Q&A with SAIS’ Jonas Nahm, Co-Author of 2024 U.S. Presidential Economic Report

April 25, 2024

Jonas Nahm, an associate professor at Johns Hopkins School of Advanced International Studies (SAIS), is serving as a senior economist on the Council of Economic Advisers—an agency within the White House that provide U.S. presidents with objective advice on the formulation of both domestic and international economic policy. Nahm’s role within the Council has specifically revolved around industrial strategy, including the development of green industries crucial for addressing the climate challenge.

In this interview, Nahm describes his experience so far in this public-service role, and his involvement in the preparation of the recently released annual Economic Report of the President—which President Biden sent to Congress on March 21, 2024.

What key issues did you focus on in the report?

Every year, the Economic Report of the President (ERP) lays out the progress and challenges affecting the domestic economy, as well as the administration’s economic policy priorities. The ERP is written by the Council of Economic Advisers (CEA), were I serve as a senior economist this year. At CEA, I cover the industrial strategy portfolio, and I co-wrote a chapter of the ERP with the senior economist in charge of the climate portfolio, Kyle Meng, together with the excellent junior economists on our team.

What are your primary findings or insights? 

Our chapter (Chapter 6) examines policy options to accelerate the clean energy transition to achieve a net zero economy. We discuss the energy transition from the perspective of structural change. Like other large-scale instances of structural change, for instance from manufacturing to services, the clean energy transition also entails a reorganization of the economy: the shift from fossil fuels to clean sources of energy to unlock a world of cheap, reliable, and abundant clean energy, along with new sources of economic growth and prosperity.
 
We identify economic frictions and market failures that currently prevent this process of structural change from unfolding as quickly as needed to meet climate goals. And we discuss policy interventions to remove these obstacles to accelerate progress toward net zero.

The breadth and depth of the Economic Report of the President…reflects the deep bench of expertise at the Council of Economic Advisers, and the federal government more broadly.

What messages or takeaways do you hope practitioners, decisionmakers, and the public will derive from your contribution to this report and from the report overall?

There are two key take-aways from the ERP chapter on climate change. First, the structural change perspective emphasizes the systemic nature of the challenge of switching from one energy system to another. This means that we have to resolve many obstacles and market failures at the same time. For instance, we have to lower the cost of new technologies so that they can more effectively compete with fossil sources of energy, we have to resolve labor market challenges so that workers can find employment in clean energy sectors, and we have to invest in complementary technologies, like batteries, so that new energy technologies can better replace the existing energy system.
 
The second take-away is that policy interventions to remove these obstacles need not be permanent. Once we have resolved market failures and economic frictions to put the economy on a path to net zero, there will be sufficient momentum and incentives for the private sector to move forward the energy transition without further government intervention. Current policy interventions, including those part of the Inflation Reduction Act, should be understood through that lens. For instance, public investments in vehicle chargers resolve a chicken-and-egg problem: the private sector is reluctant to invest in chargers absent sufficient demand for charging, while consumers are hesitant to invest in electric vehicles unless there are plenty of chargers. Policy intervention can help remove such obstacles and create markets for clean energy technologies.

What are some of the necessary steps needed to ensure that discussions and policy recommendations around clean energy occupy greater space in economic policies? 

A key contribution we tried to make in our chapter is to show that climate policy really is economic policy. The challenge of switching our energy system from one based on fossil fuels to one of cheap, reliable, and abundant clean energy bears many similarities with past periods of large-scale economic change. This includes past energy transitions, including the one underlying the industrial revolution, periods of rapid economic development, and shifts in the composition of the domestic economy. So many of the tools and concepts we have developed by studying other periods of economic change help us understand the energy transition. The challenge is that we need to move rapidly to meet climate goals.

How would you describe your experience working with your colleagues across the executive branch in preparing this report?

Working on the ERP is a team effort. This is true for the initial brainstorming and development phase, where we pitched ideas and received feedback from our colleagues in CEA. It’s certainly true for the writing phase when our team wrote chapter drafts together, writing and editing each other’s work. And it is also true for the review process when chapter drafts were circulated both in the Executive Office of the President and across government agencies for feedback and input. So it’s both a chance to work very closely with a small group of colleagues, and, during the review phase, an opportunity to meet experts from across the government who share an interest in the economics of energy transition.

How has your participation in this work shaped your view of the role of economists in public sector positions?

The breadth and depth of the Economic Report of the President—covering topics ranging from labor markets, AI, housing, education, trade, to our chapter on climate—reflects the deep bench of expertise at the CEA, and the federal government more broadly. Preparing the ERP (and every day there, really) is an opportunity to learn from each other. It has been the honor of a lifetime to serve in the government as part of such a dedicated and talented team at CEA.