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Starting in the early 1990s, Obama spent 12 years at the University of Chicago, mostly as a senior lecturer on constitutional law. It was a part-time job that helped him make money while he began to build his political career. But it also happened to place him inside what is arguably the intellectual center of modern American economic conservatism, the home of Milton Friedman and the laissez-faire philosophy known as the Chicago School of economics. By all accounts, Obama didn’t spend much time with Friedman’s disciples at the law school. Instead, he became friendly with another crowd: liberals who had come to think that Friedman was right about a lot, just not everything.</p>
<p>The Chicago School believes that markets — that is, millions of individuals making separate decisions — almost always function better than economies that are managed by governments. In a market system, prices adjust whenever there is a shortage or a glut, and the problem soon resolves itself. Just as important, companies constantly compete with each other, which helps bring down prices, improves the quality of goods and ultimately lifts living standards.</p>
<p>In its more extreme forms, the Chicago School’s ideas have some obvious flaws. History has shown that free markets aren’t so good at, say, preventing pollution or the issuance of fantastically unrealistic mortgages. But over the last few decades, as Europe’s regulated economies have struggled and Asia’s move toward capitalism has spurred its fabulous boom, many liberals have also come to appreciate the virtues of markets.</p>
<p>One of these liberals is Cass Sunstein, a prolific law professor who sometimes ate with Obama in the open, sunlit cafeteria off the lobby of the main building at Chicago’s law school. Over sandwiches in that cafeteria this spring, Sunstein told me that he didn’t think that Obama arrived at the law school as an old-style liberal or departed as anything like a Friedmanite. Yet Sunstein and other former Chicago colleagues I spoke with said they believed that Chicago had helped give Obama an intellectual framework for his instincts, at the least, and probably made him come to appreciate markets more.</p>
<p>Obama, when I asked him, agreed that his years surrounded by Chicago School thinking affected him. He tends to assign his motives to more intimate narratives, though, and he said that his grandmother, a high-school graduate who rose to become the vice president of a bank and was the family’s main breadwinner, had the biggest impact. “She had to think very practically about, How do you make money?” he told me. “How does the system work? That led me to have an orientation to ask hardheaded questions. During my formative years, there was still ideological competition between a social-democratic or even socialist agenda and a free-market, Milton Friedman agenda. I think it was natural for me to ask questions of both sides and maybe try to synthesize approaches.”
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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.</p>
<p>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.
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<p>Part of my motives for posting this article was to demonstrate that this notion that the University of Chicago is conservative and only conservative is false. I'd like say we have a sort of "postpartisan" status, but that just sounds awfully prententious, and I'd rather just say that the political climate here is rife with complexity and is not wholly part of one "side" or another. True, Milton Friedman is given a lot of credence here, but (according to one of my friends, who's much better read on these issues than me) not even Milty himself thought the free market was a solution to all life's problems.</p>