President Obama's tragic mistake was to blow out the U.S. federal balance sheet on spending that has produced little bang for the buck. The fantastical Keynesian notion (the "multiplier") that $1 of spending produces $1.50 in growth was long ago demolished by Harvard's Robert Barro, among others. That $1 in spending has to come from somewhere, which means in taxes or borrowing from productive parts of the private economy. Given that so much of the U.S. stimulus went for transfer payments such as Medicaid and unemployment insurance, the "multiplier" has almost certainly been negative.
No kidding. I believe most working Americans came to the same conclusion quite some time ago.
Personally, I could care less about Robert Barro or any of the other Ivy League pencil-pushers. Their grand economic experiments have landed the rest of us in the soup (while they continue to ponder and dutifully bank their inflated salaries). We need to jettison those who led us down the garden path, and return to common-sense economics.
This fall I will vote for business people, not lawyers, career politicians, preachers, eggheads, or ideologues. Farmers and merchants built our country. It will be farmers and merchants who set us back on the road to prosperity and fiscal sanity.
There ARE no experts in economics. There are only those whose own theories and assumptions (based closely on whatever 'school' they happen to be a part of) all seem work well, until suddenly they do not.
ReplyDeleteMy one big problem with this article is the praise of the Reagan and Clinton/Gingrich eras of economic governance.
Although they both happened to have excellent economies while in power, there is, literally, no proof that their policies were the reason, while there is now ample proof that one major policy of both administrations has led to huge reductions in good, middle-class-making jobs in the long term for the US.
That is the 'free-trade' policy, begun under Reagan, and continued by Clinton, that has sent so many jobs overseas, never to return.
To me, taking our economy from manufacturing based to 'service'/consumer was probably the most foolish thing in the history of American economic policy.
I deeply respect Reagan for the other things he accomplished (Clinton, not much, for the things he did) but I just cannot give a pass for this foolishness.
Excellent comment, DWT. I agree that the shift away from manufacturing was pure idiocy. We're now saddled with inferior goods made in Asia, an idle working class, and an out-of-control trade deficit. We haven't had a trade SURPLUS since 1975.
ReplyDeleteThat reminds me of George McGovern: After losing his Senate race in 1980, he bought an inn in New England. He hired a manager -- but rather than run the place, the manager had to spend all his time dealing with government red tape. As I recall, McGovern ended up going bankrupt. His conclusion? "If I had run a business before going into the Senate, I sure would have voted much differently."
ReplyDelete