Yes I (Gulp) Can: Peter Henry’s Obama Adventure

Jul 1st, 2009

STANFORD GRADUATE SCHOOL OF BUSINESS—One morning in early March 2008, Peter Henry stared at the email on his computer screen. “Do you want to lead presidential candidate Barack Obama’s Economics, Globalization, and Trade Policy Group?” it asked.

The Stanford Graduate School of Business economist took a breath, vacillating. “How could I say yes to this?” he recalls. “How could I say no?”

Henry’s ultimate “yes” pulled him into the maelstrom of national politics for 10 intense months. It wasn’t until this past spring that he finally settled back down in Palo Alto to tend to family and academic obligations.

When the invitation arrived, Henry was peacefully on sabbatical from the Stanford Business School. Just a week earlier, he had received a long-coveted contract from Oxford University Press to write a new book on the impact of economic reform in developing countries. The Konosuke Matsushita Professor of International Economics was eager to collect and flesh out his previous work to make the case that controversial reform policies advocating free trade, privatization, and the lowering of inflation were, in fact, growth friendly and beneficial.

“The book would mark the culmination of everything I’d been working on at Stanford for the past decade,” he recalls.

But the opportunity to apply his knowledge to one of the most exciting elections in years was too enticing to turn down. Henry soon found himself a protagonist in a classic case-study scenario: young whippersnapper professor managing some 200 senior business executives, policy analysts, and key donors. “I had to figure out how to take the reins, establish credibility, and secure lines of communication,” the down-to-earth scholar says.

Henry, who also serves as a senior fellow with the Stanford Institute for Economic Policy Research (SIEPR), was not a newcomer to the Obama camp. Since May 2007 he had been a member of the campaign’s Economics, Globalization, and Trade policy group, invited to participate by his former Massachusetts Institute of Technology graduate school classmate Austan Goolsbee, then chief economic advisor to the Obama campaign. Goolsbee, now a member of Obama’s council of economic advisors, and other principals currently in or poised for high economic positions in the Obama White House, such as Karen Kornbluh, Julius Genachowski, and Reed Hundt, admired Henry’s advocacy of free international capital movements. He was, in their estimation, centrist, fact-driven, and non-dogmatic–the perfect blend for a presidential candidate who wanted to bridge ideological divisions and get down to the business of making constructive change.

“Peter is that rare combination–a highest-tier researcher and a completely well-adjusted person and excellent communicator,” Goolsbee says appreciatively of his colleague. “He was just what we were looking for.”

But as Henry stepped in to lead the team in March 2008, the heat was on. “I went in thinking I’d be drafting policy and contemplating economic issues,” he says. Instead, he found himself firmly in the adrenaline-producing role of simply keeping everyone organized. He spent most of his days commissioning or gathering materials such as position papers and op ed essays to inform local campaign workers and the public about Obama’s views regarding globalization and free trade.

Henry also managed the grinding task of tracking down surrogates who could knowledgeably speak for the Obama Campaign on economic issues at public events. “We’d never know where in the country the needs would be, and sometimes I’d have to come up with someone at the last minute,” he says. Last September, that someone was Henry himself, who went head-to-head on how to deal with the country’s financial crisis with the McCain camp’s Kevin Hassett at a SIEPR event in Encina Hall at Stanford.

By summer 2008, Henry was hitting the phones and email at his home office from the time he got up–which, in California, was already “late” by East Coast standards–to the time he went to sleep. “I’d skip my shower until later in the day, when things slowed down east of the Mississippi River,” he laughs. As to the number of hours he put in: “Innumerable,” he says cheerfully.

While Henry was happy to use his management skills for the good of the campaign, in the fall he finally got the opportunity to apply his research expertise. Anticipating victory, in September 2008 Reed Hundt, chairman of the Federal Communications Commission from 1993 to 1997, invited Henry to lead the part of the transition team charged with reviewing the U.S. government’s role in the multilateral lending agencies.

Hundt thought that Henry’s research on international finance, macroeconomics, and emerging markets made him the perfect person for the job. Despite the August arrival of his fourth son, Henry once again couldn’t refuse. “After spending my entire Stanford GSB career thinking, writing, teaching, and speaking about the impact of the policies of the multilateral lending agencies on emerging economies, how could I turn down the opportunity to inform the president-elect about the critical role these institutions would play during a time of crisis? I felt a personal responsibility to help, and my research had uniquely prepared me to do so.” Henry says.

This time, the Stanford professor’s job involved numerous trips to Washington, D.C., to interview officials from agencies such as the International Monetary Fund and the World Bank and to strategize about such organizations’ future role in light of Obama’s economic agenda. Among his research assistants were doctoral students Cecilia Mo, Arthur Chiang, and Joel Wiles of the GSB, and Luke Stein of the Stanford economics department.

With the stock market crash and the deepening of the world economic crisis into the winter of 2008-09, the pace quickened. “A new country was coming to the IMF for money every week,” he says. The recommendations of Henry’s team to the incoming Obama administration included a call for the United States to support more IMF funding.

“It’s a good thing for the IMF to have ample resources,” he maintains. “You don’t want to create the perception that the institution does not have sufficiently deep pockets to shepherd emerging economies through the crisis. The advent of such a perception could trigger an even more severe slowdown of lending to emerging markets. That would throw emerging economies into an even deeper recession, with negative feedback effects on the United States, Japan, and Europe. We also argued that the legitimacy of the IMF and the World Bank depends critically on giving emerging economies a governance and leadership stake in these institutions that is commensurate with their increased and growing importance in the world economy.”

Henry says that the amount of time and energy the Obama Administration expended on policy issues related to the economies of developing countries during the first 100 days proved to be prescient. The World Bank recently revised downward its projections for the global economy in 2009. The Bank previously forecasted that world GDP would contract by 1.75 percent in 2009. In June, it said that world GDP will contract by 2.9 percent, in large part because the drying up of capital flows to poor countries is causing an even greater slowdown in their economies than previously expected.

After a whirlwind 10 months, the Stanford economist, who says he never, in fact, met the President, is resettling into life on the farm. “I was happy to help with the election and the transition, but my wife and four sons are happy to have me back at home,” he says, now hard at work on his new book.

Henry is not entirely without continuing ties to Washington, D.C. In June he was appointed one of 28 members of the Commission on White House Fellowships. The Commission convenes in Washington, D.C. to select 11-19 fellows from among more than 1,000 applicants for the prestigious leadership and public service program. It offers promising young individuals the opportunity to work at the highest levels of the federal government for a year. Alumni of the nonpartisan program include former Secretary of State General Colin Powell, retired U.S. Army General Wesley Clark, and Stanford Business School Dean Robert L. Joss.

—Marguerite Rigoglioso

Related Links

Research by Peter Henry

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