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Wednesday

5

December 2012

An Unconvincing Case for Protectionism

Written by , Posted in Economics & the Economy, Free Markets

A few weeks ago, Rep. Tom Rooney took to the Daily Caller to make “a conservative case for sugar tariffs.” He failed in my view, but he did succeed in proving my recent point that bringing home the bacon and handing out political “gifts” is a bipartisan disorder.

Rep.  Rooney makes the following arguments, as I understand it:

1) All countries use protectionist and interventionist policies in the sugar market – therefore we must too.
2) Brazil has captured a lot of the market and will drive out US producers with low prices if they don’t receive government assistance.
3) Jobs will be lost and prices will rise if that assistance isn’t provided.

He goes on to say that government assistance shouldn’t be too high, nor should it involve dictating business practices. That’s not enough; it shouldn’t exist at all. I agree with Milton Friedman’s view that even unilateral free trade is a better option than meeting subsidies with subsidies and tariffs with tariffs. If Brazil wants to “plow another $1 trillion into its sugar market over the next few decades,” we should let them. It’s money straight from their taxpayers pockets and into the hands of US consumers. It harms them, not us. As for the 142,000 US jobs supposedly on the line, it’s not either/or. The choice is not between subsidizing US sugar or seeing those people forced into unemployment. Their labor can be used elsewhere, and when combined with lower sugar prices than we would have otherwise seen if not for Brazilian subsidies, the net result is greater production for us. We get cheap sugar and we get whatever else those 142,000 people are able to produce. The only real loser in this equation is the Brazilian taxpayer.

Sure, the decline of US sugar producers would be disruptive to the people whose jobs were lost, but I think the social safety net (more like hammock these days) is more than big enough to handle it. And disruptions happen in all markets in a competitive system. Whether or not its because another firm has developed a more efficient business model or because of foreign subsidies doesn’t really make any difference, so long as it’s not our taxpayer doing the subsidizing. The real issue is that bad government policy has so encumbered the market that absorption of displaced workers is difficult, but more taxpayer handouts are not the solution to that problem.

Rooney repeatedly warns of a Brazilian led OPEC for sugar, presumably to explain his seemingly contradictory (amazingly, I find myself in agreement with Think Progress of all places) concern that Brazilian control over the market will mean both lower prices (to drive out American producers) and higher prices (to hurt US consumers), but OPEC strikes me as a bad comparison. An oil cartel can be effective (somewhat) at manipulating prices because oil production is necessarily concentrated in places where oil can be found, and the major national producers are few. If you have no oil deposits, it doesn’t matter how high and enticing prices get, you can’t join the market. It’s true that sugar cane cannot grow just anywhere, but the barriers to entry are not near so significant as oil. Non-Brazilian producers can simply increase production to offset any attempts by Brazil to artificially raise prices. In other words, even if US producers dwindle because Brazil is able to charge below-market prices thanks to subsidies, any later attempt to raise prices and charge above-market rates after capturing a dominant position would result in the return of US producers, or other new entrants to the market.

There is also a national defense issue with regard to oil that doesn’t exist for sugar. Interruption in the supply of sugar does not pose the same concerns as interruptions in the supply of oil.

What I think it comes down to is whether we adopt the protectionist view that within all arbitrarily designated political borders there must be complete self-sufficiency, or we instead allow ourselves to be blessed by the productive advantages brought about by global trade. Free trade is best, to be sure, but if the only available choices are between letting others foolishly distort their markets or joining them and doing the same to ours, I think it’s an easy decision which path to follow.

Sunday

2

December 2012

Overgovernment: Limiting Libations Edition

Written by , Posted in Big Government, Free Markets, Government Meddling, The Nanny State & A Regulated Society

The US government poses a serious obstacle to the import and consumption of foreign liquors. Like a product made overseas? Too bad! As for as the government is concerned, you have no more right to purchase the liquor of your choice than you do to manage your own health care.

