Sunday, September 30, 2012

Economics In A Presidential Election Year

There are folks at a table near mine having a lively discussion about economic policy. Thankfully, I can only hear enough to understand the subject matter. I say "thankfully", because typically there is so much misinformation and outright nonsense in such conversations that it's nearly impossible to keep up with it, never mind refuting it. You typically hear stuff like this: "We have to watch our debts. Why shouldn't the government?" And other similar silliness. It's not that governments shouldn't watch their debts, it's that they need to know that there are times to accumulate them and time to pay them down. In contrast to most households these days, they're also not on fixed incomes. But it's not surprising that you hear (or read) this sort of thing way too often. To understand this, all you have to do is look at our national conversations on this issue and see why. Here's a recent example, courtesy of Reuters:
Romney has tried to make the election a referendum on Obama's economic stewardship, but many voters still pin the blame for the sluggish economy and high unemployment on his predecessor in the White House, Republican George W. Bush.

Five things to watch in the presidential debate

Here's what's true: Yes, lots of people blame George W. Bush, who deserves some of that blame. Unfortunately, as we've learned, it isn't entirely his fault that the financial system's casino ran out of money, either. To understand how all that came about, you need to look at the idiotic trend toward "deregulation" that started under President Jimmy Carter. You can thank that trend for Enron, the Savings and Loan crash, the electricity crises and Enron, not to mention the Dot Com and housing bubbles. By the time Bill Clinton was President, everyone who had any "serious" economic cred was saying that the way to prosperity was to deregulate just about everything, no matter how much we depended on it. He and the Republican-controlled Congress deregulated the banks, and you can thank that genius move for the crash of Lehman, Bear Sterns, and the near-collapse of everything else.

What we should have learned from this is that some regulations are good ones. Instead, what we learned is that George W. Bush is an idiot. The latter is true, but not as important as the former.

To continue:

"Until Governor Romney can show why his policies would be different from Bush's policies, then we think it is highly unlikely that he can win," Keefe, Bruyette & Woods analyst Brian Gardner wrote in a research note.

Five things to watch in the presidential debate

The problem here is that Barack Obama should have to explain the same thing. With the exception of the stimulus, which was way too small, there was nothing he did that a third Bush Administration wouldn't have, including utterly ignoring the criminal behavior of the people who were running the financial system. Bush bailed out General Motors, which in a sane world means that it would eliminate half of the slogan "Saved GM. Killed bin Laden" that so many Obama supporters are so proud of.

The article goes on to say:

The conservative National Review says Romney should acknowledge that problems like the mounting national debt and the Byzantine tax code were in place long before Obama took office, but argue the current president has failed to fix them.

Five things to watch in the presidential debate

Of course, Obama largely did what the Republicans wanted on tax policy. We still have the ruinous Bush tax cuts in place, despite how concerned everyone is about debt. That's why I said that governments aren't on a fixed income. They can raise taxes. This one just chose not to.

So, in an analytical piece by one of the world's leading wire services, we read an analysis of the economics debate that is almost complete nonsense.

Little wonder I don't want to overhear conversations on the economy.

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