December 1, 2008, 12:00 AM

Obama picks Internet expert for top economic posts

Austan Goolsbee, a University of Chicago economics professor, will be the staff director and chief economist of the new Economic Recovery Advisory Board. Goolsbee has also been granted one of three spots on the president’s Council of Economic Advisers.

President-elect Barack Obama has chosen an Internet expert, University of Chicago economist Austan Goolsbee, for two key posts in the new administration.

Goolsbee will be staff director and chief economist of the newly created Economic Recovery Advisory Board charged with offering the President nonpartisan advice on revitalizing the economy. Goolsbee has also been named one of three members of the Council of Economic Advisers, a nomination that requires Senate confirmation. Goolsbee has been a key economics adviser to Obama since 2004.

Goolsbee’s research has focused on the Internet, the new economy, government policy and taxes. From 2000 to 2001 he was a special consultant on Internet policy to the antitrust division of the U.S. Department of Justice.

In a 2006 paper he argued that taxing broadband Internet access when it was being introduced in the late 1990s would have slowed its rollout. “This paper argues that the deadweight loss from taxing a new technology that has fixed costs associated with adoption can be much higher than taxing a conventional good because it can lead to a delay in adoption and a subsequent loss of consumer and producer surplus,” Goolsbee wrote in the paper. He went on to add that “the findings in this paper suggest that taking into account the impact of taxes on innovation and technology may be fundamental for understanding the role of government policy in the new economy.”

Donna Hoffman, co-director of the Sloan Center for Internet Retailing at the University of California-Riverside, praised Obama for appointing an economist who has focused much of his research on Internet economics and taxation. “That is very important because the Internet is going to be one of the engines driving the economy going forward,” Hoffman says. “Having an economist who understands that will be very helpful.”

Goolsbee did an early study showing that imposing local sales taxes on Internet purchases would reduce the number of online shoppers, notes Kirthi Kalyanam, director of Internet retailing at the Leavey School of Business at Santa Clara University. Kalyanam says Goolsbee’s prior work suggests he will base his recommendations on hard data and will carefully consider alternatives.

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