I wonder if Larry Summers will be thrown under Obama’s bus. He must know, deep down, the consequences of Obamanomics.
The president’s chief economic adviser warned Friday that the nation’s unemployment rate could stay “unacceptably high” for years to come — a situation that would seriously complicate Barack Obama’s ability to convince Americans that he’s beating back the recession.
“The level of unemployment is unacceptably high,” National Economic Council Director Larry Summers said Friday. “And will, by all forecasts, remain unacceptably high for a number of years.”
Summers’ comments came in a briefing with reporters ahead of Obama’s speech in New York City on Monday, marking the one-year anniversary of the collapse of Lehman Brothers, an event widely regarded as having created a panic that caused the global economic meltdown.
It’s the 1930′s all over again. And the 1970′s. History tells us again and again that Keynesian economic policies don’t work. Yet these politicians keep trying, believing they’re somehow smarter than the Keynesians of the past. Isn’t that the definition of crazy? Or is it stupid? They were wrong then, and they’re wrong now.
The Obama administration is claiming success, not because of recovery, but because of the slowdown in economic decline. Last month, just 216,000 jobs were lost, and the economy declined by only 1% in the second quarter. Based on his rhetoric, Mr. Obama expects credit for anyone who still has a job.
The fallacies of Keynesian economics were exposed decades ago by Friedrich Hayek and Milton Friedman. Keynesian thinking was then discredited in practice in the 1970s, when the Keynesians could neither explain nor cure the double-digit inflation, interest rates, and unemployment that resulted from their policies. Ronald Reagan’s decision to dump Keynesianism in favor of supply-side policies—which emphasize incentives for investment—produced a 25-year economic boom. That boom ended as the Bush administration abandoned every component of Reaganomics one by one, culminating in Treasury Secretary Henry Paulson’s throwback Keynesian stimulus in early 2008.
Mr. Obama showed up in early 2009 with the dismissive certitude that none of this history ever happened, and suddenly national economic policy was back in the 1930s. Instead of the change voters thought they were getting, Mr. Obama quintupled down on Mr. Bush’s 2008 Keynesianism.
We now have about 26 million Americans unemployed or underemployed, and the real unemployment rate is about 16%. We’ve seen this movie before. But the Keynesian true believers will never learn. Our only hope is that the voters do – and have long memories.
Oh, and expect Obama on Monday to talk about how he saved the economy from complete collapse, and without him nobody in America would have a job.
Update: From Drudge:
Friday Night White House Policy Dump:
Administration abandons six-party talks; capitulates to NKorea…
Census bureau cuts ties with ACORN…
Obama Opts for Import Tariffs on Chinese Tires…
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