{"id":7983,"date":"2011-09-26T21:19:32","date_gmt":"2011-09-27T02:19:32","guid":{"rendered":"http:\/\/ssgreenberg.name\/PoliticsBlog\/?p=7983"},"modified":"2011-09-26T21:25:07","modified_gmt":"2011-09-27T02:25:07","slug":"riffing-on-obama-economic-follies","status":"publish","type":"post","link":"https:\/\/ssgreenberg.name\/PoliticsBlog\/2011\/09\/26\/riffing-on-obama-economic-follies\/","title":{"rendered":"Riffing on Obama’s Economic Follies"},"content":{"rendered":"

In my previous post Errors Dealing With Economic Recovery Originate With Obama<\/strong><\/a><\/strong>, I used the quote from Brad DeLong’s post:<\/p>\n

I learn that Barack Obama was attracted to the idea that on top of our business-cycle demand-driven downturn was a longer-run trend rise in technological unemployment that virtually guaranteed that the recovery would be \u201cjobless\u201d:<\/p>\n

[Summers and Romer] were concerned by something the president had said in a morning briefing: that he thought the high unemployment was due to productivity gains in the economy. Summers and Romer were startled. \u201cWhat was driving unemployment was clearly deficient aggregate demand,\u201d Romer said. \u201cWe wondered where this could have been coming from. We both tried to convince him otherwise. He wouldn\u2019t budge.\u201d Summers had been focused intently on how to spur demand, and on what might drive a meaningful recovery\u2026. [W]ithout a rise in demand, in Summers\u2019s view, nothing else would work\u2026. But productivity?\u2026 If Obama felt that 10 percent unemployment was the product of sound, productivity-driven decisions by American business, then short-term government measures to spur hiring were not only futile but unwise. The two economists strained their memory\u2026 had they said something he\u2019d misconstrued?\u2026 After a month, frustration turned to resignation. \u201cThe president seems to have developed his own view,\u201d Romer said.<\/p><\/blockquote>\n<\/blockquote>\n

I’d like to talk about what is so wrong about Obama’s thinking.<\/p>\n

Obama is short sighted when he thinks, “high unemployment was due to productivity gains in the economy.”\u00a0 He needs to realize that because of the way our taxes are structured and the rules that have been set up for our economy since 1980, the fruits of increasing productivity flow almost exclusively to the top of the economic pyramid.\u00a0 The rest of the economy\u00a0 is left to suffer only the bad consequences of how this economic structure is set up.<\/p>\n

In my previous post Imagine – Total Automation<\/strong><\/a>, I tried to show that by taking the rise of productivity to an extreme it might be clearer that one could imagine a different outcome is possible for the 98% of the economy that is actually harmed by increasing productivity under the current system.<\/p>\n

Where Romer missed making an effective argument, was in saying that \u201cWhat was driving unemployment was clearly deficient aggregate demand,\u201d\u00a0 as if that were totally unrelated to the President’s vision of the cause of high unemployment being the fault of increased productivity.<\/p>\n

Letting the top 2% of the population take all of the benefits of increased productivity, robs the other 98% of the money needed to buy all that can be produced by this highly productive economy.\u00a0 This combination is what leads to high unemployment.\u00a0 Contrary to what Obama was thinking, the high productivity does not inevitably lead to high unemployment.<\/p>\n

This flow of all benefits upward is a product of our tax structure and economic rules and regulations created by the government.\u00a0 Both of these are within Obama’s domain to try to change.\u00a0 When faced with the thought that “the high unemployment was due to productivity gains in the economy”, he needed to ask himself, so how can we change this outcome of productivity gains without losing the benefits of those gains.<\/p>\n

There are plenty of experts around who can explain to Obama how to do this.<\/p>\n

When I voted for Obama, I thought of him as a man of vision and great enough intellectual curiosity that he would learn the things he needed to in order to be a success.\u00a0 In the case of economics, he has been a man of little vision.\u00a0 He has been completely intellectually unaware that he was not an economics expert. There is no reason why he would have even thought that he was an expert.<\/p>\n

Somehow, his erroneous thinking has shifted him from “Yes we can”, to “Oh well, I guess we really can’t” with respect to fixing the economic problems of the country.<\/p>\n

He is going to have to work extremely hard in the next 14 months to convince me that he has seen the error of his ways.\u00a0 So far he blames the discouragement of his natural constituency on themselves.\u00a0 All the exhortation in the world won’t get these people excited about him again unless he gives them something to be excited about.<\/p>\n

The one lesson we learned from Ronald Reagan’s tenure is that when faced with such dire problems, we may not be able to fix them until someone comes along with the courage and the heartlessness to let the economy crash so that it can finally be reshaped in a better way.\u00a0 With his programs, Reagan was finally able to break the back of OPEC and solve our inflation problems.\u00a0 Of course, what he and his descendants in the office of President did after\u00a0 he solved the inflation problem is the proximate cause of our current problems.<\/p>\n

In 2012, should I vote for Obama if he shows signs that he is just going to manage to prolong the agony?\u00a0 Or I should I vote for someone to crash the economy so we can finally go on to the next phase of resolving the issues?\u00a0\u00a0 As in Reagan’s case, the actions of the person who solves the problem of economic depression will be taken to extremes and in the long run will swing the pendulum too far in the opposite direction.<\/p>\n","protected":false},"excerpt":{"rendered":"

In my previous post Errors Dealing With Economic Recovery Originate With Obama, I used the quote from Brad DeLong’s post: I learn that Barack Obama was attracted to the idea that on top of our business-cycle demand-driven downturn was a longer-run trend rise in technological unemployment that virtually guaranteed that the recovery would be \u201cjobless\u201d: […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[166],"tags":[],"class_list":{"0":"post-7983","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-stevegsposts","7":"czr-hentry"},"_links":{"self":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/7983","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/comments?post=7983"}],"version-history":[{"count":5,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/7983\/revisions"}],"predecessor-version":[{"id":7988,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/7983\/revisions\/7988"}],"wp:attachment":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/media?parent=7983"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/categories?post=7983"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/tags?post=7983"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}