Mr Obama, You're No Reagan!

Deroy Murdoch, a most astute man, does us a favor by assembling a concise catalog of Obama's economic blunders...

"Under Obama, federal spending has risen from 20.7 percent of gross domestic product to 25.3 percent, Washington’s largest slice of apple pie since 1945."

"Obama’s spend-o-rama includes federally funded green jobs that Boskin dismisses as “the leprechaun economy.” The apotheosis of this blarney was last month’s $1.2 billion Energy Department loan guarantee to SunPower Corporation of Richmond, California. Its solar-equipment project promises 15 permanent positions. Cost per job-created: a staggering $80 million." (NRO-Deroy Murdock)

Reagan's Recovery vs. Obama's Sagging Non-Recovery

Boskin compared snapshots of Obama’s and Pres. Ronald Reagan’s post-recession recoveries, 27 months after each downturn hit bottom.

In September 2011, on Obama’s watch, non-farm payrolls had grown 0.6 percent, yielding 841,000 jobs since June 2009.

Under the tax-cutting, business-boosting Reagan, non-agricultural employment swelled 8.7 percent, generating 7.7 million new jobs. (NRO-Deroy Murdock)

How Mr. Volker Would Fix It

Reading that comparison reminded me how Obama, to much fanfare, brought the venerable Paul Volker on-board as a convenient counter-weight to his socialist advisers who were discomfiting those serious people not in a hopium-induced daze those first heady days of the Obama Presidency.

It calmed people down, and then Obama proceeded to completely ignore the former Fed Chair who tamed Carter's dreaded stagflation and ushered in the historically-unprecedented Reagan economic boom. Volker has offered his advice on how to fix this mess. It's too wonky to go into here, but it involved breaking up anyone too big to fail, no more government underwriting Wall Street gamblers, putting the different financial functions into their own boxes and jailing those who stray, among other things. You can read the whole thing here: Volker's Advice.

Free Market Ideas for Increasing Employment

For the libertarians among us, taking advice from a former Fed Chairman just won't do, so Reason Magazine has an article entitled Get a Job! that is chock full of free-market remedies sure to get people back to work.

The ideas are too simple-minded and timeless for the progressive eggheads powering Obama's economic failure: Less regulations, less government intervention in the marketplace, no more government bureaucrats picking winners and losers...

Free marketeers know that government cannot power the recovery.  The path to economic success begins with economic freedom. Bill Frezza explains:

Do you sometimes wonder why economists are accorded such respect and influence given the fact that they claim knowledge over the unknowable, promote theories that are untestable, and make forecasts for which they are never held accountable? Isn’t that the definition of a witch doctor?

If engineers were held to the same standards, bridges would collapse as often as banks, planes would fall from the sky (if they ever got off the ground), and cyclical blackouts would be a permanent feature of our electrical grid. But at least they would get to visit the White House.

This gets to the heart of why we should take all macro economic advice with a grain of salt.  It is a soft science, useful for gaining insight, but incapable of predicting market behavior.  Government-planned economies fail, free markets succeed. 

Have you ever watched engineers from different schools argue on Sunday morning talk shows about the validity of Bernoulli’s Principle or Ohm’s Law? No? Yet economists, like rival witch doctors, get red in the face promoting diametrically opposed economic remedies, sometimes sharing Nobel Prizes in the same year for theories that directly contradict each other. Take $2 trillion and call me in the morning. (Bill Frezza - Fundamental Fallacies of Macro Economics)

Obama's No Lincoln, Plus a Quick Economics Lesson

Hailed as America’s first truly cosmopolitan president, Mr. Obama seems to have learned nothing from his youthful years on the international scene. It's no exaggeration to say that the typical Army Sergeant has more real-life experience than this elitist metrosexual poser.

He’s not like Lincoln because he’s shown no humility...

"I have been driven many times upon my knees by the overwhelming conviction that I had no where else to go. My own wisdom and that of all about me insufficient for that day."
  -- Abraham Lincoln

Lincoln had seen success and failure in his life,and he understood all too well our flawed and fallen nature. He had a deep humility borne of this knowledge.

It is impossible to imagine Obama saying something like that.  Instead, he and his wife lecture us on how stupid we are.  Obama juts his chin in the air and fills it with flowery words that have no basis in real-world experience. He’s an inexperienced, unlearned man, but this does not stop him from loudly calling out enemies and lecturing us on how to eat, how to live, how to sneeze and how to spend our money.

To comprehend economics, avoid Paul Krugman, read Greg Mankiw

Harvard Economics professor Greg Mankiw has a gift for explaining the dismal science. Here he explains how economic transactions in a free market are not a zero sum game, but rather, they are win-win situations:

… let’s start with a basic economic transaction. You have a driveway covered in snow and would be willing to pay $40 to have it shoveled. The boy next door can do it in two hours, or he can spend that time playing on his Xbox, an activity he values at $20. The solution is obvious: You offer him $30 to shovel your drive, and he happily agrees.

The key here is that everyone gains from trade. By buying something for $30 that you value at $40, you get $10 of what economists call “consumer surplus.” Similarly, your young neighbor gets $10 of “producer surplus,” because he earns $30 of income by incurring only $20 of cost. Unlike a sports contest, which by necessity has a winner and a loser, a voluntary economic transaction between consenting consumers and producers typically benefits both parties. (Greg Mankiw - Emerging Markets)

This also explains why trade deficits are not always bad. Think about it: Your household runs a permanent trade deficit with the grocer and the utility company. If they were simply vacuuming money out of your pocket this would be a bad thing, but it is not because you get a product back (food, heat) for the money you hand over. In turn, those products enable you to continue widening the trade surplus with your employer.

Finally, this is why I think, on balance Wikileaks helps more than hurts...

China has us by the balls:

An October 2008 cable, released by WikiLeaks, showed a senior Chinese official linking questions about much-needed Chinese investment to sensitive military sales to Taiwan.

His comments came days after the Pentagon notified Congress it was poised to sell $6.5 billion worth of arms to China's arch rival Taiwan.

The much-delayed package was eventually sold, but did not include requested F-16 jets. (AP - Breitbart)