On Obama and the Economic News

Earlier today, I wondered whether the Obama Administration had accepted the Republicans' (incorrect and cynical) claim that it was possible to belt-tighten and budget-cut our way out of a collapsing job market. Readers' reactions.

From FVH, a businessman on the East Coast:

>>As an owner/manager of a small manufacturing business I suffer a combination of despair and anger each time a political animal, of whatever color, promises to "focus like a laser on job creation." I neither need nor want Government to focus on "job creation" (as though it were in their power to do anything in that realm). I need it to focus on "customer creation"! IT'S DEMAND, STUPID!

If governments can induce demand, I will happily handle the part about "job creation." Get me to the point where my 1.5 production workers have to be put on overtime to fill the orders and I will quickly make my part-time employee full-time. A few more customers and I'll hire another worker. Look, guys, that's what we do out here! Don't worry about cutting my taxes, don't concern yourself with over-regulating me, don't fuss about the "death tax" depriving my progeny of the joy of running my business. That is all trivia! This is all about Demand Side Economics.

Oh, and don't look now, but if we can get a little "demand creation" goin' on, so I (and my ilk) can hire some folks, then maybe those folks can think about dumping their overpriced rentals and buying foreclosed homes, thus addressing the housing inventory glut and moving us toward housing recovery. And thus beginneth a Virtuous Circle.<<

From JK, whereabouts unknown:

>>My greatest disappointment with Obama so far has been his inability to explain economics.

just saying 'stimulus' is not an explanation. And saying that the government, like a family, must balance its budget is crazy -- as Krugman repeatedly points out.

Why has Obama NOT EVER tried to explain counter-cyclic government spending?
Why has he not explained the need for deficit spending?
Why has he NOT used the Great Depression as an example?
Why has he NOT taken on the inconsistent and self-serving arguments of the Republicans?

The level of discussion has been appallingly low. The points are not difficult to present. But, at some stage, a bit of economics must be presented and defended. It's not an argument of the morality of economics -- share the burden -- its how a government fights a weak economy.<<

From DM:

>>I don't understand why Obama is parroting the right's economic justfications that make no sense whatever. Business confidence?  All business knows is what walks in the door. If people walk in the door, business expands to meet the need. If they don't, business sits on its cash until such time as investment will bring a return. Duh.

If business confidence were anything real, the crash of 2007 would have occurred much earlier when all the writing was on the wall.  But business kept investing and expanding until people actually stopped walking in the door. Business wanted to keep expanding, but the banks stopped lending them money.  Business is reactive; not proactive.<<

Let's hope that this week's "we can save our way out of a recession" talk by Obama was a lapse. Otherwise we've got a reverse-sweet-spot combination of tragically misguided economics and self-defeating politics. Next year no one will care whether Obama was "reasonable" rather than "partisan" in this budget showdown with Boehner, Cantor, McConnell, Ryan, et al. People will care about whether they're employed or not, and will judge him mainly on those grounds.

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James Fallows is a national correspondent for The Atlantic and has written for the magazine since the late 1970s. He has reported extensively from outside the United States and once worked as President Carter's chief speechwriter. His latest book is China Airborne. More

James Fallows is based in Washington as a national correspondent for The Atlantic. He has worked for the magazine for nearly 30 years and in that time has also lived in Seattle, Berkeley, Austin, Tokyo, Kuala Lumpur, Shanghai, and Beijing. He was raised in Redlands, California, received his undergraduate degree in American history and literature from Harvard, and received a graduate degree in economics from Oxford as a Rhodes scholar. In addition to working for The Atlantic, he has spent two years as chief White House speechwriter for Jimmy Carter, two years as the editor of US News & World Report, and six months as a program designer at Microsoft. He is an instrument-rated private pilot. He is also now the chair in U.S. media at the U.S. Studies Centre at the University of Sydney, in Australia.

Fallows has been a finalist for the National Magazine Award five times and has won once; he has also won the American Book Award for nonfiction and a N.Y. Emmy award for the documentary series Doing Business in China. He was the founding chairman of the New America Foundation. His recent books Blind Into Baghdad (2006) and Postcards From Tomorrow Square (2009) are based on his writings for The Atlantic. His latest book is China Airborne. He is married to Deborah Fallows, author of the recent book Dreaming in Chinese. They have two married sons.

Fallows welcomes and frequently quotes from reader mail sent via the "Email" button below. Unless you specify otherwise, we consider any incoming mail available for possible quotation -- but not with the sender's real name unless you explicitly state that it may be used. If you are wondering why Fallows does not use a "Comments" field below his posts, please see previous explanations here and here.


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