March 10 (Bloomberg) -- Last week, Austan Goolsbee, an adviser to Barack Obama and a University of Chicago economist, found himself in the middle of a firestorm over a visit he had with a Canadian consular official.
The written report of the meeting suggested that Goolsbee had reassured the Canadians that Obama's rhetoric opposing the North American Free Trade Agreement was political posturing. This characterization of the conversation, which is disputed by Goolsbee, was comforting to the Canadians, who have benefited enormously from their trade with the U.S.
With Obama suffering what must be extremely disappointing defeats in Ohio and Texas, the media seems eager to make a scapegoat of Goolsbee. If the press kerfuffle drives Goolsbee back to the halls of academia, it will be bad for Obama, and bad for the country.
I first met Goolsbee when he was one of the hottest graduating Ph.D. students on the job market in 1995. He works in the same general area of economics that I do, and his early promise as a rookie was rapidly realized as he became a young professor. A paper he wrote on the job market poked a hole in one I had previously published, but I liked the guy anyway.
As he matured at the University of Chicago, he wrote a number of enormously influential papers, many of which broke new ground. Most impressive was his ability, even as a youngster, to make important discoveries in dramatically different areas.
Pioneer on Internet
He has one of the leading papers in the literature that explores the response of high-income individuals to higher marginal tax rates. He has also explored the impact of investment tax policy on the wages of workers in capital-goods industries, a link that few had ever thought to investigate before.
Most importantly for his lasting reputation, he and his collaborators were among the first economists to investigate the impact of the Internet on economic life, just as the new medium was starting out.
He showed that the Internet reduced the prices of life- insurance policies. He found that individuals who lived in regions with high sales taxes were more likely to shop on the Web to avoid the levies. He measured the gain to consumers that resulted from competition between satellite television providers and cable companies.
He provided one of the first estimates of the response of computer buyers to changes in prices. He showed that federal Internet subsidies helped speed the diffusion of Web access in public school. The list goes on and on.
Recruiting Target
Nobody was surprised when Goolsbee was tenured at a young age, and he has been a regular recruiting target of other top departments at universities looking to improve their reputations.
Most unusually for such an influential economist, Goolsbee has a remarkably engaging personality. You can disagree with him and still be friends at the end of the day. Indeed, it is rare for a person to radiate both intelligence and kindness, but Goolsbee pulls it off.
I don't know what Goolsbee told the Canadians, but I do know this: Virtually every economist who works with Democrats is apologetic when their candidates appear to oppose free trade. Back in 2000, one of Al Gore's economic advisers told me off the record virtually the same thing Goolsbee is accused of saying, after we participated in an event together.
Hillary Clinton's top economic guru, Gene Sperling, took enough bullets for free trade to drop an elephant when he worked in the White House for Clinton's husband.
Voice of Reason
Sperling, a sensible and avid free trader (and fellow Bloomberg News columnist), is too seasoned a political hand to get caught in a mess such as this one, but free traders know that he would be a voice of reason on the issue in a potential Clinton administration.
There are two kinds of politicians in Washington: Those who respect economists and listen to their advice, and those who don't. Obama, 46, an Illinois senator, may yet be the nominee. If he is, then his platform will be much more sensible if he has a strong economist in his inner circle.
As the populist rhetoric has spewed forth, it has always been reassuring as one envisions a possible Obama presidency to hear insiders say that Goolsbee and Obama are close friends.
The Nafta flap wouldn't have happened if Goolsbee had avoided a meeting with the Canadians, yet it would also have been avoided if Obama had paid more attention to one of his campaign's most valuable assets, the star young economist.
Indefensible Populism
The truth is, Obama's populism would be difficult or impossible for any economist to defend. The problem exploded on the candidate because he is far too intelligent to believe his own rhetoric on trade, and everyone knows it.
The first law of Washington is that you only get in trouble if you say something that has remained unspoken, but everyone believes to be true. Whether Goolsbee said what he was accused of saying, the law clearly applies in this case.
The right response to Nafta-gate is to listen more to economists next time and involve them more in the campaign, not less.
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