PeraclesPlease: Carrier/United: A Fool and his Money
Ramona: Trump is Trump, But Who Are We?
Niall Ferguson wrote a Newsweek cover story called "Hit the Road, Barack" and now seems surprised that people are picking over the carcass. This is, of course, ridiculous. Newsweek editor Tina Brown very often chooses stories specifically to inspire reaction. There's nothing wrong with that, from where I stand. It's okay to be provocative on purpose. Though this one seems as half baked as when Forbes, my alma mater, published Dinesh D'Souza's musings on Barack Obama's Kenyan socialism.
No doubt, Ferguson would bristle at that comparison, were he to notice it. He has now defended himself against his critics by calling them nitpickers who are ignoring his larger argument, which is that Obama has failed to deliver economically. If you want to see the very significant nits being picked, this Center for Economic and Policy Research piece gathers them, though Paul Krugman and Brad Delong deserve credit for being early and convincing debunkers.
Still, as a big argument kind of guy, I sympathize with Ferguson. Sometimes the thesis can be valid even while some important details are wrong. In this case, I'm especially open to hearing him out, given that we lefties have been some of the most critical people about Obama's handling of the economy.
None of us are happy with current unemployment. That's Ferguson's big bullet. Even giving the Obama administration some forgiveness for underestimating the extent of the recession, it has failed to restore anything like full employment during Obama's first term.
Fair criticism. However... when Obama said that the private sector was "doing fine," it should not have been considered a gaffe. If you eliminate the public sector from GDP, the private sector is growing... pretty robustly! It's not awesome, but also not bad. We're talking 2.5-3% growth for private sector GDP. And, the private sector has been adding jobs, month by month, since early 2010. And, the stock market has more than doubled since its January 2009 lows (right before Obama took office, the S&P 500 was at 666). Also, public company corporate profits are at record levels. Also, public company balance sheets are flush with cash. Also, the credit markets that were frozen in 2008 and early 2009 are quite open now, with big companies finding easy access to the credit markets to push out maturities and lower borrowing costs. There's a lot of good things going on for business.
But, there are a lot of bad things going on with cash strapped states and cities. They are firing people. They are firing so many people that they are drowning out private sector job creation and so, unemployment remains high. Worse, since these public sector jobs pay decently and offer good benefits, their absence is felt acutely throughout the economy and it retards private sector growth.
The issue here is that Obama failed to achieve a large enough stimulus, focused on state and local aid. But... not exactly the president's fault, right? I'm sorry but, if you ask the data, the private sector is growing at the kind of post-recession pace you might expect. The biggest problem that Obama had to deal with was that Republicans, and some Democrats, went deficit hawk too early. This is the kind of criticism that Ferguson might dismiss as unproven and partisan. But, we are where we are. Public sector employment is down so much that even robust private sector employment growth is muted by it, if not negated. That seems to suggest a problem of inadequate public spending, doesn't it?
And... were public spending adequate and all of those unemployed put back to work at decent wages and with dependable benefits, the economy might well boom. Not only does every gainfully employed person have spending power but, they are no longer reliant on either the government or friends or family in order to make ends meet. Every person put back to work, in a public or private job, not only relieves the government of a burden, but they given spending power to their friends and neighbors as well. A virtuous cycle can result.
Obama failed to get a large enough, and well targeted enough, stimulus. Some of that is his fault. but the criticisms that Ferguson lays at his feet are kind of silly. The deficit fixation that suddenly gripped Republicans (after years of dealing with deficits that "don't matter" under George W. Bush) seems political and the Democrats that joined them seem, at best, misinformed. I'll gladly criticize Obama for not fighting back on that front, and even for trying to compromise with the insane, but that is not Ferguson's argument at all.
Here is Ferguson:
In my view, he has not only failed to live up to the high expectations of those who voted for him, but also to the pledges he made in his inaugural address. (In order to be fair, I deliberately did not judge his performance against his campaign pledges.) The economy has performed less well than the White House led us to expect, despite a bigger increase in national debt than it led us to expect.
This is hard to disagree with. I surely expected that circumstances would be far batter now than I'd have guessed in 2009. I had no deficit or debt expectations and didn't frankly care. Just 9 years before, I'd been told that we were running surpluses so extreme that we'd be eating into the debt by now. But, again... whatever. Debt or surplus, I only care about rising living standards. I'd see no value in a surplus economy where people's lives didn't improve over time.
And, yes... Obama has failed to reverse decades of momentum pushing wealth towards the few while the masses struggle. This is a major problem, one that I think Obama acknowledges, but it is not very important to Ferguson.
So, what is Ferguson's complaint? If it's that the huge economic gains since 2009 have not been fairly shared, that'd be interesting. If it's that those at the top haven't gained enough, that's absurd, since they have gained most from the crisis recovery.
Judging by his article, his complaint is that the recovery has been more tepid than Obama promised and that too few of us have shared in what has gone right. So I have to wonder how Romney and Ryan, who Ferguson now supports, are going to fix that.
Ferguson notes the upcoming "fiscal cliff" of expiring tax cuts an spending cuts that could cost us more that 4% of GDP. Without balanced budget demands from Republicans (and some Democrats) in the midst of a severe recession, the fiscal cliff would not exist. Heck, Obama only agreed to the cuts and expirations because his opponents threatened to default of the entire national debt of the United States, an action that would, by the way, have more severe effects outside of the U.S. than within.
Obama is blamed, in the end, for not being magic. He was unable to persuade people who would rather see him fail than succeed, to do what was right. I think we all kind of agree on that.
But, to Ferguson's point, I have not seen any math that proves that pivoting towards debt service would actually improve people's lives. Obama has made some mistakes. But Ferguson failed to explain how Romney and Ryan would fix them. As for his complaints about his critics...
...he should be more honest. That his voice is louder than so many others is proof enough that the world is unfair and that meritocracy is a myth.