First off – the United States drinks its whiskey from 750ml bottles. The entire rest of the world (except for South Africa, I believe) does not. 700ml or 70cl is the global standard. The United States does not want its citizens to be confused between two different measurements, so they do not allow for 700ml bottles of booze to be sold domestically. That means that any liquor company that wants to sell its booze in the U.S. needs to put it in an entirely different bottle with a new label as well. All of their other booze can be shipped with ease to every other nation (except South Africa, I believe) around the world. Then a separate, special, time-consuming batch has to be made just for the Americans. That sounds annoying and it probably is annoying to many small companies in the whisky trade, so they say forget the Americans. It’s too much extra trouble.

The reason? You’re too bloody stupid, that’s why (Hat-tip: Overlawyered)!

Kevin Erskine of The Scotch Blog inquired with the Tax and Trade Bureau as to why the US has this regulation. In short, it’s because the agency transitioned in the late 1970s to metric measurements and 750 ml was very close in volume to the then standard “fifth” (referring to a fifth of a gallon). Allowing 750 ml and 700 ml bottles was deemed too confusing for consumers, and so we’re stuck with an aberrant standard and less access to rare spirits.

Big government, limiting your freedom one condescending rule at a time.

Tuesday

27

November 2012

Harry Reid's Dishonest Filibuster Reform Argument

Written by , Posted in Waste & Government Reform

I try on this blog to criticize the ideas and policies of my adversaries, instead of the people themselves. I don’t always succeed, but that is one of my goals. But for Harry Reid I make an exception and don’t even try. He continues to demonstrate that he is one of the most loathsome people in the DC cesspool, and cares about nothing other than the accumulation of his own power. He runs the Senate like a dictatorship, abusing his authority in ways that do direct harm to political process and the American people. He is a cancer desperately in need of removal from the body politic.

His latest assault on good government is taking place as a crusade against the filibuster. He claims that the problem is his adversaries, who are abusing it to block his agenda. As usual he has twisted reality on its head, as it is Harry Reid who has long abused Senate rules to prevent votes on issues he considers politically dangerous to himself or his party, and who is seeking to solidify his ability to do so going forward. Mark Calabria of Cato explains:

First, let’s remember that the objective of every majority leader is to stay majority leader. To do so means members of his party must win re-election. One of the important ways a majority leader can facilitate such is to protect his members from tough votes. For instance, witness Reid’s current attempts to stop a vote on Rand Paul’s (R-KY) amendment to limit indefinite detention. You’d think that since many liberal voters and groups oppose indefinite detention, Reid would welcome such a vote. But such a vote would put Democrats and President Obama at odds. So Reid’s favored course of action is to avoid such a vote.

How does this relate to the filibuster? Well after cloture is invoked (see Senate Rule XXII), the only amendments that can be voted on are those that are both pending and germane. And an amendment only gets pending if there’s no objection. All Reid needs to do is oppose amendments for 30 hours, then the curtain comes down and he can force a vote, and this assumes he hasn’t already filled the amendment tree (I’ve witnessed such a process too many times to count). So when Majority Whip Dick Durbin (D-IL) claims, “[w]e’ve had over 300 filibusters in the last six years,” he fails to mention that few of these were actual filibusters. The vast majority were attempts by the Majority to limit amendments by pre-emptively filing cloture.

He goes on to look at the ratio of roll call votes to measures passed as a proxy for how frequently a Majority Leader uses this obstructionist practice, and lo-and-behold, Harry Reid is worse than the average. Harry Reid does not want filibuster reform to enhance the workers of the Senate, he wants filibuster reform to enhance his iron grip on the legislative agenda and further constrain the ability of anyone not named Harry Reid to have a say.

Sunday

25

November 2012

Yes, Politicians Buy Votes

Written by , Posted in Waste & Government Reform
Originally published in The Daily Caller

If Mitt Romney thought the gotcha-obsessed political press would let him escape into obscurity following his election defeat, he has rather quickly been disabused of the notion. After Romney suggested in a private call with donors that President Obama’s re-election campaign was assisted by “gifts” to his strongest voting blocs, the punditry and political class blew a rare bipartisan gasket.

