2008 08 24 NYT: Leonhardt: Barack Obama, A Free-Market-Loving, Big-Spending, Fiscall...

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Sunstein, now on the faculty at Harvard, has a name for this approach: “I like to think of him as a ‘University of Chicago’ Democrat.” It’s a useful label. Today’s Democratic consensus has moved the party to the left, and on issues like inequality and climate change, Obama appears willing to be even more aggressive than many fellow Democrats. From this standpoint, he’s a true liberal. Yet he also says he believes that there are significant parts of Reaganism worth preserving. So his policies often involve setting up a government program to address a market failure but then trying to harness the power of the market within that program. This, at times, makes him look like a conservative Democrat. From the beginning, Obama has sought out academic economists, rather than lawyers or former White House aides. His first economic adviser, Austan Goolsbee, is a young University of Chicago professor who shares Obama’s market-oriented Democratic views. This summer, Obama added Furman, who has a more traditional background, having worked for both the Clinton administration and the Kerry campaign. But he, too, has a Ph.D. in economics, from Harvard. As anyone who has spent time with Obama knows, he likes experts, and his choice of advisers stems in part from his interest in empirical research. (James Heckman, a Nobel laureate who critiqued the campaign’s education plan at Goolsbee’s request, said, “I’ve never worked with a campaign that was more interested in what the research shows.”) By surrounding himself with economists, however, Obama was also making a decision with ideological consequences. Far more than many other policy advisers, economists believe in the power of markets. What tends to distinguish Democratic economists is that they set out to uncover imperfections of the market and then come up with incremental, market-based solutions to these imperfections. This helps explain the Obama campaign’s interest in behavioral economics, a relatively new field that has pointed out many ways in which people make irrational, short-term decisions. To deal with one example of such myopia, Obama would require companies to automatically set aside a portion of their workers’ salary in a 401(k) plan. Any worker could override the decision — and save nothing at all or save even more — but the default would be to save.