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Obama at GMU
President-Elect Obama just spoke at GMU. I was fortunate to have an invite. He had a number of good lines including as good a one-line explanation and justification for Keynesian economics as you will find:
Only government can break the cycle that is crippling our economy, where a lack of spending leads to lost jobs, which leads to even less spending, where an inability to lend and borrow stops growth and leads to even less credit.
He emphasized that jobs would be created in the private sector and saved in the public sector. Nicely put.
His goal is "not to create a slew of new government programs, but a foundation for long-term economic growth." Very good.
In terms of long-term investment, I was pleased to see him mention the smart grid in particular, an idea I pushed as recently as today.
Overall, my view is that the Obama fiscal stimulus plan is evolving in a sensible direction. As promised, he is a pragmatist who is listening to a wide variety of well-qualified, centrist economists.
A substantial fraction of the fiscal stimulus is tax cuts, a substantial fraction is preventing state and local funding from plummeting, a modest but reasonable fraction is on maintenance and improvements of old infrastructure (projects that are mostly already on the books), and a modest (but increasing over time) fraction is on longer term projects which are likely to pay off in future returns.
At present, I see very little in the way of Keynesian pyramid building. Nor do I see an attempt to grab the revolutionary moment by the horns and push the U.S. in a new direction. Thus, thankfully, No New Deal. There is plenty of uncertainty in the economy but it's not regime uncertainty.
Addendum: Do note that I am evaluating Obama relative to what we can expect given the situation and our current politics and also relative to say the New Deal.
Posted by Alex Tabarrok on January 8, 2009 at 01:48 PM in Current Affairs, Economics, Political Science | Permalink
Comments
"I was fortunate to have an invite. He had a number of good lines including as good a one-line explanation and justification for Keynesian economics as you will find:
Only government can break the cycle that is crippling our economy,
where a lack of spending leads to lost jobs, which leads to even less spending,
where an inability to lend and borrow stops growth and leads to even less credit.
He emphasized that jobs would be created in the private sector and saved in the public sector.
Nicely put."
Alex, its one thing when you feel the tingly feeling running up your leg-
But when I feel the tingly feeling running up your leg, it's kind of revolting.
Then again, the professiorate is as dependent on government spending as anything else.
Posted by: Adam Baum at Jan 8, 2009 2:13:52 PM
"...Thus, thankfully, no New Deal..." This from a guy who denied that there was ever a credit crunch. Is this how economists earn their scientific stripes? By denying the economic equivalent of something like electromagnetism?
Posted by: at Jan 8, 2009 2:18:11 PM
Thank goodness the bloated public sector will be preserved! And added to, of course. Let's become China!
Posted by: Vernunft at Jan 8, 2009 2:27:13 PM
Don't be so certain now. Words and actions can diverge, cutie.
Posted by: IWantCookieNow at Jan 8, 2009 2:31:35 PM
I would support pyramids.
Huge concrete structures that can't fall over with empty rooms that could be used for anything in the future sounds like the perfect works project.
The worst thing would be a permanent waste. The best thing would be a permanent resource.
Use large concrete blocks that could be dismantled and used for other stuff later and I might get a tingly feeling.
Posted by: Andrew at Jan 8, 2009 2:32:41 PM
No offense, Alex, but what a load of horse manure.
Let me preface my comments by saying that I don't have anything personal against Pres-elect Obama (I actually quite like him, relative to other options), but we should always strive to stay objective in light of our personal views.
I find it pretty disappointing that, after hearing a rhetoric-filled speech (which undoubtedly was tilted toward the GMU audience), you're so willing to give his Keynesian economic views a free pass. These are views which supposedly stand very opposite to yours, and yet, if you won't stand up to them now, why do you bother to wake up every morning?
To ask a few questions -- why should the eloquence of Obama's defense of Keynesianism skew your view of his policies?
Why aren't you questioning what Obama means when he says "a foundation for long-term economic growth?" (After all, we know what Keynesians have meant by that in the past).
Do the teachings of Tullock and other public-choicers not cause you to question the distinction between "created in the private sector" and "saved in the public sector?"
Do you not agree with Russ Roberts that proposing tax cuts without corresponding cuts in spending does not represent a tax cut at all, or are you just willing to accept the phrase "tax cuts" at face value?
It seems to me that your having an invite to the speech has led you to feel somewhat closer to Obama, and this personal connection has lessened your more intense feelings. Just as looking back on the past often results in a more favorable assessment than reality at the time, my take on your comments is that this connection has made you more willing to spin the bad stuff you heard in a positive light.
I can't help but think it pretty sad to see you -- a public intellectual I very much respect -- wilt under the weight of a simple invitation. I guess if I want to hear the principles of a Hayek or Friedman, my only real option is Don Boudreaux.
Posted by: Bobby at Jan 8, 2009 2:34:15 PM
Bobby, you're wrong. Its worse than horse manure.
Cafehayek.com has a slightly different view of this speech, from a less fawning viewpoint.
Seriously Alex, my 5 year old nice is less excited when Hanna Montana comes on TV and I think she'd
still be more reserved than you if she had a backstage pass. Get a hold of yourself.
Posted by: Superheater at Jan 8, 2009 2:44:07 PM
That's pretty cool you were able to go.
Posted by: Shevonne at Jan 8, 2009 2:50:54 PM
Heh people, my views are well known and haven't changed. I am evaluating Obama relative to what we can expect given the situation and our current politics and also relative to say the New Deal.