Of course, there are valid reasons to criticize Romney’s remarks. For one thing, they represent a fundamental misdiagnosis of the cause of his campaign’s failure. Romney didn’t lose because Obama offered voters “gifts”; Romney lost because he failed to connect with voters, most of whom believe that the federal government is doing too much.

But many of Romney’s critics seem to think that it’s somehow uncouth to suggest that President Obama would buy votes. In fact, Obama does buy votes — all politicians do.

Politicians are in the business of winning elections. They’ll spend campaign money to get into office, and once elected they’ll spend both campaign funds and tax money to stay there. Anyone who doubts that politicians secure their power through the generous use of taxpayer dollars need look no further than U.S. farm policy. Farm subsidies, some of the longest-lasting and most deeply entrenched of special interest programs, make little economic or social sense. Varying programs pay farmers to both farm and not farm, and some even pay people who aren’t farmers at all, as land once used for farming can still draw financial support from Uncle Sam long after it’s been retired. The Washington Post estimates that between 2000 and 2006 non-farmers received $1.3 billion in farm subsidies, a figure no doubt higher today. And many of the recipients of farm subsidies are much wealthier than the taxpayers who support them.

Every few years, there’s talk of addressing farm subsidies, but Congress never does anything. A strong bloc of farm-state lawmakers always stand firmly in the way. Both they and their constituents understand that they are put into office to keep the gravy train rolling. They even form coalitions of mutual support with lawmakers from urban districts to provide a stronger front against the interests of the taxpaying public. That’s why food stamps are part of the farm bill and distributed by the USDA. Earmarks have also long been a vital tool for this pork-barrel process, which is why their elimination was seen as a key piece of political reform.

More discerning critics of Romney’s statement might have pointed to frequent Republican dissembling and dodging on farm subsidies as proof that vote-buying is a bipartisan affliction, which would have been a legitimate criticism. Instead we got hand-wringing over the very idea that politicians might wave taxpayer dollars in front of specific voting blocs to secure their support. Yet thanks to the prominence of Iowa in the presidential primaries, even the most fiscally conservative of candidates is liable to bow down and kiss the farm subsidy ring, a ritual act of pandering to which voters are a willing party.

The common practice of pork-barrel politics has been a fact of political life for over a century. Farm subsidies are just one of many such schemes. Energy, financial services and defense spending bills are other vehicles through which politicians bring home the political bacon.

The politicians who bring home the most political bacon tend to be the hardest to unseat. A 2010 study by Professor Thomas Stratmann of George Mason University found that securing earmarks leads to higher vote shares for politicians, and that the effect is increased when earmarks are directed to a politician’s home state. Voters, it seems, like it when the pork flows their way.

Curiously, much of the outrage over Romney’s remarks has come from the right, where politicians at least rhetorically portray themselves as skeptical of government spending. Newt Gingrich described Romney’s comment as “nuts” and “insulting.” Bobby Jindal agreed that it is “insulting voters” to say that “votes were bought.” This might be little more than political grand-standing, but even so it represents what Republican politicians believe they should say to curry favor with the outraged.

But since when were voters beyond reproach? The News IQ Survey conducted by Pew Research in August found that only 60% of voters could identify Bain Capital as the company Romney once ran, and only 40% knew that Republicans controlled the House of Representatives but not the Senate. These results are not at all surprising, as there is plenty of research showing that most citizens know little about politics and public policy — which is understandable given the relatively small impact a single voter will have on an election, and the fact that people have more pressing matters in their day-to-day lives with which to concern themselves. But it is nevertheless a long-standing source of voter criticism.

Criticizing voters was certainly fashionable last year and earlier this year, during the Republican presidential primaries. Liberal pundits accused Republican primary voters of everything from racism to stupidity. Take, for example, Lawrence O’Donnell suggesting that Romney deliberately got booed by the NAACP in order to please his racist base, or Sam Donaldson’s accusation that “many on the political right … oppose [President Obama] not for his polices [sic] and political view but for who he is, an African American!” But insulting those kinds of voters is okay, as they clearly have it coming. Just don’t you dare imply that politicians are buying votes, or that voters love them for it.

