Last April, economics majors at Princeton University crowded into a campus auditorium to watch “Inside Job,” a documentary about the financial meltdown, and then listen to a panel discussion between their department’s leading professors.
Paul Krugman, the school’s Nobel Prize-winning professor and one of the loudest liberal critics of President Obama from his perch at the New York Times, sat audience left and echoed the film’s lacerating view of Wall Street shenanigans and complicit economists.
Alan Krueger, the school’s popular, data-driven professor, who had recently returned from a stint in the Treasury Department, sat on the other side and expressed a more skeptical view of the film’s depictions of evil economists. Compared with Krugman’s outrage, recalled Gene Grossman, chairman of the economics department, Krueger’s was “less so.”
Obama’s recent selection of Krueger to head his Council of Economic Advisers is evidence in the eyes of many that the president, who campaigned as a champion for sweeping change, has also adopted an approach of “less so.” And as an unemployment-scarred country prepares to watch Obama deliver his jobs plan to a joint session of Congress on Thursday, the macro-Krugman vs. micro-Krueger divide that once may have seemed like a low-stakes, ivory-tower debate now is anything but.
“I’m not sure that appointing Alan Krueger is meant to be terribly symbolic, though it is,” said Alan Blinder, a colleague in Princeton’s economics department and a former member of President Bill Clinton’s Council of Economic Advisers. The message sent by the Krueger pick, Blinder said, is that “realistically the time for a huge macroeconomic program, a stimulus program, is gone now, but the urgency of doing something about employment is not gone. And what Alan represents is trying to think about programs, some small, some very small, some modest-sized, that can do something about that.”
Obama’s choice of Krueger, who declined to comment while awaiting his confirmation by the Senate, was a safe one. He is an economic superstar and recent assistant secretary of the Treasury. His selection has been roundly applauded by the nation’s leading economic minds, including Krugman.
“He’s done excellent work, he’s a really good guy, whom I know pretty well, since we keep getting each other’s mail,” Krugman wrote in an Aug. 29 post on his Times blog, “The Conscience of a Liberal.” Krugman wrote that despite his colleague’s reputation for more quantitative, narrow research, Krueger had big-picture chops and “is pretty salt-water and activist by inclination.”
But as much as Krugman and Krueger have in common — professorships at Princeton, left-of-center politics, genius status in the world of economics — the two economists have marked differences in temperament, campus presence and ideas.
Krueger, 50, is a handsome, fit and able Washington insider. A tennis buddy of past and present Obama economic gurus Larry Summers, Tim F. Geithner and Gene B. Sperling, he also hits with Blinder, who observed with a chuckle of Krugman, a mildly Hobbit-like 58-year-old, “I don’t believe he plays.”
Most important, Krueger and Krugman have opposing approaches to fixing the economy. “They think about the issues differently,” said Grossman, the department chair.
Krugman, the big-picture guy, is likely to focus on sweeping theories, aggregate spending and interest rates and monetary and fiscal policy. Krueger, whose reputation is that of an empiricist, is focused on how regulations and other economic mechanisms can be manipulated to spur job growth.
Blinder pointed out that the two professors probably disagreed only on a quarter of the issues.
But that quarter happens to be the crucial battlefield for the direction of Obama’s jobs plan, and probably his presidency.
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Until now, Obama has consistently argued for a compromise-driven approach to economic policy. At last week’s announcement of Krueger’s appointment, the president suggested that his jobs initiative would be loaded with “bipartisan ideas that ought to be the kind of proposals that everybody can get behind, no matter what your political affiliation might be.”
But since the Republicans claimed the House, that measured approach, as evidenced by the debt ceiling disaster and even the dispute over the timing of his jobs address, hasn’t yielded him much.
Krugman’s visceral frustration with Obama and the White House has made him the de facto figurehead of a belief that the present political and economic situation — what the president calls the “status quo” — isn’t working out so well economically or politically and that perhaps the president needs to pursue a more ideal world in order to create a more acceptable reality.
But Krueger’s advocates at Princeton, including fellow labor expert Cecilia Rouse, until recently a member of the Council of Economic Advisers, view Krueger as the perfect match for a president who is apparently banking on small but steady improvements in the economy to win the 2012 election. Rouse called Krueger a “more realistic” pick than a columnist who writes about “what we might do in an ideal world.”
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Several colleagues called Krueger an academic’s academic. His office, lumped with other labor scholars in the university library, is isolated from most of the economics professors. According to colleagues, it is packed with books, a flip chart, and pictures of his wife and children. On the wall he displayed a poster commemorating a speech to the Princeton faculty on terrorism, in which he argued that data belied the pervasive notion that terrorists arose mostly from poverty-stricken, uneducated backgrounds.
Krueger has written broadly — about what he calls “Rockenomics” (research about which bands sell and why); the awfulness that is commuting; a study titled “Sorting in the Labor Market: Do Gregarious Workers Flock to Interactive Jobs?” Krueger’s most famous study overturned the conventional wisdom that a higher minimum wage would automatically lead to greater unemployment by showing contradictory data.
While less visible than the Krugman supernova in the media universe, Krueger is the bigger man on campus, participating regularly in the daily life of the university and, upon his return from Treasury, putting together an entire new course for undergraduates about the Great Recession.
“Alan Krueger participates much more in the daily intellectual life of Princeton than Paul Krugman,” said Elizabeth Bogan, a senior lecturer in economics at Princeton and a Krueger partisan. “Paul is off at the New York Times.”
As in the Inside Job panel, the two professors do sometimes participate in the same Princeton events. In April 2009, the university held a symposium called “Obama and the Economy: An Early Report Card,” in which Krugman delivered the keynote address and Krueger appeared on a panel about “Mitigating the Recession.” Douglas J. Holtz-Eakin, director of the Congressional Budget Office during the administration of George W. Bush, also was on the panel. He recalled that Krueger, who had just been nominated to be assistant secretary of the Treasury for economic policy, was “incredibly scripted” with administration talking points, while Krugman was taking the “everybody is wrong but me” view.
According to Grossman, the economics chair, the challenge for the micro-specialist will be to channel a little bit of Krugman and tackle the big issues in his new job.
“Alan,” he said, “will have to address those things now.”
Krueger hasn’t been on board with all of the White House’s incrementalism. When the administration debated a new jobs tax credit that Krueger advocated, “he lost inside the administration,” Blinder said. “But he is going to be back on that side for sure. And in a higher position to get his voice heard.”
Krueger’s ability to get his point across is something Krugman, the gleefully combative public intellectual, has questioned.
“Now the question,” he wrote in his Aug. 29 post, “is whether anyone in the administration listens to him.”