Economic Cluelessness


While in high school, I was standing at a bus stop next to a gas station. A kid tossed a candy wrapper on the station lot. Somebody yelled, “Hey, pick that up.” The kid, with a straight face, defended himself. He said, “I just created a job.” Someone would be hired, he explained, to pick up the trash, and this would be good for the economy.

Don’t laugh. The kid probably works for the Obama administration.

Congress is now considering yet another “stimulus” package. But did the administration’s previous one work? Of the $787 billion stimulus package, President Obama said it would “save or create” 3.5 million new jobs. Has it?

The National Association for Business Economics polled 68 private-sector members. Seventy-three percent said the employment at their companies was neither higher nor lower as a result of the stimulus package.

What about the nonpartisan Congressional Budget Office? A February 2009 Washington Times article said:

“President Obama’s economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.

“CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.”

What do normal, regular, real-world people think? In December 2009, a Rasmussen poll asked likely voters whether the “stimulus” helped, hurt or did nothing.

They agreed with the private-sector economists and the CBO — the stimulus did not work. And more felt it did damage than thought it helped: “A new Rasmussen Reports national telephone survey finds that 30 percent of voters nationwide believe the $787-billion economic stimulus plan has helped the economy. However, 38 percent believe that the stimulus plan has hurt the economy. This is the first time since the legislation passed that a plurality has held a negative view of its impact.”

Obama, House Speaker Nancy Pelosi and commentator Ed we-need-health-care-reform-and-I-don’t-care-how-much-it-costs Schultz think one way. Believers in the free market and limited government think another. As between these two camps, which one better understands how the real world works?

Zogby International asked questions about economics of nearly 5,000 people. George Mason University economist Dan Klein co-authored a report on the responses given to eight basic economic questions.

(Correct answers and “not sure” responses were ignored — only flatly incorrect responses were counted.) Do housing restrictions increase the price of housing? The answer is yes. Whether the restrictions are good or bad is a separate issue. But restrictions on any good increase the price of that good — whether houses or horseshoes. Do minimum wages increase unemployment? The answer is yes. Whether one accepts this as a worthy trade-off is a separate question. Is our standard of living higher than it was 30 years ago? It is. Whether we are “addicted” to oil or facing cataclysmic “global warming” is a separate issue. The other questions involved licensing, rent control, the definition of a monopoly, the definition of exploitation, and whether free trade leads to unemployment.

Respondents self-identified as progressive/very liberal, liberal, moderate, conservative, very conservative, or libertarian. Who did better?

“On every question,” wrote Klein, “the left did much worse. On the monopoly question, the portion of progressive/very liberals answering incorrectly (31 percent) was more than twice that of conservatives (13 percent) and more than four times that of libertarians (7 percent). On the question about living standards, the portion of progressive/very liberals answering incorrectly (61 percent) was more than four times that of conservatives (13 percent) and almost three times that of libertarians (21 percent).”

Maybe those with more education performed better? No, the report said. “We work with three levels of schooling: (1) high school or less; (2) some college (but not a degree); (3) a college degree or more. In our data, economic enlightenment is not correlated with going to college.”

The left blames the financial collapse on “greed,” ignoring the role played by government involvement — Freddie Mac, Ginnie Mae, the Federal Housing Administration, the Community Reinvestment Act and elsewhere. Leftists point to “insufficient regulation” on Wall Street for reckless behavior, rather than to the players’ assumption that too-big-to-fail would protect them.

On the BP Gulf oil spill, Obama wants to find “whose ass to kick.” He’s called for a moratorium on new offshore drilling. But why do we drill offshore for oil more than a mile deep? Is it that on-land and safer, shallow water areas are off-limits — thus pushing companies to extract oil from more dangerous places? Have the restrictions on clean nuclear power altered how and where we obtain energy?

Republicans, in the eight-question economics poll, averaged 1.61 incorrect answers. Democrats averaged 4.59 wrong answers. So in the President’s search for “ass to kick,” start here.

Larry Elder is a syndicated radio talk show host and best-selling author. His latest book, “What’s Race Got to Do with It?” is available now. To find out more about Larry Elder, visit his Web page at www.WeveGotACountryToSave.com.

