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Tuesday, February 20, 2024

Obama’s Great Economic Lie



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On Tuesday, April 10, President Obama spoke in Boca Raton at Florida Atlantic University. He promptly showed that he needs a remedial course in basic economics.

The speech covered all the same ground as the rest of his speeches lately: he’s declaring class warfare on the rich. In this speech, though, he went into particular depth on his vision of economics. Or rather, his blindness with regard to economics.

Obama casts his re-election campaign as a debate between becoming a nation “where a shrinking number of people are doing really, really well, but a growing number are struggling to get by,” and a nation where “everybody gets a fair shot … does a fair share … plays by the same set of rules.”

There’s only one problem with this – Obama isn’t on the side he thinks he’s on. According to Robert Reich, Obama’s interim economic advisor, Obama’s supposed economic recovery has gone almost entirely to the top 1%. So his economy is the economy creating unfairness – greater government interventionism does not translate into greater prosperity for those who are not top earners.

But Obama continued. “This is the defining issue of our time,” he said. He admitted that “Government is not the answer to everything.” And he added that the free market “is the greatest force for economic progress in history.” But, he said – and you knew there would be a but – “through our government,we should do together what we cannot do as well for ourselves.”  What kinds of things can’t we do well? Apparently we’re bad at education – although private education routinely outstrips public education in terms of performance. Apparently, we’re bad on our own at health care – even though the most highly-privatized sectors of our health care economy are also the most efficient. And apparently we’re bad at saving our money for the future – even though Social Security is an enormous Ponzi scheme that has essentially gone bankrupt.

No, said Obama, we need government for all of that. “This is not some socialist dream,” he blathered. “They have been made by Democrats and Republicans for generations, because they benefit all of us and they lead to strong and durable economic growth.”

This is nonsense. Worse, it is ahistoric nonsense. Every major government program undertaken by this country has cramped economic growth. Government has exploded over the last decade, but our living standards are essentially the same as they were ten years ago. The programs Obama is so fond of quoting are in dire need of reform – if they’re not reformed, they will be gone within the next two decades. Obama himself is cutting $500 billion from Medicare in order to fund his greater government.

But we still haven’t gotten to the crux of Obama’s vision. Here it is: “When we guarantee basic security for the elderly or the sick or those who are actively looking for work, that doesn’t make us weak.  What makes us weak is when fewer Americans can afford to buy the products that businesses are selling, when fewer people are willing to take risks and start their new business, because if it doesn’t work out they worry about feeding their families …. In this country, prosperity has never trickled down from the wealthy few.  Prosperity has always come from the bottom up, from a strong and growing middle class.”

This is the smartest man ever to occupy the Oval Office?

Let’s analyze. What makes us weak, he explained, is when we can’t afford to buy products. This is idiotic. We can always afford to buy products unless we are completely impoverished. The question is which products we can afford to buy. If we could not afford to buy products, the prices would drop until they reach the level at which we can afford to buy them. This is why when markets go down, deflation occurs.

As for risk-taking, the real problem with risk-taking is not the risk of failure – risk-takers try and fail and try again. The real problem is unpredictability of regulatory regime. Sure, we are more risk averse when times are bad. But that’s not solved by handing out money to poor people. That’s solved by allowing banks the freedom to loan – which requires people to save their money in banks. The market solves these problems if left to its own devices. Obama won’t leave the market to its own devices.

Obama believes that prosperity comes from the bottom up. Have you ever been hired by someone poor? No? Join the other people who have worked for a living. People who hire are people who are successful financially. Those who are poor can’t afford to hire workers. They are trying to live day to day. Taxing a rich man $10,000 to give $2,000 to a poor man, the rest being eaten up by government bureaucracy, is a rotten deal.

This is basic Marxism. It assumes that because people in the lower economic rungs work hard and work long hours, they produce inordinate wealth. They do not. Specialized skill sets produce wealth. Providing goods and services to a willing market, and finding innovative ways to do so – that produces wealth. Wealth is always trickle-down; wealthy people are wealthy because they are good at making money. If poor people were good at making money, they wouldn’t be poor – and that’s why many poor people become wealthy. No poor man becomes wealthy by simply picking up a government paycheck.

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