Governor Appoints Economic Council

Gov. Arnold Schwarzenegger on Friday appointed a Council of Economic Advisors that featured names highlighting his affinity for free-market economics.

The 16-member group is salted with academics from Stanford University’s conservative Hoover Institution and the University of Chicago. The group includes two Nobel Prize winners, Milton Friedman and Gary S. Becker, both from Chicago. Economist Arthur B. Laffer, whose controversial “trickle down” theories heavily influenced President Reagan, also will be advising the governor at the panel’s quarterly meetings.

“It’s the heavy cream of their profession,” said former U.S. Secretary of State George P. Shultz, who helped the governor and his staff draw up the list and will lead the panel. Shultz, who headed Schwarzenegger’s economic advisory team during last year’s recall campaign, said the group would play a function similar to that of economic councils he set up for Reagan and former Gov. Pete Wilson.

Schwarzenegger said he wanted the panel to propose ways to make the California economy more competitive in hopes of spurring job creation. Although the state’s economic picture has improved since Schwarzenegger took office last year, it still faces big budget deficits and difficult spending choices.

“This is a group of brilliant individuals with a clear understanding of the complexities of our economy and the steps necessary to rebuild it,” the governor said in a statement.

Friedman has long been one of the governor’s idols. In 1990, Schwarzenegger introduced the videocassette version of Friedman’s television series “Free to Choose,” based on a bestselling book he wrote with his wife, Rose, also an economist.

The group “looks a little conservative but has a broad range of experience,” said Steven Cochrane of Economy.com, a Pennsylvania-based consulting firm. Although Laffer remains a controversial figure, Cochrane said, the researchers from the Hoover Institution are “on top of things today.”

Many members of the panel have specific areas of expertise that can help the governor find novel solutions to problems, said panel member James L. Doti, president of Chapman University in Orange.

“I think the governor wants perspective from people he has respect for,” Doti said. “Knowing some of the people there, I think they are going to be looking for ways to solve environmental problems and challenges in higher education that will look more toward market solutions than overt governmental involvement.”

For his part, James L. Sweeney, a Stanford energy specialist, said he would urge the governor to fix California’s convoluted regulatory system and “move the state back toward a leadership position” in developing clean- energy technologies that reduce dependence on oil and other fossil fuels.

The other members of Schwarzenegger’s council, along with their positions and academic credentials:

Annelise Anderson, research fellow at the Hoover Institution; PhD, Columbia University. Martin Anderson, senior fellow at the Hoover Institution; PhD, Massachusetts Institute of Technology. Michael J. Boskin, senior fellow at the Hoover Institution; PhD, UC Berkeley. Tom Campbell, dean of the Haas School of Business, UC Berkeley; PhD, University of Chicago; JD, Harvard Law School. John F. Cogan, senior fellow at the Hoover Institution; PhD, UCLA. Robert Denham, lawyer; JD, Harvard Law School. Sebastian Edwards, professor of international business economics at UCLA; PhD, University of Chicago. Warren Hellman, investment banker; Harvard Business School. Ron Olson, lawyer; JD, University of Michigan. John B. Shoven, director of the Stanford Institute for Economic Policy Research; PhD, Yale University.

Times staff writer Joe Mathews contributed to this report.