When President Obama was first elected, he surrounded himself with a first-rate team of economic advisors, and then didnt pay attention. Maybe it was his apparent desire to get along with the Republicans, to make friends, to bring a new period of amity and civility to Washington.
But maybe he just spent too much time at the University of Chicago.
Yes, he was teaching at the Law School and the questionable influences came from the school of economics, but heres what the economics department says about itself: The University of Chicago is home to an unusually innovative department of economics. The proportion of new ideas in economics over the last forty years that have emanated from or become associated with Chicago is astonishing. Maybe the ideas emanate into the faculty cafeteria as part of the bologna sandwich lunch special.
Listening to professional economists discuss fiscal expansion is almost as elucidating as listening to physicists discuss quantum theory, but to oversimplify beyond all reason, freshwater economists (so called because they teach at schools near the Great Lakes) dont think that government intervention to revive a stagnant economy accomplishes much, and they have models to prove their point.
Advocates of Intelligent Design over Evolution also have models to prove their claims and theyre as valid as the economic ideas coming from what Paul Krugman has called the Chicago types. The Freshwater economists are good at finding reasons why, even in a severe recession, expanding the distribution of money wont do any good.
Its from this group of experts that we get the idea that while millions of people have been unemployed for years, have used up their share of the social safety net and have given up hope its a good idea to cut spending and balance the budget. These economists have no solution to the economic malaise, so they change the subject. The tragedy is that President Obama, who should know better, parroted the misinformation of the Republicans and their Tea Party faction.
In his July 25 speech, President Obama said Now every family knows that a little credit card debt is manageable. But, if we stay on the current path, our growing debt could cost us jobs and do serious damage to our economy.
This comparison of the national economy to a family, or even to a state is easy to understand, friendly, something that people can relate to.
Unfortunately, nobody is taking the time or effort to present the basic economic fallacies of the Republicans and, it increasingly seems, President Obama.
When you have a family, and things get tight, you cut back on spending thats simple. But when you have a whole nation to worry about, and things get tight, cutting back just makes things worse.
You cant reduce high unemployment by firing more people.
Firing the police makes the streets less safe, and firing teachers destroys hope for the future.
Higher unemployment becomes a spiral and businesses which lose customers have no choice but fire more people. Granted Keynes said that in flush times, governments should build a surplus to use when things go sour, and instead we created most of the deficit during the Bush years when we could have been saving but that doesnt change things now.
The US government was still creditworthy, and could have borrowed more money, and once the economy was vibrant again, that would be the time to get things in balance.
Instead, we may be entering an L shaped recession, with no recovery in sight and a balanced budget amendment would institutionalize economic suicide. What we needed was a massive program to fix roads before they crumble, bridges before they collapse but we didnt get it. We got tax cuts instead.
What we need now, desperately, is a Manhattan Project that will find a way to explain economics in a 15 second television commercial.
Sam Uretsky writes and practices pharmacy on Long Island, N.Y. Email him at firstname.lastname@example.org.
From The Progressive Populist, September 1, 2011
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