Wednesday, August 17, 2011

The bad luck Presidency


Obama: I reversed recession until 'bad luck' hit
At a town hall meeting on his campaign-style tour of the Midwest, President Obama claimed that his economic program "reversed the recession" until recovery was frustrated by events overseas. And then, Obama said, with the economy in an increasingly precarious position, the recovery suffered another blow when Republicans pressed the White House for federal spending cuts in exchange for an increase in the national debt limit, resulting in a deal Obama called a "debacle."

"We had reversed the recession, avoided a depression, gotten the economy moving again," Obama told a crowd in Decorah, Iowa. "But over the last six months we've had a run of bad luck." Obama listed three events overseas -- the Arab Spring uprisings, the tsunami in Japan, and the European debt crises -- which set the economy back.

If I were to make a list of the things that have derailed this recovery, none of those items would be on it. I'm willing to concede, for the sake of discussion, that there's been some impact to the US economy from the destruction in Japan. It's not obvious to me that that the European situation, beyond giving a foretaste of what we're headed for in the absence of a course correction, has had much tangible impact. And if the "Arab Spring" has had a negative impact on the US economy, I suspect it pales in comparison to the Cash for Clunkers program, in which the United States transferred tax dollars from less wealthy to more wealthy and paid for the destruction of billions of dollars worth of US assets at the same time.

Bad luck? "The Fault, Dear Barack, lies not in our stars, but in ourselves." At a time when our debt was already bad, we increased it with a poorly designed "stimulus" that utterly failed to spur aggregate demand. At a time of high cyclical unemployment, we implemented plans and policies which inevitably increase the cost of hiring and firing, and therefore increase structural unemployment. At a time when financial markets are scared to invest, we add an enormous law filled with regulations of every aspect of the business, a law which will require years of implementation before people really understand all of the implications. At a time when we need businesses to get back to the business of business, hiring people and selling product, we unleash harsh rhetoric against the business community. To quote the always quotable C.S. Lewis,
we continue to clamour for those very qualities we are rendering impossible. You can hardly open a periodical without coming across the statement that what our civilization needs is more 'drive', or dynamism, or self-sacrifice, or 'creativity'. In a sort of ghastly simplicity we remove the organ and demand the function. We make men without chests and expect of them virtue and enterprise. We laugh at honour and are shocked to find traitors in our midst. We castrate and bid the geldings be fruitful.
Lewis was not talking about business or the economy, but it couldn't be more on-point if he had been. We laugh at prudence and fiscal rectitude and are shocked to find Fannie Mae and Lehman Brothers in our midst. We castrate businesses with excessive regulation and bid them be fruitful and hire.

Bad luck? To the extent that you were elected in 2008, President Obama, yes, we've had bad luck.

Oh, and, of course, we have to close with the Heinlein quote:
Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.

This is known as "bad luck."

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