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Obama's Economic Ignorance


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July 1, 2011

Obama's Carefully Burnished Economic Ignorance

By Robert Tracinski

So I heard the latest economic bulletin from President Obama: that the whole problem with the economy and the federal budget is because of a tax break for corporate jets.

Really? We're in economic and fiscal trouble because we haven't raised a tiny little tax on corporate jets? Does the president have any concept of how irrelevant this is? The tax accounts for less than one tenth of one percent of the deficit reduction his negotiations with the Republican are supposed to achieve. Moreover, as he sneers derisively about the owners of corporate jets, does he have any concept of their value to the economy? As someone who has recently traveled on a commercial airliner, let me say that I certainly hope that the nation's CEOs are not waiting around to be stuffed into coach class on Delta. I certainly hope that they have more efficient travel arrangements and more productive things to do with their time.

Thinking about this latest claim reminded me of the president's previous economic brainwave: his claim that the reason for high unemployment is automation, as embodied by the new-fangled ATM machine. In response, the Wall Street Journal published a very thorough response explaining how increased productivity from automation creates wealth and therefore not only creates jobs but creates higher-paying jobs.

It was a nicely done piece, but when I was reading it I felt a vague sense of embarrassment. It was all correct and very clearly stated, with good concrete examples--but there was nothing there that I hadn't read more than twenty years ago, in college. The embarrassment was not for me, but for Obama and his protectors in the mainstream media. How could they not know this already? How is it that they need this to be explained to them?

But then I realized that I went through very much an alternative history compared to Obama. Back then, I was toting around a dog-eared copy of Henry Hazlitt's Economics in One Lesson. Hazlitt was a columnist for Newsweek in the middle of the last century, back when the magazine was worth more than one dollar, and he was renowned as one of the clearest explainers of free markets. (Times change, and today I expect that my younger counterparts have downloaded Thomas Sowell's Basic Economics onto their iPads.)

More to the point, since this sort of thing isn't all learned from books, I have spent the intervening 20 years actually looking at and paying attention to the economy around me. I am old enough to remember when ATMs were new and exciting technology, and I remember a whole era in which ATMs and other forms of automation took over everywhere--even as unemployment declined to 5% and businesses began to complain about a shortage of workers. So it would never appear to me to accept, "Oh, well, people are using ATMs," as an explanation for unemployment, or to offer that up as an explanation to the rest of the world.

But I was clearly doing something different all those years than Barack Obama. I was gaining a knowledge of the economy and of how the world works that he never absorbed. Why?

Of course, we can suspect Obama of a certain degree of hypocrisy on these issues. Take corporate jets. Obama raised about $750 million for his 2008 campaign. Did he fly regular commercial airliners during his campaign, or did he spend some of his enormous fund-raising haul on private jets? And didn't his own stimulus package contain a tax break for private jets, in an attempt to stimulate the airplane manufacturers? So we can certainly suspect that his talk about ATMs is just an attempt to distract our attention from the ill effects of his policies, or that his railing against private jets is an exercise in demagoguery, calculated to fire up the class resentment of the lumpenproletariat rather than to enlighten anyone on the finer points of economics.

Yet on the other hand, President Obama seems genuinely, privately ignorant on these issues. The political gossip going around right now is that the Obama administration is panicking because they sincerely expected a robust economic recovery by now, and they wanted to campaign next year by borrowing Ronald Reagan's "it's morning again in America" theme--without actually having to borrow any of Reagan's policies. We have to presume that if Obama knew how to revive the economy, he would, and he seems genuinely stumped as to why his stimulus is not working.

So what explains the deep-seated ignorance of economics on display in his public comments? Why does he demonstrate such a lack of practical appreciation of how business works?

The answer is that he lacks it because it is forbidden knowledge.

Consider Obama's background. He grew up among leftists, his childhood mentors were outright communists, and he then went off to academia, where he spent his formative years in an environment where business and profit-making are looked down upon as ugly, dirty, rapacious, immoral. Is it any mystery why he doesn't know about business or economics? Asking him to study the economics of the free market is like asking one of the old New England Puritans to thumb through a manual on sex education. Why immerse oneself in a subject that is so unseemly? Why make a study of how to be immoral?

It is for this attitude that Obama was elevated in American politics. He won the Democratic primaries because, unlike Hillary Clinton, he really seemed to believe in all of the old "liberal" pieties. He projected the sense that he still regarded big government as an untried new idea that would do better than the free market. But to believe that, he had to resist the contamination of pro-free-market economics or any independent observation of the workings of the economy. He had to live through 25 years of ATMs and low unemployment--or, for that matter, of balanced budgets while CEOs still flitted about in untaxed corporate jets--and not let any of it register. He had to preserve a carefully maintained, earnestly burnished ignorance of the economics of a free market.

That is the problem that keeps us mired in the Great Recession. What we are up against is not just ignorance of economics, but its cause: a moral prejudice against capitalism and moneymaking, which makes people like President Obama think that ignorance of the workings of a private economy is a virtue.


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I think this gives him/them too much benefit of the doubt. It's not ignorant disregard for basic economics...this is a willfull act. This is a deliberate ploy to create a consistuency completely dependant on living off the productive class. The whole premise is built off a ponzi scheme...you can keep creating dependant groups as long as > 50% of the population is the productive class and the economy/housing/etc., are growing fast enough to fund it. Otherwise, government growth would flatten over time vs growing as everything else grows...there's really no reason for government to grow each year at a given rate...government services should be basically flat over time. But, given that we keep adding new and "improved" ways for government to entangle itself in our lives; or to appropriate another dependant class from what was formerly a productive class; the Left keeps growing it's political base because the rest of us fund it.

Now we have the Great-Reckoning... >50% in the dependant class and the Ponzi scheme has been brought down by the forces that fed off it...this is why they don't know what to do..becasue their whole philosophy,and the only way this ever works, is assuming you never get to this point...see Bernie Maddoff...

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