Jake Tapper asked the President one heck of a good question last night. Basically, what he asked was, “Mr. President, how will we be able to tell if your stimulus bill is working?”.
I wish I could easily quote the President’s answer, but I can’t because it was four paragraphs of bad economic theory with one whale of a contradiction buried in the middle like the cream filling of a Twinkie. After reading it, I’m still not sure if the President actually has a guiding economic philosophy or if he’s just working off the margin notes in a few textbooks he borrowed from Lawrence Summers. The good news is that you only need to see two small sections of the answer to learn that the President appears to know less than I do about how our economy works.
The bad news is that almost everything I learned about how our economy works I learned in the last two years, on my own.
Here’s the first bit:
I think my initial measure of success is creating or saving 4 million jobs. That’s bottom line number one, because, if people are working, then they’ve got enough confidence to make purchases, to make investments. Businesses start seeing that consumers are out there with a little more confidence, and they start making investments, which means they start hiring workers. So step number one: job creation.
Right off, he gives us a garbage metric. There is no way to measure how many jobs we will be “saving’ because there’s no reliable way to tell how many jobs we would lose had we done something else. I’m sure that in a year, he’ll come up with some arbitrary number of jobs we could have lost had we done something else and he’ll claim victory. But his numbers will always be a guess because that’s the best he or anyone else can do.
After that, he grabs up a few economic concepts and mashes them all into his go-to formula of “lots of jobs = good!”. But we know that’s not true. Heck, the left spend eight years denigrating the low unemployment of the Bush administration by saying that all the jobs were in low-paying entry-level jobs. Yet those are exactly the kinds of jobs you get with government make-work programs. Go back and look at programs like the TVA and the WTA. Sure, they provided jobs, but they were largely low-level “placeholder” jobs. What jobs the stimulus plan does create aren’t going to be wealth-creating jobs.
Which is the second point. This recession hasn’t been caused by too little work. Our unemployment rate is still under 8 percent, which is pretty darned low compared to our history and the rest of the world. The crisis here is a crisis of confidence. People need to know that the economy is heading upwards and that it will keep heading that way for a little while. They need to see that they can move from the job they’ve had to take into a job they want to take. Once they see a path upwards for themselves, they’ll feel free to spend more money and start investing a little. That requires economic growth that a Keynesian spending program has never, in the history of the world, ever provided.
What we have been seeing instead are a President and Congress who say they want to create long-term economic growth, but are doing something quite different. They’re taking trillions of dollars out of the private sector (you know, where the long-term economic growth happens) and using it to secure votes for re-election and to force government control on banks and other companies. That’s not helping consumer confidence even a little bit.
At this point in his answer, he’s on shaky, but defensible ground. He could tune that part of the answer a bit and most folks would say that he was pretty much a doctrinaire Keynesian. Of course, he didn’t stop there.
Earlier that day, he spoke before an audience in Elkhart, IN. Elkhart has been crushed economically because the recreational vehicle industry has been in a nosedive. He tried to make the case that the town’s woes were due to the credit crisis but in doing so, he destroyed the only reasonably intelligent argument he had made to that point.
Part of the problem in Elkhart that I heard about today was the fact that — this is the R.V. capital of America. You’ve got a bunch of R.V. companies that have customers who want to purchase R.V.s, but even though their credit is good, they can’t get the loan.
Okay, so on one hand people don’t have enough confidence to go out and make purchases but on the other hand, they have so much money that they can buy an R.V. if only the credit market loosened up? He can’t be talking about rich people here. Rich people don’t need credit to buy an R.V. Even in cases where they wanted to buy one on credit, there’s not a bank in this country that would deny the loan. He has to be talking about the middle classes, the very people who just two paragraphs earlier were sitting on their wallets because of the job market. So which one is true: people are scared to spend or they are eager to spend but can’t? They can’t both be true.
At this point in the answer, the President is clearly throwing every bullet point he heard in his latest economic briefing at the wall and hoping that a few of them stick.
What’s worse for the poor people of Elkhart is that, even if there is a line of people ready to buy RVs, it’s likely his stimulus plan is going to drive them away. The Stimulus Bill has hundreds of billions for “green” initiatives designed to move people away from big, gas-guzzling vehicles like RVs. It spends money on “smart growth”, which is just a fancy way of saying that people should be jammed into urban centers instead of spreading out and creating the dreaded “urban sprawl”. You ever tried to park an RV in a city? There’s plenty of cash there for alternative energy but nothing for more oil exploration or drilling.
There’s no help there for the RV industry at all — no tax credits for buying an RV, no tax breaks or hiring incentives for RV manufacturers, no attempt to increase domestic gasoline production, nothing. What is there is plenty of help for companies and interest groups that would kill the RV industry dead as a doornail. That’s no help to the people of Elkhart who I am sure trust the President. Little do they know that the guy who stood in front of them and promised them the moon hasn’t the foggiest idea what he’s doing right now.