Saturday

24

November 2012

Michigan Court: Equality Violates Equal Protection Clause

Written by , Posted in The Courts, Criminal Justice & Tort

You can’t make this stuff up. Last week a liberal majority ruled that a provision of the Michigan state constitution passed in 2006 that prohibited racial preferences in college admissions was unconstitutional. Their logic? It created an unequal burden on minorities who wished to change the law by requiring them to amend the state’s constitution to do so.

You. Can’t. Make. This. Up.

By this logic, any constitutional provision creates an unconstitutional burden on groups that may wish to repeal it. In other words, it’s completely absurd.

Ilya Shapiro writes:

The court voted 8-7 that making people more equal under the law violates the constitutional provision that requires people to be treated equally under the law!

The Sixth Circuit’s “logic” would similarly prevent Congress from outlawing racial preferences under federal law.

Fortunately, this crazy ruling will not long survive. The California-based Ninth Circuit has (remarkably) ruled the other way; conflict between the lower courts virtually ensures that the Supreme Court will take the case.

And don’t forget that the Court this term is already considering the propriety of racial preferences in UT-Austin’s admissions program. If the Court finds racial preferences themselves to be unconstitutional—that’s my view—then the Sixth Circuit’s ruling has no practical effect anyway.

Saturday

24

November 2012

Canadians Turn to Private Care as Government Fails

Written by , Posted in Big Government, Economics & the Economy, Free Markets, Health Care, Welfare & Entitlements

Private markets can be their own worst enemy. Rather than force people to deal with the consequences of bad policy choices, they provide a relief valve for ill-considered socialist schemes. Such is the case in Canada right now, as patients are increasingly forced to seek refuge from their “universal” health care debacle.

Surgery wait times for deadly ovarian, cervical and breast cancers in Quebec are three times longer than government benchmarks, leading some desperate patients to shop around for an operating room.
But that’s a waste of time, doctors say, since the problem is spread across Quebec hospitals. And doctors are refusing to accept new patients quickly because they can’t treat them, health advocates say.

…The worst cases are gynecological cancers, experts say, because usually such a cancer has already spread by the time it is detected. Instead of four weeks from diagnosis to surgery, patients are waiting as long as three months to have cancerous growths removed.

“It’s a crisis for Quebec women,” said Lucy Gilbert, director of gynecological oncology and the gynecologic cancer multi-disciplinary team at the McGill University Health Centre. Her team has had access to operating rooms only two days a week for the past year, with dozens of patients having surgeries postponed week after week.

…One worried patient, a mother of five children who waited three months for surgery for invasive breast cancer, said she is worried about the effects of such a long wait. After surgery, she paid $800 for a bone scan in a private clinic rather than wait five months for a scan at the Jewish General Hospital.

There are always costs. You cannot legislate them away. Trying to do so through price controls just forces them to manifest elsewhere. In this case, the cost is increased wait times, which when it comes to health equates to increased mortality rates. The reason is simple: when you remove the market signals generated by free floating prices, you lose the most effective means known to man for allocating resources. A bunch of government bureaucrats cannot anticipate demand and allocate the appropriate resources to meet it as well as the invisible hand.

Saturday

17

November 2012

Overgovernment: Meatless Mondays Edition

Written by , Posted in Big Government, The Nanny State & A Regulated Society

The LA City Council has declared the observance of “Meatless Mondays“:

The Los Angeles City Council is urging all residents to observe “meatless Mondays” from now on.

A resolution adopted on Oct. 24 reads: “Be it resolved, that the Council of the City of Los Angeles hereby declares all Mondays as ‘Meatless Mondays’ in support of comprehensive sustainability efforts as well as to further encourage residents to eat a more varied plant-based diet to protect their health and protect animals.”

Councilwoman Jan Perry, who introduced the resolution, also wants to ban new fast-food restaurants in South Los Angeles.

