Recommendation
The White House should restructure the Council of Economic Advisors as the Council of Economic and Enterprise Advisors.
Details
The Council of Economic Advisors was established in 1946 to provide economic advice to the president and has almost exclusively been staffed by economists. But as Lord David Sainsbury wrote in Windows of Opportunity: How Nations Create Wealth, there are two main schools of economic thought: the market efficiency school and the production capabilities school. The former focuses on markets and prices; the latter organizations, production, and innovation. The former dominates U.S. economic policy for both parties, and with few exceptions the CEA has been staffed with economists from this school, which is why CEA has generally opposed an active U.S. innovation strategy. However, now that both innovation and competitiveness are central to U.S. economic policy, it is no longer adequate to have U.S. economic policy guided only by economists from the market efficiency school. President Bill Clinton understood this, and this is why he made the controversial appointment of Laura Tyson, a business scholar, to head CEA. The administration should expand the CEA from three to five positions; agree to name to three of the positions, including the chair, from the production capabilities school; and change the name of the CEA to the Council of Economic and Enterprise Advisors.
Keep reading:
▪ Robert D. Atkinson, “Think Like an Enterprise: Why Nations Need Comprehensive Productivity Strategies” (ITIF, May 2016), https://itif.org/publications/2016/05/04/think-enterprise-why-nations-need-comprehensive-productivity-strategies.
