By Kevin D. Williamson
Sunday, May 01, 2016
On the matter of Barack Obama and the performance of the
U.S. economy, the aptest metaphor is anatine: We aren’t swimming in gold like
Scrooge McDuck, and we haven’t blasted the beak off our face with a shotgun
like Daffy Duck, but instead limp along like what the president is: a lame
duck.
Spare me the technicalities about how President Obama
isn’t officially a lame duck until after the election; we aren’t officially in recession,
either, but 0.5 percent annualized growth — the most recent figure — is close
enough.
How should we judge President Obama’s economic record?
There are two ways to go about that: First, from the point of view of people
who understand at least a little about economics; second, from the point of
view of Barack Obama.
We Americans maintain a superstitious, priest-king
attitude toward presidents and economies. Just as moral and religious defects
in the holy chieftains of old were thought to be the source of droughts and
crop failures, we take weakness in the economy to be the result of presidential
flaws: He didn’t “care about people like us” enough, he followed the wrong
policies, listened to the wrong people, etc. That’s mainly not true.
The most important factors shaping the economic
performance of the United States, or that of any advanced country, isn’t
policy, but events, from developments abroad to entrepreneurship and innovation
at home. The 1990s didn’t boom because Bill Clinton pursued a radically
different economic agenda from that of Ronald Reagan and George H. W. Bush: He
ran on “time for a change” but more or less stayed the course, thanks in no
small part to Newt Gingrich and the 1994 election. The 1990s boomed because the
development of the personal computer and other forms of information technology,
supercharged by the growth of the web, launched an extraordinary period of
investment, innovation, and entrepreneurship. Bill Gates, Marc Andreessen
(whose Netscape browsers brought the web to the masses), the development teams
at Ericsson and Nokia, and a few million Americans who invested
enthusiastically in everything marked “dot-com” had a lot more to do with the
economy of the 1990s than Bill Clinton did. Likewise, the rough spots of that
era (such as the Asian currency crisis) weren’t the president’s doing, either.
There is no mystical connection between presidents, GDP
growth, employment, and wages.
Policy of course has a non-trivial effect on economic
events, but the most important policy choices that affect the economy in the
near term don’t come from the White House: They come from Congress, from the
courts, and from the Federal Reserve. A lot of what we think of as Reaganomics
had relatively little to do with Reagan: Important deregulation efforts
(airlines, oil prices, telecommunications, trucking and transit) had been
enacted by Congresses before Reagan ever took office; in fact, Reagan pandered to
the Teamsters by promising to delay deregulatory efforts pressed by the Jimmy
Carter administration. What we used to call “the phone company” was broken up
by the courts in 1984 as part of an effort that began years before he took
office. Reagan’s tax reforms were enormously important, of course, both in
terms of their real financial effects and their long-term psychological
effects.
President Obama’s term in office was preceded by a
housing crisis and a subsequent recession for which he was as much to blame as
anyone then in government — which is to say, not very much. The housing and
banking policies that resulted in the financial crisis were enacted by
politicians of both parties over a span of many decades, from the housing
schemes of the 1930s to the creation of Fannie and Freddie to changes in
financial practices originating in the Reagan, Bush, and Clinton
administrations. Senator Obama did not have much to say about these until after
the fact. He is a practically Delphic oracle of hindsight.
President Obama insists — straight-facedly — that in the
context of a wrenching fiscal crisis, the United States under his leadership
performed better than any major economy in modern history. That isn’t even close
to being true, of course. Obama’s presidency will coincide with a remarkably
weak recovery, with GDP essentially treading water. His presidency will be the
first in modern times to fail to coincide with at least one year of 3 percent
economic growth. It has teetered on the edge of recession, and may very well
end in formal recession. (George H. W. Bush was thrown out of office in protest
of a recession that had ended before the election; it wasn’t the economy, it
was boredom.) Wages remain stagnant, and the rate of work-force participation
is worryingly low.
What can we actually say about Obama administration
policies? One is that the so-called stimulus underperformed on one front and
failed on another. It may have provided some meaningful stimulus (economists
debate the question still) at a cost — there always is a cost — that will
remain unknown for the foreseeable future. What it did not do — we have the
president’s own word on this — is dramatically improve public infrastructure.
Indeed, every time the Democrats call for a dramatic new campaign of
infrastructure investment, it is an implicit indictment of the failure of
previous campaigns. The stimulus mainly operated as a covert bailout for badly
governed Democratic cities and states. Recovery and reinvestment? Weak, at
best.
