I am, of course, happy to read this post by Matt Yglesias which confirms my own biases.
In a June interview with Fox News, President Obama appeared to argue that the country is suffering from high unemployment because productivity enhancing technologies such at ATMshave reduced the need for work. It wasn’t clear to me at the time if the president really meant that or if it was just a bad moment in an interview, . . .
Team Obama has, I think, landed on a more sophisticated version of this theory, and that explains some of the reason why Romer & Summers aren’t in the administration anymore and haven’t been replaced by like-minded people.
This confirms my biases because it suggests the world is in some ways a lot simpler than people make it out to be.
We observe a President not pushing for more stimulus and not appointing doves to the FOMC. What could be the reason? You could come up with all sort of theories involving intrigue and political strategery.
However, here is one you might want to try: the President doesn’t want to do stimulus and is not interested in appointing doves to the FOMC.
I would first wait for evidence that overturns that theory. It’s a powerful one and based on extremely common observation that people in general try to do things that they want to do.
Indeed, if I observe a person who cannot communicate – by baby for example – trying to avoid a situation, I am likely to conclude “Charlie does not want to do that” I think this is generally sound reasoning.
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Tuesday ~ September 20th, 2011 at 5:55 pm
cjerian (@cjerian)
Looks like in 2 places my becomes by, e.g. my baby becomes by baby and my biases becomes by biases. I don’t get the last sentence, of how your baby not being able to talk yet has much to tell us about Obama not being able to defend his positions
Tuesday ~ September 20th, 2011 at 6:28 pm
jazzbumpa
Yes – I really wish you would learn to proof read.
Obama doesn’t want to do these things, because he is not, and has never been, any kind of progressive.
This situation screams for fiscal stimulus, and has for about three years. If Obama believed in it, we’d have been hearing all about it for a long, long time.
Alas, though, we are on our way back to 1937 – if not 1930.
Alas,
JzB
Tuesday ~ September 20th, 2011 at 6:33 pm
georgesblog360
That is one of the standards defining the decision making process. Response to stimulus is an observable phenomena. Poke the frog and see if he jumps.
Tuesday ~ September 20th, 2011 at 6:44 pm
Alan.robinson
The problem Obama’s advisors had in convincing Obama that there was a demand problem is the fact that there was also a technology problem as well.
I follow two industries directly that are going through major changes due to technologies: mail and parcel delivery. As such, I also follow indirectly the entire mail/print supply chain and the retail supply chain.
I have completed two studies looking at jobs and economic activity generated by the Postal market (mail and parcel delivery). These studies showed that the industry generate $1.1 trillion in economic activities and over 8.5 million jobs.
Technology is having a major impact in jobs associated with the industry.
Demand for mail is dropping precipitously for transactions (bills and payments), periodicals, and catalogs. The supply chain on the print side (including printers and their suppliers, the mail handling side for bill payments, and the editorial staff of periodicals have seen significant losses of jobs in the past decade that has accelerated since the recession started.
There are more jobs in the parcel delivery side of the business, but not as much as you might think as much of the growth has been offset in losses of jobs associated with deliveries to brick and mortar retail outlets.
Where there has been a larger jobs impact of the changes in direct marketing sales and B-2-C and B-2-B deliveries that are no longer being made in retail outlets. (I have estimated that 20 – 25% of all retail sales are now delivered compared to half that level a decade ago.) Selling anything on line is significantly less labor labor intensive than selling the same product in a store. In addition, the retail supply chain (i.e. construction, utilities, etc) is also affected as the amount of commercial real estate needed to seel products on-line, in a catalog on QVC is significantly less and in different locations that what would be required if brick and mortar retail still dominated.
So what I see is that two supply chains that employed millions of people are going through a major technological revolution that cuts the demand for jobs even as demand for managing transactions, delivering advertising or selling products to consumers and businesses grows.
So in my mind there is a significant structural problem affecting to major economic sectors print communications and retail that is cutting jobs more rapidly than the downturn alone would cause. that does not mean there is not a demand problem, but it does mean that any solution trying to fix the demand problem will face greater headwinds then existed just a couple years before the recession.
The only demand side program that is not affected by these trends is infrastructure construction. It is immediate, Must be done locally, and most of the supply chain for infrastructure construction is domestic. Infrastructure construction is also helpful as it creates demand for commercial construction that substitutes for reduction in demand in retail/office construction. Beyond that, I am suspicious about demand based solutions that increase income and consumer spending due to my understanding of changes in retail and communications markets. (This is also why tax increases will have a less of an impact that Republicans argue as well.)
Tuesday ~ September 20th, 2011 at 7:10 pm
Th
The quandary for me is what do you do when our standard bearer doesn’t believe in our fundamental economic theories. The failure to lift the country back to full employment means to voters that “Democratic Party economics” doesn’t work, not that Obama’s policies were wrong.
I am guessing that the progressive caucus told him they are going to campaign against his policies unless he falls in line. How else to explain the about face.
