Jason Furman and Obamanomics

The appointment of Jason Furman as economic policy director for the Barack Obama presidential campaign has caused a stir [1]. Furman was executive director of the Hamilton Project, a project created by Citibank chair and former Treasury Secretary Robert Rubin, largely to explore how to sustain support for corporate trade policies. Furman himself is criticized for his work suggesting that Wal-Mart offers a business model worth emulating.

The criticism of the appointment reflects submerged concerns about Obama’s own posture on globalization. Furman is actually a progressive, formerly with the Center fur Budget and Policy Priorities, and broadly concerned with social justice. His campaign job is to organize economic advice for Obama, not define it, and by all accounts, Furman will be an honest broker. He is a far remove from former Visigoth Senator Phil Gramm [2] or Carly Fiorina [3], the CEO sacked by Hewlett Packard, who have emerged as Sen. John McCain’s leading advisors.

But his appointment was clearly a signal by the Obama campaign designed to reassure Wall Street and the business community. And that is how it was interpreted by bankers and labor leaders alike. So the pushback isn’t surprising.

The real question is whether Obama understands that the current U.S. global strategy is unsustainable. The dollar has lost half its value to the euro, but our trade deficit remains high — driven by the cost of oil and still increasing imports from China. Workers responded to the long-term stagnation of wages by working more hours and taking on more debt. The country has been sustaining itself by taking on more debt, dependent on the kindness and the mercantilist appetites of strangers. Now, with the collapse of the housing bubble, the near-death implosion of the shadow banking system, that road is blocked.

We need a fundamental change of strategy in the global economy if we are to sustain a broad middle class. The thrust of the Hamilton Project was to see if growing public alarm could be placated with more investment in education and training, perhaps some greater help for workers losing decent jobs — even while putting priority on trade deals that protect the rights of bankers but not those of workers, and on balancing the budget over making the investments we need. That isn’t close to the new deal that is imperative.

The controversy really isn’t about Jason Furman. It’s about Barack Obama. Does he understand the scope of the change that will be needed? Or is he more concerned about reassuring Wall Street that the price won’t be too high? We’ll learn more about that over the next weeks, when he plans to lay out his long term strategy for the economy. One thing is clear. Obama is smart enough and Furman principled enough that he’ll hear the arguments from all sides. The real question isn’t what advice he gets; it’s what advice he decides to adopt.