The Affordable Care Act is a failure. Again, we have the
Democrats’ own word on this, as they labor feverishly to keep its least-popular
features (such as the taxes that pay for it!) from taking effect. In fact,
Obama’s would-be successor, Hillary Rodham Clinton, seeks to partly
dismantle Obamacare, repealing the so-called Cadillac tax that vexes her
public-sector supporters, whose health-care plans are a great deal better than
yours. The woefully misnamed Affordable Care Act hasn’t been a dramatic
job-killer, but there is evidence (from the Congressional Budget Office and
other sources) that it creates some headwinds against employment, undercutting
the equivalent of 2 million full-time jobs. It hasn’t solved the problem of
health-care inflation, and probably has made it worse, at a very high cost in
terms of actual outlays and economic distortion.
The usual this-’n’-that stuff that the president likes to
talk about during State of the Union addresses — green-economy dreams, tax incentives
for politically favored businesses, etc. — do not seem to have had much of an
effect at all.
We have pursued, with the president’s blessing, a wildly
inflationary monetary policy (quantitative easing and all that) without wildly
inflationary results, at least in terms of general prices. It may be that the
idea of “inflation” as a unitary concept is inadequate to the modern global
economy, that the general devaluation of the dollar one would expect has been
offset by the supply of inexpensive consumer goods and raw materials from
around the world and has mainly made itself felt in the steadily rising stock
portfolios of the millionaires and billionaires that President Obama enjoys castigating.
(The question of asset-price inflation vs. ordinary consumer-good inflation is
an interesting one; I do not necessarily agree with everything in this Robert Blumen
essay, but it is an interesting discussion.) Generally speaking, the beneficiaries
of a bubble are the last to complain about bubble prices.
In a thousand years or so, archaeologists seeking to
understand the last days of the Westphalian nation-state will study the works
of Robert Higgs the way Hellenists study fragments of Sappho, and it is here
that judging President Obama will be much more art than science. To Professor
Higgs we owe the term “policy uncertainty” and its nasty big brother, “regime
uncertainty.” Policy uncertainty refers to the costs inflicted when investors
and enterprises are faced with unknown developments in the rules governing
their activities; for example, employers making plans about employee benefits,
headcounts, compensation, and the distribution of part-time and full-time
positions cannot make rational plans if they do not know how the Affordable
Care Act is going to affect them, whether they will be exempted from it,
whether the National Labor Relations Board will take extraordinary and possibly
illegal action against them, etc. Regime uncertainty describes the same problem
but in relation to the much more fundamental question of whether and how
property rights will be respected. For example: How certain are you that this
administration, or a future administration, will not attempt to seize through
taxation a portion, and possibly a large one, of your purportedly tax-free
retirement savings? How certain are you that the federal government will not
attempt to rewrite bankruptcy law and apply it retroactively at the expense of
the rights of secured creditors, when politics demands it?
The intelligent answer in both cases is: “Not very.”
t is in the matter of such uncertainty that the Obama
administration probably will have its longest-lasting and most intensely
negative effect. The president’s predilection for unilateral executive action
and a maximalist interpretation of presidential powers will no doubt be
considered precedent by Democratic and Republican successors alike (the
greatest hope of a Ted Cruz presidency is that the great constitutionalist
would reverse this even though it would diminish the power of his office) and,
because executive action inevitably is more unpredictable and arbitrary than is
legislative action, Obama’s poison gift of uncertainty will grow, cancerously,
long after he has left office. But it is impossible to put a price on that.
That’s how Obama stacks up on the first metric.
The second task, evaluating Obama by his own standard,
won’t take nearly so many words, inasmuch as the streets of this country are
not full of automobiles that run on happy thoughts and the lights of our cities
are not kept burning bright by the power of unicorn flatulence. The election of
Barack Obama did not turn out to be a pivotal moment in human history. He will
be remembered as a minor figure, the Al Smith of the early 21st century.
If everything that transpired in these United States up
until January 20, 2009, was uniquely and especially the fault of George W.
Bush, then there is no dodging responsibility for the weak and muddled current
state of affairs. Obama, who must be judged harshly by his own standard, hasn’t
read his James George Frazer. (Honestly, he doesn’t seem to have read much.) If
you’re going to be a god-man or a priest-king, there’s only one way that those
careers come to an end: “The scapegoat, upon whom the sins of the people are
periodically laid, may also be a human being. . . . The Athenians regularly
maintained a number of degraded and useless beings at the public expense; and
when any calamity, such as plague, drought, or famine, befell the city, they
sacrificed two of these outcast scapegoats.”
I wonder if they campaigned for the job, the way our
contemporaries do.
No comments:
Post a Comment