Obama at GMU

by on January 8, 2009 at 1:48 pm in Current Affairs, Economics, Political Science | Permalink

President-Elect Obama just spoke at GMU.  I was fortunate to have an invite.  He had a number of good lines including as good a one-line explanation and justification for Keynesian economics as you will find:

Only government can break the cycle that is crippling
our economy, where a lack of spending leads to lost jobs, which leads
to even less spending, where an inability to lend and borrow stops
growth and leads to even less credit.

He emphasized that jobs would be created in the private sector and saved in the public sector.  Nicely put.

His goal is "not to create a slew of new government programs, but a foundation for long-term economic growth."  Very good.

In terms of long-term investment, I was pleased to see him mention the smart grid in particular, an idea I pushed as recently as today.

Overall, my view is that the Obama fiscal stimulus plan is evolving in a sensible direction.  As promised, he is a pragmatist who is listening to a wide variety of well-qualified, centrist economists.

A substantial fraction of the fiscal stimulus is tax cuts, a substantial fraction is preventing state and local funding from plummeting, a modest but reasonable fraction is on maintenance and improvements of old infrastructure (projects that are mostly already on the books), and a modest (but increasing over time) fraction is on longer term projects which are likely to pay off in future returns.

At present, I see very little in the way of Keynesian pyramid building.  Nor do I see an attempt to grab the revolutionary moment by the horns and push the U.S. in a new direction.  Thus, thankfully, No New Deal. There is plenty of uncertainty in the economy but it’s not regime uncertainty.

Addendum:  Do note that I am
evaluating Obama relative to what we can expect given the situation and
our current politics and also relative to say the New Deal.

1 Adam Baum January 8, 2009 at 2:13 pm

“I was fortunate to have an invite. He had a number of good lines including as good a one-line explanation and justification for Keynesian economics as you will find:

Only government can break the cycle that is crippling our economy,
where a lack of spending leads to lost jobs, which leads to even less spending,
where an inability to lend and borrow stops growth and leads to even less credit.

He emphasized that jobs would be created in the private sector and saved in the public sector.
Nicely put.”

Alex, its one thing when you feel the tingly feeling running up your leg-

But when I feel the tingly feeling running up your leg, it’s kind of revolting.

Then again, the professiorate is as dependent on government spending as anything else.

2 Vernunft January 8, 2009 at 2:27 pm

Thank goodness the bloated public sector will be preserved! And added to, of course. Let’s become China!

3 Andrew January 8, 2009 at 2:32 pm

I would support pyramids.

Huge concrete structures that can’t fall over with empty rooms that could be used for anything in the future sounds like the perfect works project.

The worst thing would be a permanent waste. The best thing would be a permanent resource.

Use large concrete blocks that could be dismantled and used for other stuff later and I might get a tingly feeling.

4 Superheater January 8, 2009 at 2:44 pm

Bobby, you’re wrong. Its worse than horse manure.

Cafehayek.com has a slightly different view of this speech, from a less fawning viewpoint.

Seriously Alex, my 5 year old nice is less excited when Hanna Montana comes on TV and I think she’d
still be more reserved than you if she had a backstage pass. Get a hold of yourself.

5 Alex Tabarrok January 8, 2009 at 2:59 pm

Heh people, my views are well known and haven’t changed. I am evaluating Obama relative to what we can expect given the situation and our current politics and also relative to say the New Deal.

6 libfree January 8, 2009 at 3:02 pm

Did Tyler not get to go?

7 libfree January 8, 2009 at 3:04 pm

I agree with Alex. I was expecting a lot worse and have been pleasantly surprised so far. We’ll have to wait and see what actually happens.

8 Jay Chambers January 8, 2009 at 3:13 pm

Coming up next: Alan Greenspan comes to campus, gives a speech and afterwards some GMU economists publicly state that they have to rethink the whole monetarist school.

😉

9 HH January 8, 2009 at 3:22 pm

Winston, relax. I’m pretty sure “a number of good lines” refers to the content of them, not how well they were delivered.

In fact, everyone needs to chill out a bit. The post struck me as one of relief, not of approval: “We could be facing nationalization of everything, but instead we’re getting this.” That’s a pretty good choice, given our realistic options – much like Obama was a pretty good choice given our two options. Clearly Alex isn’t endorsing the proposals as ideal in this or any setting. So relax, everyone.

