Hyperbole

by Russ Roberts on February 25, 2009

in Politics

Here is Steven Pearlstein in the Washington Post, commenting on Obama's State of the Union address:

Not since Franklin Roosevelt delivered his first fireside chat, eight days into his presidency, have Americans been more hungry — and more desperate — for economic leadership. 

Can't agree with that. In January of 1982, Reagan gave his first State of the Union address. Unemployment was over 10%. It is currently at 7.6%. Inflation in the previous year had exceeded 10%. Today it is roughly zero.

Pearlstein continues:

And not since FDR has there been an economic agenda as bold or ambitious, or as likely to reshape American capitalism.

Just a month in office, Obama has already pushed through additional fiscal stimulus equal to 5 percent of the country's economic output. His Treasury Department is about to embark on the second phase of a program that will lead to greater government control and ownership of some of the nation's biggest banks. He has assembled a team to pull off what amounts to a bankruptcy reorganization for automakers that will leave taxpayers as one of the industry's biggest creditors. And within months, the president has promised to deliver the blueprint of a new regulatory architecture that will dramatically increase the government's oversight of financial firms.

Yes, Obama is spending a lot of money. But the spending itself isn't reshaping capitalism. The rest of the stuff is reshaping capitalism, at least for now. The attempts to salvage the auto industry and de facto nationalization of the banks are leftovers from the Bush Administration and I wish Obama had but them in the garbage rather than adding them to the menu. As for government's oversight of financial firms, no details are available yet.

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  • jorod

    Don't Nationalize, Suspend Market to market


    http://www.ftportfolios.com/Commentary/EconomicResearch/2009/2/23/dont_nationalize;_suspend_mark-to-market

  • Actually, unemployment is much higher than 7 %.


    Don't forget the Clinton administration's redefinition of how unemployment was calculated, that essentially stopped reporting anyone who had given up looking for work because there were no jobs to be had as being unemployed. According to Shadow Stats, the unemployment rate as reported by the government should be around 15%.

  • The Dirty Mac

    The more educated workforce created more mobility than existed many years ago. Most of my older family members got a job at ages 18-25 (often blue collar) and never progressed. A white collar worker can easily be set back 10-20 years. The unemployment rates aren't catching that.

  • The Dirty Mac

    And yes, it was the Bush Administration that should get the "credit" for corporatist revolution although Obama seems to have no problem with the concept.

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