While I suppose that freedom lovers can take solace in the “symbolic” nature of the dictate, you just know it would be backed by the force of government if they thought they could get away with it. Even such a “symbolic” gesture can only come from the mind of person who loves the power of controlling the lives of their fellow citizens and, as we see, the resolution’s author indeed has designs on more than just symbolic demonstrations of nannyism, but also wants to ban new fast-food restaurants.

But perhaps there is a precedent here of which we can one day take advantage. In the distant (or not so distant) future when Jan Perry and all the other petty tyrants have encumbered our existence with so many rules and dictates, we might wish to symbolically declare a “Freedom Friday” in support of maintaining the illusion that choice and free will still exist in American society.

Thursday

8

November 2012

Beware Liberals Bearing Gifts

Written by , Posted in Taxes
Originally published in The Daily Caller

Elections can be hard to predict, though thanks to more sophisticated and voluminous polling data and the greater reliance on statistical analysis afforded by it, it has gotten much easier. But what has always been easy is predicting how liberals will respond to a Republican defeat — with self-serving offers of ill-conceived advice for how Republicans can turn it around. Republicans, conservatives and advocates of limited government should beware these liberals bearing gifts.

It’s hard to miss all the media and liberal hand-wringing over the plight of the Republican Party. Conservatism can’t win, they say. Abandon your limited government principles and start pandering more to voters, they say. Ezra Klein summed up this latest bout of liberal pundit group-think when he said that “the substantive and coalitional commitments of the modern Republican Party need to be rethought,” otherwise “it will be a disaster for the Republican Party.”

I’m no campaign strategist and I don’t work for the Republican Party, but I do want to see strong advocates of limited government and free markets elected, so I have one word for the liberal experts who seem to have all the answers for how to form a winning coalition on the right — malarkey!

If liberals truly believed that Republicans would lose without heeding their expert advice, why would they even bother offering it? Don’t they want Republicans to lose? The truth is that they are afraid of conservatism because conservatism wins. Their only hope is to convince advocates of limited government not to run, and they’ll use every tool in their media and pop culture arsenal to make sure that happens.

Liberal commentators are pointing to the election results as proof that the electorate has shifted to the left, suggesting that a failure on the part of Republicans to do the same will result in permanent minority status. The evidence hardly sustains this conclusion.

Barack Obama and Woodrow Wilson are the only presidents elected to a second term with a lower Electoral College total than their first. The vast majority of the electorate shifted to the right between 2008 and 2012, and in barely squeaking out a popular vote victory the president was unable to match the vote for President Bush when he was re-elected in 2004, despite having a voting-age electorate over 20 million citizens larger. In fact, when looking at the Democratic share of the electoral vote as a percentage of the voting-age population over time, the idea that 2012 cemented an insurmountable new liberal or progressive majority is revealed as pure fantasy.

When President Obama was swept into office in 2008, it marked the only time in the last generation that Democrats received votes from a larger share of the voting-age population than in 1976. Tuesday’s result, however, marked a return of Democratic support to even less than pre-Obama levels.

democratic vote share chart

What this data in particular highlights is the importance of turnout. Who turns out to vote and who does not is just as important, and perhaps even more so, than winning the support of swing voters. The Obama campaign clearly understood and took advantage of this fact. Key demographics for President Obama — in particular minority and younger voters — turned out higher in swing states than in non-swing states, suggesting that they were driven to the polls by the president’s impressive campaign apparatus and well-established ground game. While that is a testament to his campaign and its workers, it hardly suggests a national ideological shift. Moreover, this strategy is heavily dependent upon the characteristics of Obama himself and is unlikely to carry over for future Democratic candidates. Senior Obama adviser David Plouffe acknowledged on the campaign’s final conference call that, “you can’t transfer this [ground game],” and also that, “the only reason why this happened on the ground in 2008 and 2012” was the “relationship between [Obama voters] and our candidate.”

