Selecting Ed Lazear as head of the Council of Economic Advisors is actually a very strong ideological statement by Bush Jr. I actually am very familiar with Ed Lazear’s work, especially his seminal book “Personnel Economics” because this was what I was studying in grad school. I wanted to apply microeconomic theory to the inner workings of firms, and Lazear was the first labor economist to seriously study these things. I was supposed to study under his direction during my final year of grad school in 2001 when I came out here near Stanford.
Anyway — this is a major departure from other selections to the CEA. Usually, they select an economist who is a heavyweight in macroeconomics. For example, they are typically people like Greg Mankiw (my macroecon professor – although an early prodigy, more known for negotiating the first multimillion publishing deal for an econ textbook, than his body of work after he got this sweet deal), Alan Greenspan, Martin Feldstein and Paul Krugman. All people with very strong opinions about macroeconomic events like monetary policy and fiscal policy.
Lazear, on the other hand, is mostly known for labor economics and microeconomics. His latest policy foray was in tax issues, but seems to be more microeconomic, than macroeconomic. This shows that Bush Jr.’s ideological bent of seeing the world as largely made up of profit-maximizing firms and utility-maximizing consumers (the microeconomic view) and not more holistically, as in the macroeconomic view.
Interesting development, if the CEA were more of an effective policy organ, but it seems to have completely disappeared from the policy making arm during the Republican administrations….
