The president's council of economic advisers.

by Dorothy B Gaines

Institution: Boston University
Year: 1951
Record ID: 1565480
Full text PDF: http://hdl.handle.net/2144/10347


This paper is an effort to examine the work of the President's Council of Economic Advisers, created by the Employment Act of 1946, in its relation to economic science as a guide to practical policy and analysis and to the functions of the economist in the public service. In its role as an advisory body, instrument of analysis, and an agency devoted to the appraisal and formulation of practical programs of action in the economic sphere, the Council is daily confronted with problems which are predominantly extra-economic in their implications, and which it must meet in a manner having regard both for its professional responsibilities to economics as a science and to the requirements and goals of the Employment Act. The author has used as principal sources the publications issued by the President's Council of Economic Advisers and the Joint Committee on the Economic Report since their inception, as well as having examined extensively the leading economic journals and recent publications for reference to the Council's work. The paper covers a period from the beginnings of agitation for an employment act, in 1944, to the first months in 1950. The origins of the Employment Act are traced, the structure and functioning of the Council is studied, and special emphasis given to the conflicts arising out of differing interpretations of the Council's role in presenting its analyses and in its relations with the President and with Congress. A section summarizing the leading observations from the Annual Reports reveals the conflict within the Council as to the means and goals of stabilization. An attempt is made to analyze and discuss the adequacy of the tools being used by the Council in the preparation of its Analyses of the Economic Situation. This discussion is centered around the concept of the Nation's Economic Budget, the adequacy of statistics, and the problem of forecasting. Leading criticisms of the Council's work, pointing up the problems revealed in the previous chapters, are then tabulated and analyzed, along with legislative attempts to implement the Employment Act and recommendations for modification of the Council's structure and responsibilities. In general, the major conclusion reached by the author is that the Employment Act itself, by its failure to resolve any policy issues or to specify any accepted means of stabilization or tools of analysis, as had been done in the original Full Employment Bill, placed the Council in an extremely difficult position. Without any agreement on institutional goals for the economy, the Council has no frame of reference against which to measure its policies and hence is continually charged with speaking beyond its rightful province and of mixing political, ethical, and social considerations with its analyses. Until the ends of national economic policy are more clearly delineated through legislation, these difficulties will continue. For its own part, the Council needs to be careful to specify the assumptions underlying its analyses and to separate those which are primarily…