Mitt Romney, meanwhile, failed to connect with voters, and in particular to convince advocates of limited government that the GOP again deserved their enthusiastic support after eight years of profligate spending and expansionary government under Bush. The exit polls showed that Romney’s supporters were less likely than the president’s to express unreserved support for their candidate, and were also more likely to suggest they were voting against a candidate instead of for one. And while 51% said that “government is doing too many things better left to businesses and individuals” — another sign that Republicans should not adopt more big-government positions to attract voters — Mitt Romney was only able to attract 74% of these voters. That the president got 24% of the vote from those who think that government is doing too much is an indictment of Romney’s campaign and demonstrates a clear failure to win the major arguments of the day.

Faulting Romney alone for this failure, however, is probably unfair. He and his campaign did about as well as they could with what they had to work with. He just wasn’t the right man for the job. He was a Northeastern moderate Republican, with a nice family and a history of kindness, who nevertheless was stuck trying to speak a conservative language that he didn’t fully understand and with which he wasn’t entirely comfortable. Unsurprisingly, it showed and voters weren’t convinced. It was only through the complete incompetence, overwhelming baggage and just generally unacceptable condition of every other Republican primary candidate that he inherited the nomination, and he did with it about as much as could reasonably be expected.

It’s certainly true that demographic groups which today vote strongly for Democrats are growing as a share of the population. So far that has not produced the kind of new heights in the Democratic vote that would preclude the possibility of future conservative victories. Nor are party preferences by any means static. There is little reason to believe that conservatism well argued and articulated cannot appeal to these demographics. In fact, there is plenty of support for conservative principles amongst the black and Hispanic communities in particular. That conservatives should find ways to demonstrate how the consistent application of their principles are to the benefit of all, including members of these groups, is just plain old common sense.

What Republicans and conservatives don’t need to do is abandon the principles of limited government and adopt the kind of pandering and demographic-vote-buying schemes used by Democrats — who have a smaller ideological base upon which to draw from, and who thus must rely upon more creative coalition-building efforts. Liberal pundits who suggest otherwise either don’t know what they are talking about or, as is more likely the case, are trying to convince Republicans to preemptively surrender. I can’t really blame them — given half a chance that it might work I’d similarly try to convince statists to adopt without a fight my views for shrinking government, cutting spending and freeing markets.

The challenge for advocates of smaller government is that liberalism is easy. It’s not at all hard to convince people that government should help them or give them something seemingly for nothing. It’s much harder to convey the more subtle understanding that such efforts often create many more problems than they solve, and that there really is no such thing as a free lunch. This is why it is all the more important for Republicans to pick candidates both well versed in conservative thought and capable of connecting with and educating the electorate.

The good news is that there are several capable choices on the horizon. It would be a major mistake for the Republican Party to preemptively cut them off and run toward the left before they have a chance to make a principled case to the American people.

Wednesday

7

November 2012

Election Kicks Can Down the Road, And What Republicans Can Learn

Written by , Posted in Big Government, Economics & the Economy, Liberty & Limited Government

The public voted for status quo. President Obama was reelected, joining only Woodrow Wilson on the list of President’s elected to a second term with a lower electoral college total than their first. The Senate stayed Democratic, the House Republican, and both by very similar margins as before. In other words, nothing changed. And Hester Peirce of the Mercatus Center points out, even a party flip for either branch still would have left much of the policy-making apparatus on auto pilot and unresponsive to public input – that of the bureaucracy. But I digress. The point is that the public decidedly rejected changing course, despite mostly believing that things are “seriously off on the wrong track.”

In terms of America’s great fiscal challenges, no real solutions will be in the offing. More than likely we can expect more temporary extensions of most current tax rates, with Republicans caving and foolishing offering more “revenue” through ill-conceived class-warfare tax hikes. And let’s be clear, class warfare was a big winner of the election. It sustained the President’s campaign and elected far left radical Elizabeth Warren to the Senate. Exit polls further show an electorate that has bought the class warfare rhetoric, with 47% wanting to increase taxes on those with incomes over $250,000 (plus 13% wanting to raise them on everyone), 55% believing the US economic system “favors the wealthy,” and 53% saying that Romney’s policies would generally favor the “rich.”