10 HH January 8, 2009 at 3:44 pm

“Bobby”

Yes, the content was “good” relative to a New New Deal situation, as Alex has repeatedly explained.

11 Bobby January 8, 2009 at 3:47 pm

Kent,

At least Kucinich would have pulled out of Iraq…

12 HH January 8, 2009 at 4:01 pm

“Bobby”

1. Yes, McCain would have been better than … Pat Robertson? Ahmadinejad? Yes, given those two choices only, McCain would have been a better call. He’s not an ideal choice, much like Obama’s plan is not an ideal choice for anyone on this board, and I’m pretty sure Alex would agree. But, like him, I’m relieved that a far worse intervention seems to be off the table. I’d still prefer a less interventionist gov’t (and will speak and vote accordingly), but in the short term, that’s not an option. The question isn’t, “what should Obama do?,” it’s “Given that Obama wants a massive gov’t stimulus, what’s the least damaging way to have one?”

2. Odd choice of supporting argument, where the choice is “suffer the slings and arrows of outrageous fortune” or suicide [that’s how Hamlet wanted to end his troubles]. Since we’re both picking the lesser of two evils [you haven’t killed yourself yet], I don’t know why that’s an unreasonable choice in the Obama situation.

Now off you go. Lew Rockwell misses you.

13 Brian Garst January 8, 2009 at 4:34 pm

You actually take Obama at his word? FDR promised to balance the budget, you know. He is following FDR’ path to the T, deception and all. You’ve been hoodwinked. When Obama is done carving out massive new welfare programs and saddling the economy with crippling environmental regulations, what’s left will hardly be recognizable.

Regime uncertainty? I can hardly tell what planet this is anymore.

14 Winston January 8, 2009 at 4:44 pm

HH:

That’s a pretty good choice, given our realistic options – much like Obama was a pretty good
choice given our two options.

I’m still waiting to hear what made Obama the better choice, because when a guy
talks about “transparency” and has invitation only events-about the only thing I
see as transparent is that super thin resume

15 IWantCookieNow January 8, 2009 at 5:04 pm

To his credit, compared with Cafe Hayek, Alex at least hasn’t claimed Social Security to be a Ponzi scheme. So not all grass is really greener on the other side.

16 theRadical January 8, 2009 at 5:06 pm

Cookie,

Social Security is a Ponzi scheme.

17 HH January 8, 2009 at 5:20 pm

theRadical

You’re talking past me. If your two choices are Marxism and Keynesianism, then yes, Keynesianism is “good.” In the very short run, given the US political situation, those were roughly our choices, since the majority of people want more gov’t intervention. Alex appears relieved that the worst ideas don’t seem to be considered anymore. Does he also have to spell out what he’d want gov’t to do in the ideal scenario every time? Hasn’t he done that plenty on MR? Why can’t someone just prefer the less of the two evils without automatically being accused of endorsing the lesser evil? I’m relieved that Israeli raids kill hundreds, not thousands, but that doesn’t mean I endorse them. There’s no need to read more into the post than what it said. It could have been worse.

Anyway, Alex, for future posts where you express any positive feeling for anything but the party line, be so kind as to link to Robin Hanson’s post at OB:

http://www.overcomingbias.com/2008/06/against-disclai.html

Specifically, the part that says “If you say you prefer option A to option B, you also prefer A to any option C.” Even if C is not an option.

18 billswift January 8, 2009 at 6:55 pm

Comparisons don’t make something good just because it isn’t as bad as what it’s compared to.

“The lesser of two evils is still evil.”

19 Tim January 8, 2009 at 6:59 pm

theRadical:
I read the Granville-Barker play The Voyzey Inheritance the other day, and I had the same thoughts about social security. You, sir or madame, must be a genius like myself.

20 whosonfirst January 8, 2009 at 7:36 pm

Bernard,

Not yet, maybe.

21 josh January 8, 2009 at 8:06 pm

Hey Alex, did he tell you about our recent victories in the war against our eternal enemy Eurasia. Not bad, eh?

Seriously, who the hell wrote this post? Does being made to feel important really have this kind of effect on you?

22 wdm January 8, 2009 at 8:39 pm

I enjoy how I point out the fact that these are basically troll arguments, and you delete my post pointing it out. Somehow, removing a reference to the fact that the debate here, in these comments, is basically complete bullshit makes the comments all of a sudden have moral high ground?