Posted by: Alex Tabarrok at Jan 8, 2009 2:59:00 PM
Alex: have you drunk the Obama Kool-aid?
Posted by: Patrick at Jan 8, 2009 2:59:37 PM
Did Tyler not get to go?
Posted by: libfree at Jan 8, 2009 3:02:08 PM
Nice points Alex and I agree with your analysis of Obama's points. He is a pragmatist who seems to really work towards solution unlike Bush.
Posted by: Brad at Jan 8, 2009 3:04:22 PM
I agree with Alex. I was expecting a lot worse and have been pleasantly surprised so far. We'll have to wait and see what actually happens.
Posted by: libfree at Jan 8, 2009 3:04:27 PM
What's a trillion dollar deficit here, and a trillion dollar deficit there?
Pretty soon you'll be talking some serious money.
Posted by: at Jan 8, 2009 3:09:49 PM
Coming up next: Alan Greenspan comes to campus, gives a speech and afterwards some GMU economists publicly state that they have to rethink the whole monetarist school.
;-)
Posted by: Jay Chambers at Jan 8, 2009 3:13:45 PM
"I am evaluating Obama"
No, you aren't. There's nothing to evaluate yet other than words.
In any case, evaluation is an OBJECTIVE process-a quality you clearly lack in this regard.
You didn't say "Obama stated this-and the data supports that because"; you said:
"He had a number of good lines".
That's a judgment about speechmaking, not economics.
There's something really creepy about Obama's "invitation-only" events. Smacks of Nuremberg.
But clearly, if you "preach to the choir", they'll sing your praises after "church".
Posted by: Winston at Jan 8, 2009 3:13:53 PM
Winston, relax. I'm pretty sure "a number of good lines" refers to the content of them, not how well they were delivered.
In fact, everyone needs to chill out a bit. The post struck me as one of relief, not of approval: "We could be facing nationalization of everything, but instead we're getting this." That's a pretty good choice, given our realistic options - much like Obama was a pretty good choice given our two options. Clearly Alex isn't endorsing the proposals as ideal in this or any setting. So relax, everyone.
Posted by: HH at Jan 8, 2009 3:22:54 PM
HH,
Just to be clear -- the content of Obama's lines were "good," then?
Phew. I was worried it was just the delivery that Alex was responding to. Now that I know that it was the content he liked, I feel much more at ease. [yes, that's intentional misunderstanding -- surely I jest...]
By the way, if people like Hayek had set their post-WWII standards as low as you are today ("We had a huge depression, tons of government intervention, and just had a big ol' nasty war, etc, so it's OK if we get government control of our economy."), we'd have about 1/10 of the free markets that we currently have in this country.
When citizens believe that they don't even have the power to speak up for what they believe in, then that is the moment when they truly become powerless.
Posted by: Bobby at Jan 8, 2009 3:43:10 PM
"Bobby"
Yes, the content was "good" relative to a New New Deal situation, as Alex has repeatedly explained.
Posted by: HH at Jan 8, 2009 3:44:58 PM
You can read Obama's text here, and make up your own mind about whether it's reassuring or scary:
http://i.usatoday.net/news/politics/election2008/pdf/obama-speech-01-08-09.pdf
The undiluted Keynesian premise is clearly there, despite the attempts to reassure. The whole world has gone crazy Keynsian, and I do not find this reassuring. But I'll grant it's less scary than Kuchinich would have been.
Posted by: Kent Guida at Jan 8, 2009 3:45:06 PM
Kent,
At least Kucinich would have pulled out of Iraq...
Posted by: Bobby at Jan 8, 2009 3:47:39 PM
HH,
By that logic, should we have been content with a McCain victory, because we could argue that he'd be better than (insert disliked political figure here)?
Methinks this argument's been had before:
"Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles,
And by opposing, end them."
Posted by: Bobby at Jan 8, 2009 3:51:45 PM
"Bobby"
1. Yes, McCain would have been better than ... Pat Robertson? Ahmadinejad? Yes, given those two choices only, McCain would have been a better call. He's not an ideal choice, much like Obama's plan is not an ideal choice for anyone on this board, and I'm pretty sure Alex would agree. But, like him, I'm relieved that a far worse intervention seems to be off the table. I'd still prefer a less interventionist gov't (and will speak and vote accordingly), but in the short term, that's not an option. The question isn't, "what should Obama do?," it's "Given that Obama wants a massive gov't stimulus, what's the least damaging way to have one?"
2. Odd choice of supporting argument, where the choice is "suffer the slings and arrows of outrageous fortune" or suicide [that's how Hamlet wanted to end his troubles]. Since we're both picking the lesser of two evils [you haven't killed yourself yet], I don't know why that's an unreasonable choice in the Obama situation.
Now off you go. Lew Rockwell misses you.
Posted by: HH at Jan 8, 2009 4:01:04 PM
Bobby,
That quote is about whether or not to commit suicide, not whether to fight against "slings and arrows."
Somehow I don't think too many people, however much they may disagree with Obama, are contemplating suicide because of his ideas.
Posted by: Bernard Yomtov at Jan 8, 2009 4:08:05 PM
You actually take Obama at his word? FDR promised to balance the budget, you know. He is following FDR' path to the T, deception and all. You've been hoodwinked. When Obama is done carving out massive new welfare programs and saddling the economy with crippling environmental regulations, what's left will hardly be recognizable.
Regime uncertainty? I can hardly tell what planet this is anymore.
Posted by: Brian Garst at Jan 8, 2009 4:34:07 PM