These numbers suggest failure on Romney’s part to win the key arguments of the campaign. In a bit of good news, 51% says that “Government is doing too many things better left to businesses and individuals,” which represents a change from 2008 when a majority wanted government to do more. But 24% of those who think government is doing too much voted for Obama, which is a massive failure of the Romney campaign and the Republican party. That they still cannot more easily and decisively separate themselves in the eyes of voters from the Democrats on the size of government question is inexcusable. Romney’s inability to sufficiently connect with the electorate was also confirmed by the degree to which his voters expressed their support: Obama won more voters who said they strongly favored their candidate, while Romney won more of those who had reservations, or simply disliked the other candidates. Romney voters, in other words, were more against Obama than they were for Romney.

It’s worth pointing out that, despite a majority at one point saying that want to raise taxes either on everyone or just the wealthy, 63% also said that taxes should not be raised to help cut the budget deficit. This apparent contradiction in the numbers indicates that some of the tax hiking support cited earlier is “soft,” and is certainly welcome news for those of us seeking to limit the growth of government.

All of this suggests two things: 1) Advocates for limited government have a lot of work to do in combating leftist class warfare attacks and educating the public, 2) The Republican party has work left to do when it comes to convincing small government voters that the GOP is a welcome home again, and furthermore in identifying candidates capable of accomplishing  number 1.

With the President likely to renew pursuit of his economically destructive agenda, the 2016 landscape should favor Republicans. It would be both to their benefit, and those who support limited government, to nominate someone capable of connecting where Romney failed, and educating where Romney could not. In other words, it should be Marco Rubio’s election to lose.

Monday

5

November 2012

If Obama Beat Hoover, So What?

Written by , Posted in Big Government, Economics & the Economy

You know your record as President is abysmal when supporters are reduced to touting how much better you’ve done than Herbert Hoover. But that’s where Obama is at, apparently, as historian Robert McElvaine took to the New York Times a few days ago to make exactly that case. Seeking to combat unfavorable comparisons to the pace of recovery under Obama with that of other Presidents, such as Reagan or Clinton, McElvaine dismissed them all us irrelevant and asserted that the only comparison that matters is between Obama and Hoover. And on that measure, we are told that Obama passes with flying colors!

He makes two points that I dispute: 1) That the only meaningful comparison for the recession that preceded Obama’s tenure is the crash that lead to the Great Depression, and 2) That the comparison proves Obama has done a good job on the economy. Neither is true.

McElvaine asserts that, “the most appropriate presidential term to use as a benchmark is Herbert Hoover’s. He was the last president to face an economic crisis on a scale similar to the one that confronted Obama when he took office.” But while he makes a case for comparing the two, he doesn’t explain what makes the other comparisons less valid. In particular, there is a lot that can be learned by comparing the current recovery, such that it is, to that seen under Reagan, because a case can equally be made that the early 80’s recession was as bad or worse than 2008-2009.

Both the 2008 and early 80’s recession were financially caused. Unemployment was also similar when each president took office,  at 7.5% under Reagan versus 7.8% under Obama, though joblessness peaked higher in 1982 than 2009, and Reagan had the added challenge of dealing with double digit inflation. Yet despite this Reagan did a much better job turning things around, and the economy grew an average of 5.6 percent for the first three years following the bottom of the recession he inherited, versus only 2.2 percent growth under Obama in the same time frame.

The similarity between these recessions makes the comparison valid.

But even if we accept the Hoover comparison as decisive, it doesn’t prove what McElvaine suggests. No where in his argument does he point to specific policy choices and explain how they produced the results he highlights. Sure, he mentions the stimulus bill, but doesn’t provide any actual evidence that it helped. It didn’t, as explained in this video. In other words, his argument fails to account for the very plausible explanation that Obama was merely less bad than Hoover. That Obama’s policies might not have done quite as much damage as Hoover, another big spending government interventionist, does not suggest he should be praised, merely that we could have done worse, if ever so slightly. But surely we can still do better.

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About Me

profileI serve as Vice President of the Center for Freedom and Prosperity, a non-profit think tank dedicated to preserving tax competition and free markets. This site features my personal views, which are not reflective of CF&P.

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