Thursday, September 22, 2011

Obama Not Good On Economics

Now that the dam has broken on the Obama White House, we are getting our first real look at the man and his ideas--without the PR. Says The Money Illusion blogger:
It seems increasingly clear that Obama doesn’t have a good understanding of economics.  He approaches issues like a very bright non-economist using his common sense.
This is not good.  Because the whole point of economics and, for that matter, physics since Newton is that common sense doesn't do it on economics.  It would seem, from common sense, that productivity kills jobs.  You replace a man with a machine, and you lose a job.  Right?

Economics is the non-common-sense knowledge that says it ain't what you think.  The machine releases the worker for other work.  And there is plenty of other work to be done.  We've seen this process right from the start of the industrial revolution.  The workers that manned the textile factories were men that had lost their livelihood on the land.  Two centuries ago, about 80 percent of workers worked in agriculture.  Now it is less than 3 percent.  Then the factories started emptying out and manufacturing jobs started to decline.  A century ago, a huge proportion of workers worked in mining, steel, and railroads.  Now almost nobody works in those basic industries.  Yet overall Americans are much more prosperous than a century ago.

So it matters that President Obama doesn't get economics.

The bigger problem is that he doesn't get that he, or the next guy, is going to be the president that reneges on all the pretty promises about government entitlements.  Someone, and it better be soon, is going to have to reverse a century of liberal politics and cut entitlements, cut subsidies, cut labor regulation, cut environmental regulation and stop trying to gun the economy with the credit system.  The problem for Democrats is that their entire political existence is built upon entitlements, subsidies, labor "gains", environment, and cheap credit.  So if President Obama does fixes the economy he loses his base.

Right now the president seems to be focusing on the need to head off a primary challenge from the left. No doubt once he is sure of the nomination he will pivot to the center.

But the problem for the president that doesn't understand economics is that when he pivots to the center there may not be anyone there.  The president has been laying down a record for the last 30 odd months, and that record is spend, tax, regulate.  The American people want jobs, jobs, jobs.  And they mean jobs in the private sector, jobs that aren't procured by crony capitalism.

Any voter that thinks that Obama will deliver on jobs in the private sector any time soon deserves what he gets.

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