Chicago is not a place, but a state of mind, Paul Samuelson once said famously. Barack Obama’s hobnobbing with the “wrong” economists from Chicago is attracting similar remarks, given his political platform. Is this surprising?
Many decades ago, Nobel Prize winning economist James Buchanan, who trained in Chicago, said the distinctive feature of the city’s economics was empirical, which gave its theories a different flavour. Things are no different now.
Richard Thaler, the Chicago economist associated with the Obama campaign, once ran the “anomalies” column in the Journal of Economic Perspectives, that featured empirical oddities in otherwise neat theories. James Heckman, another Chicago man, is expected to head the White House council of economic advisers.
These are precisely the kind of economists the new president needs, ones who can look at economic data and suggest out-of-the-box solutions, instead of tired theories that serve no end.