Comments you should delete which would make this debate less mud-slingy and a bit educated: the entire bullshit between Bobby, and HH.

trolling would be enjoyable here, except I have other things to do, like write a dissertation, have a life, ect.

23 Klug January 8, 2009 at 9:12 pm

Inveighing against the “smart grid”:

I don’t know what the hell a smart grid is, but it appears to be this: 1) the opposite of whatever we have (don’t forget that whatever we have is “third-world” or “primitive”) 2) something that has all sorts of Schneierian non-brittle networked cleverness (not that it’s a bad thing) and 3) an assurance to liberals that no, we won’t have to suck it up and build more real power plants (coal, nuclear, gas) and we can pretend that solar panels on your home and a Prius in the driveway will power your homes, your children’s home and the factory next door.

Apart from the specific technologies (superconducting cables being one, more investment into utility SCADA is another), the “smart grid” sounds and smells like bullshit to me.

24 Chemjobber January 8, 2009 at 9:21 pm

Inveighing against the “smart grid”:

I don’t know what a smart grid is, but it appears to be this: 1) the opposite of whatever we have (don’t forget that whatever we have is “third-world” or “primitive”) 2) something that has all sorts of Schneierian non-brittle networked cleverness (not that it’s a bad thing) and 3) an assurance to liberals that no, we won’t have to suck it up and build more real power plants (coal, nuclear, gas) and we can pretend that solar panels on your home and a Prius in the driveway will power your homes, your children’s home and the factory next door.

Apart from the specific technologies (superconducting cables being one, more investment into utility SCADA is another), the “smart grid” sounds and smells like baloney to me.

25 Gamut January 8, 2009 at 9:39 pm

“and a modest (but increasing over time) fraction is on longer term projects which are likely to pay off in future returns.

At present, I see very little in the way of Keynesian pyramid building.”

I see a slight contradiction there. If you think, even for a moment, that $400 billion in ‘projects’ is going to get you anything more than $400 billion in half-finished commitments, then Obama must be one hell of an orator.

I’m a frequent reader of this blog, and I enjoy it for it’s pragmatism, but today’s post made me scroll up to the top to ensure my aggregator didn’t pitch me onto another site — seriously. Truly extraordinary how much tone can change after a session with this man. I find that much more frightening than the spending itself. I shudder to think what a few ‘fireside chats’ with this man might do to ‘direction’.

26 Winston January 8, 2009 at 10:28 pm

“”There’s something really creepy about Obama’s “invitation-only” events. Smacks of Nuremberg. ”

………???

I can’t even begin to fathom what this means, or why these events seem like “really creepy” behavior.”

If your stated inability to “fathom” this is sincere, I feel sorry for you.

In that vein, there are some really overtly narcisstic tendencies to this guy.

The Greek columns, the acceptance speech, the biographies, the disposal of his grandmother-its all bout Barack & power.

On the oter hand, I’m reasonably sure you are making a pathetic attempt at sarcasm.

27 Emily Ng January 8, 2009 at 11:11 pm

Barack Obama said in this speech – “A world that depends on the strength of our economy is now watching and waiting for America to lead once more. And that is what we will do.”

This is absolutely right. US leadership in kickstarting the international economy is crucial. But the case for this is also partly because the United States itself is dependent on the good health of the world economy.

The Bank of England said this just now in explaining its latest historic interest rate cut – “The world economy appears to be undergoing an unusually sharp and synchronised downturn. Measures of business and consumer confidence have fallen markedly. World trade growth this year is likely to be the weakest for some considerable time.” As Obama said soon after the election – “We must also remember that the financial crisis is increasingly global and requires a global response.”

In the discussions of recent months it has become increasingly clear to me that both the US and the wider global economies need:
1. coordinated macro-economic stimulus (both through monetary and fiscal policy)
2. strong international economic institutions like the IMF and World Bank (both of which seem to have been contributing positively to dealing with the current crisis), and
3. every possible measure to maintain an open international trading system and to avoid the perils of protectionism.

This is very much in line with what we can learn from the now-revived John Maynard Keynes (as understood from Skidelsky’s and Moggridge’s biographies, and Markwell’s study of Keynes and international relations).

It is good to see Barack Obama place emphasis on the international context, and the importance of US leadership. It would be even better to see him commit clearly to those three points, including to be clear that he will stand strongly against the self-destructive economic nationalism and protectionism that has done so much harm in the past.