Wednesday ~ September 21st, 2011 at 10:36 am
Tel
The progressive caucus are facing the problem that Obama is more popular than the rest of the Democrat party, and he did give your fundamental economic theories a good go (as did Bush, Bernanke, Geithner, Paulson, etc), but so far he has nothing to show for it.
Personally, I hope Obama keeps plugging away with more of the same right up to the 2012 election, because I’m genuinely curious to see if it all miraculously turns around. However, I expect Obama is smart enough not to enjoy playing against odds like that, so he is searching for a failure narrative that allows him to blame the inevitable disaster on the Tea Party or something similar.
Wednesday ~ September 21st, 2011 at 7:11 pm
Th
I always stop reading when people call the Democratic party the “Democrat” party. I finished the 3rd grade 50 years ago.
Sunday ~ September 25th, 2011 at 12:19 am
Tel
I’ve always thought of Democracy as a system, and not as a party. Given than the word “democratic” is already taken, and as an adjective it applies approximately equally to both US parties, I’m left with their trade name “Democrat”. How many trade names does a business need that it has to start borrowing common words are well?
I understand there’s a distinction between pure Democracy (absolute rule by majority) and a Republic (which is Democracy constrained by limited authority and individual rights) but I can’t in clear conscience recognize that distinction as being significant in the present circumstance, sorry if my bluntness offends some.
Then again, I’m not American *shrug*.
Tuesday ~ September 20th, 2011 at 7:15 pm
Becky Hargrove
…and then we get top Republicans writing a letter to Bernanke to leave well enough alone…
Tuesday ~ September 20th, 2011 at 7:28 pm
Lord
Which leaves us with the choice between Hoover lite and Hoover heavy.
Tuesday ~ September 20th, 2011 at 8:44 pm
Curt Doolittle
The people dont want it. They don’t want it because they don’t trust their government.
He can see the data that the people don’t want it. He’s facing a pretty tough election.
The more interesting question, is why you don’t change your position to accomodate the ever present political reality.
But I think it’s becoming clear that you’re in favor of totalitarian actions regardless of what the people want.
Wednesday ~ September 21st, 2011 at 2:05 pm
Lord
The people don’t want it as implemented in the past, but they do want improvement on jobs and economy. Leadership is about showing the way to accomplish what they want without the problems they see in past actions, but that requires creativity and persuasion, which is in short supply. Often better to fail conventionally than succeed unconventionally, but that may not be enough to save him, only even more conventional opponents may do that.
Tuesday ~ September 20th, 2011 at 11:45 pm
Steve Roth
Yeah I’m coming to the sad conclusion that Obama’s statement about “Reagan changing the trajectory” was actually speaking approvingly about the direction of that change.
Wednesday ~ September 21st, 2011 at 1:00 pm
georgesblog360
That’s exactly what I get, searching out “The Four Money Questions”. The stimulus in the banks, anyway. This is a classic case of the Shell Game. Of course, it’s presented to the public as a carrot on a string.
http://georgesblogforum.wordpress.com/2011/09/16/the-four-money-questions-update-09-162011/
Thursday ~ September 22nd, 2011 at 7:58 pm
Barton Marks
Nate Silver wrote an interesting piece about football coaches going for it on 4th and goal on the two yard line. In spite of the statistical odds that it will usually help your team, most coaches won’t do it as a matter of course (not in the fourth quarter). He cited some business study (don’t remember what) which came to the conclusion that business leaders, and coaches too Nate believed, are less interested in success than they are keeping their job, and so they aren’t interested in doing what seems right if it makes them stick out of the crowd, because it might cost them their job.
So I think in this instance, like many of Obama’s policies, is affected by what he believes will help him get re-elected more than simply the efficacy of the policy. He is a politician after all.
Thursday ~ September 22nd, 2011 at 8:08 pm
Steve Roth
“many of Obama’s policies, is affected by what he believes will help him get re-elected”
Far be it from me to think I know more about politics than BHO, Rahm Emmanuel, and William Daley, but I gotta ask:
Who won four successive elections?
Did he do it by being conciliatory to the conservatives?
When he did go conservative in ’37, how’d that work out for him politically?
I just don’t get it. Even though changing demographics mean that ‘pubs are well beyond their sell date, they’ve been successful for thirty years by playing to their base, in the process constantly pushing the “center” to the right.
Dems keep pandering to that rightward-shifting target with mediocre success, in the process abdicating control of the short-term conversation *and* the long-term trajectory.
Is that a good way to get elected?
Nah, they’re too smart for that. Obama’s doing what he believes in. Sigh.
Thursday ~ September 22nd, 2011 at 8:16 pm
georgesblog360
Interesting observation. People are going to be what they are. Some have to lie to do it. All politicians lie. The fact remains that money talks and everything else walks.With the financial news of the day, I just had to write a sequel to
“War Of The Money Worlds”
The boys are a little testy, this week.
http://georgesblogforum.wordpress.com/2011/09/22/war-of-the-money-worlds-update-09222011/