898 pages of loopholes.
According to reports during the Democratic primary, when Barack Obama pledged to renegotiate the North American Free Trade Agreement (NAFTA), Goolsbee reassured government officials in Canada that the statements were just political positioning not to be taken seriously.
Goolsbee has observed that free trade increases wages and that globalization does not cause income inequality. He has downplayed the impact of imports from China, noting that they are small relative to the size of the U.S. economy. According to Goolsbee, Chinese imports do not reduce U.S. production, but replace imports from other countries.
With respect to the benefits of international trade, Goolsbee’s embrace of accepted wisdom is a bright spot in the fog of economic policies emanating from the Obama Administration. It’s just the kind of economic advice the President needs.