US economic leadership in this way will serve the interests both of the United States and of the wider world.

28 SheetWise January 9, 2009 at 12:05 am

I heard Obama speak this morning.

All this printing of money … it made me think of Say’s Law, which I hadn’t read in a while.

After reading it again, I was again comforted. I went back to sleep comforted by the knowledge that this wasn’t a dream — these people really are that stupid.

They really do believe that I, and millions like me, are not going to try and profit from their idiocy.

God bless America.

29 pulverizer January 9, 2009 at 3:03 am

Obama,oh,i think he will be a good president,but now ecnomic crisis will let him no good day

30 Bob Layson January 9, 2009 at 7:02 am

There are names and then there are descriptions. If I call my mutt Stimulus will it cease being a dog?

31 Brian January 9, 2009 at 9:36 am

“A substantial fraction of the fiscal stimulus is tax cuts,”

This is like suggesting your income has increased because you got a new credit card. Why do you and Tyler persist in calling these “tax cuts”?

32 RobertD January 9, 2009 at 10:57 am

Bobby,
I think you are underestimating Alex’s intelligence. He does understand that tax cuts need to be coupled with decreases in spending. See his article in the independent.
http://www.independent.org/newsroom/article.asp?id=1143

I must say that I admire Obama for speaking about his economic policies at GMU.

33 StreetWalker January 9, 2009 at 12:52 pm

Alex,

jobs would be created in the private sector

Re-reading your post since it still niggles at me. You know, Obama can give me as many tax credits as I want for hiring somebody, but I ain’t gonna hire nobody if consumers ain’t spending. Unless Obama pays their whole salary & benefits, a tax credit won’t be enough to pad my staff – my shareholders won’t stand for the increased cost.

So why is this a great idea, except for supporting the local governments – they will in fact be able to retain jobs & services?

34 guy in the veal calf office January 9, 2009 at 1:37 pm

So, Alex, you have Hope that he’ll Change from all those terrible promises he’s made in the past?

Is it possible that you fell for that famous ability of his to seduce listeners to project onto his oratory whatever the listener wants from him?

He’s got the “yes, but” and “not, if” down to a science.

35 liberty January 9, 2009 at 2:28 pm

(David Brooks anyway)

36 Alex Tabarrok January 9, 2009 at 5:08 pm

Liberty, I’m puzzled. Brooks echoes my comments very closely.

“Obama’s team has clearly thought through every piece of this plan. There’s no plank that’s obviously wasteful or that reeks of special-interest pleading. The tax cut is big and bipartisan. Obama is properly worried about runaway deficits, but he’s spending money on things one would want to do anyway. This is not an attempt to use the crisis to build a European-style welfare state.”

Brooks’ point is that the plan may be too ambitious, “overload.” This is certainly a good point but not inconsistent with what I said.

37 In Check January 9, 2009 at 5:51 pm

“Barack Obama said in this speech – ‘A world that depends on the strength of our economy is now watching and waiting for America to lead once more. And that is what we will do.'”
@Emily Ng

If he really means this, he needs to get on the phone to South Korea right now. Apparently there’s more than a little concern at Cheong Wa Dae about Obama’s election, and the devastating impact it’s expected to have on bilateral trade.

http://english.chosun.com/w21data/html/news/200901/200901090002.html

38 Andrew January 9, 2009 at 8:39 pm

Meter, give the man a break. He hasn’t even hired any interns yet.

39 Superheater January 9, 2009 at 10:49 pm

Meter, you are a tedious drone and your responses are remarkably vacant and wasteful drivel. I’ll concede that I’m sure you speak with considerable expertise on autoerotic activity. Please return to it quickly-because your thoughts should be as private as your “hobby”-great for you, just disgusting for the rest of us.

BTW, some of us prefer and have the company of a woman.

40 Matthew January 11, 2009 at 9:35 pm

The people who write this blog are a lot more sane than the people who comment on it.

41 lv Bag September 10, 2010 at 10:22 pm

I’m a frequent reader of this blog, and I enjoy it for it’s pragmatism, but today’s post made me scroll up to the top to ensure my aggregator didn’t pitch me onto another site — seriously. Truly extraordinary how much tone can change after a session with this man. I find that much more frightening than the spending itself. I shudder to think what a few ‘fireside chats’ with this man might do to ‘direction’.

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