Posts Tagged obamanomics

The New Deal Myth

Jay Wiley at American Thinker takes a look at the myth that Democrats still push that the New Deal somehow saved us from the Great Depression:

The New Deal was a menagerie of federal programs and bureaucracies based on the Keynesian economic theory that increased government spending would stimulate the economy. This theory necessitated more government intervention in and control over the American economy. This dovetailed nicely with the Left’s political agenda.

The prevailing historical narrative of the New Deal casts FDR as champion of economic justice through “bold” and “dynamic” government regulation of the economy. Of course, every good story needs a villain, and critics of the Keynesian approach were cast as greedy, self-interested capitalist thugs. FDR’s cosmopolitan, forward-looking approach was meant to draw a sharp contrast to the outdated and unjust laissez-faire economic model. This was progress.

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The truth is that the experimentalism of the New Deal was an ineffective mess that further tangled the knot of the Great Depression.

After years of unprecedented economic intervention by Roosevelt, competition was stifled, investment plummeted, restrictive cartelization abounded, industrial production stagnated, and budget deficits skyrocketed. Wage controls and new union contracts limited the number of new workers private-sector employers could hire, leaving unemployment to hover around 20%.

Government being government, the New Deal was plagued by staggering inefficiency and red tape. Many New Deal programs were to be administered by local officials with agendas, constituencies, relationships, and governing philosophies of their own.

Roosevelt’s lack of imagination was also startling. He governed as though a new agency or bureaucracy were tantamount to a new solution. The federal government took on a new role in the 1930s as insurer against poverty, recession, and even human want itself — a sharp deviation from Jeffersonian principles of freedom from government. The result was an exponential growth of government, a restriction of economic freedom, and an economic downturn lasting far longer than usual.

And despite the fact that such a massive imposition of the government on the economy was such an abject an abysmal failure, the Democrats are hoping that if they try it again, it will work splendidly!

Read the whole thing.

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Where Are the Jobs?

Reason TV Presents this brief video that asks a simple question: If Obama’s economic policies are so great, and he’s fixed the recession, then where are all the jobs at? An interesting comparison between the policies of today and those that ended prolonged the Great Depression.

Today many Americans credit FDR with rescuing our nation from the Great Depression, but there’s plenty wrong with that view, says Lee Ohanian, a UCLA economics professor who specializes in economic crisis. “What’s wrong with that view is that private-sector job growth did not come back under Roosevelt,” says Ohanian, who notes that Americans often forget how long the Great Depression lasted. Unemployment stood at 17 percent in 1939, a decade after the infamous stock market crash, and, although times were much worse back then, Ohanian sees troubling parallels between the Great Depression and the Great Recession. In both instances our nation emerged from a severe downturn with strong productivity growth and the banking system largely restored. We were poised for a recovery, but didn’t get one. “So the key puzzle for both today and the 1930s is why aren’t private-sector jobs being created at a much more rapid rate?” Read the rest of this entry »

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Failed Policies of the Past

Peter Ferrara at the American Spectator presents this excellent analysis of President Obama’s economic policies, and his eagerness to dismiss successful economic policies, such as tax cuts and reduced government regulation, as “failed policies of the past,” whiel embracing Keynesian economic policies that have been shown to fail time and time again.

This pitiful economic performance is the plainly foreseeable result of an economic program based on the fundamental misconception that economic growth results from more government spending, surging welfare, and record shattering deficits and national debt, which are the foundational principles of the long discredited Keynesianism at the core of Obamanomics. What President Obama is treating us to is effectively a historical reenactment of the 1970s, if not the 1930s, so we can all see first hand how those economic tragedies happened. All the more so now that Bernanke has embraced the monetary policy fallacies of the 1970s in trying to use inflation to stimulate economic recovery. The resulting declining dollar means we are all getting poorer, as everything we buy from overseas will be more expensive as a result, meaning a declining standard of living for America.

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Obamanomics 101

Andrew B. Wilson at the American Spectator presents a rather scathing critique of Obama’s economic policies, and how they are spun as doing things that they don’t do:

For spendthrift Democrats to go around claiming that they have “cut taxes” is to engage in the most deliberate and outrageous obfuscation — throwing dirt in the eyes of an American public. What Obama and the Democrats have done, in the course of running up $2.7 trillion in federal deficits and spending nearly 25% of GDP over the past two years, is to put checks in the mail to people who, for the most part, pay no income tax — meaning that these payments from the federal government out of borrowed money are indistinguishable from welfare checks. The Obama administration has not cut tax rates for real taxpayers and has no intention of doing so (with huge tax increases soon to take effect with the expiration of the earlier round of George W. Bush tax cuts).

But none of this stops Democratic Party stalwarts from playacting the part of favoring tax cuts. On CNN, California Senator Boxer made the laughable claim that she had supported “$1.2 trillion in tax cuts” through the stimulus bill — which would suggest that the entire stimulus bill, and more, was devoted to tax cuts. In fact, she began her interview with Wolf Blitzer in claiming she had supported $2.2 trillion in tax cuts.

Since Obama came to office in January 2009, the unemployment has risen from just under 8% to close to 10% — where it has stayed for the past year.  There has been a net loss of about 2.5 million jobs.  Even so, the Obama administration continues to claim that it has “created or saved” about 3 million jobs.  That is a meaningless metric, which is not based on any evidence.  It comes from plugging data on government spending into a Keynesian computer model and assuming (against a great weight of contrary evidence) that every dollar spent would provide $1.50 in economic growth and job creation.  It is merely a restatement of what the target was at the outset of the stimulus program, as opposed to an objective measure of what the program has actually achieved.

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