  • ze-ev ben jehudah

    Barack Hussein Obama is better known as Mr No Brains.

  • The_Inquisitor

    It is incumbent upon every citizen to learn economics. Start with Henry Hazlitt's "Economics In One Lesson" and work deeper from there. Check out
    http://www.mises.org/
    for articles and further reading. Your understanding of economics and your ability to explain it to others is crucial to America's survival.

    • http://intensedebate.com/people/Reason_For_Life Reason_For_Life

      The left isn't ignorant of economics.

      "It isn't what you don't know that can hurt you, it's want you know that ain't so"
      – attributed to Mark Twain but I've heard other versions of the same idea from others.

      Ignorance is curable, fanatical devotion to wrong ideas is not.

      • http://intensedebate.com/people/The_Inquisitor The_Inquisitor

        I don't give a hoot about the Left. My concern is with economic ignorance on the Right. For example, what percentage of Conservatives would you say believe anti-trust laws are necessary?

  • Ken

    OBAMA – One Big Ass Mistake America!

  • jim

    This blog is a joke. I submitted a comment hours ago and it contained an s followed by three dashes to describe how much Obama cares about the economy versus government control, and it was not allowed to be displayed on the blog. Now I see "ass" is OK (Obama says it, so I guess that makes it OK to the blog monitor, huh) but not the letter s. This website has seen the last of my contributions!

    • USMCSniper

      Oh aren't we the arrogant little twit! Last of my contributions you say and you're leaving! Well don't let the door hit you in ASS on the way out!

      • Stephen D.

        Hey Sniper. I clicked on the "thumbs up" symbol (so I thought) in favor of your reply to jim but I must have hit the thumbs down button. Sorry for that my friend. You sohuld watch it though. You may have hurt his feelings and got him crying.

  • USMCSniper

    The Marxist, Buraq Hussein Obama is clueless: Since "economic growth" is today's great problem, and our present Administration is promising to "stimulate" it — to achieve general prosperity by ever wider government controls, while spending an unproduced wealth that increases the national debt to where it is beyond any possibility even to ever repay.

  • coyote3

    Glad this is finally getting some attention, albeit indirectly. First off, the oil spill "is" BP's fault, in the sense that it is their property, their oil, their workers, i.e., they had "control" over the thing in the legal sense. So, there is no question there. However, a corporation has a first and foremost obligation to its shareholders to make money. There is also a legitimate and constitutional regulation navigable waterways and coastlines. The deep water drilling seems very expensive, and risky. Notwithstanding the expense, if something happens, and it did, and will, there is a limited ability to do something about. Now, it was the federal government that has severely restricted drilling on land, or more importantly, shallower depths, where the oil companies have tremendous experience and expertise in combating fires, accidents etc. Seems that the federal government's regulations play a part in this "cause in fact" situation, because "if not" for the severe restrictions, the oil companies might have been able to drill in safer locations. Sounds like the regulators might have traded an environmental risk for a much greater danger.

  • Jim Johnson

    All sides show not ignorance of economics but rather willful ignorance. All sides preach the economic view that benefits them the most.

    Both the 'bail out' and the 'make work programs' are not working.
    Ayan Rand Capitalism's 'No Rules No Regulations' has flopped.( Alan Greenspan said so).
    The Left's Command and Control theories resulted in Corruption and Poverty.

    No one knows they only espouse programs that will benefit their side.

    And I certainly do not know.

    • USMCSniper

      Jim, who regulates the regulators whose only goal is to have power to loot from those who do produce. Regulations negates the competition for reputation and excellence and substitutes minimum standards and inflence peddling with politicians in place of enforcement of contracts. Allan Greenspan is a colossal failure as a man and as an economist.

      • Jim C.

        I don't know. I like knowing my food will not be poisoned, my medicine will not cause me to grow another leg, and the plant down the road can't dump its waste into my drinking water. Don't you? Or would you just rather they got investigated and sued long after your town got poisoned?

        Ayn Rand was a neurotic ditz.

        • coyote3

          Please provide medical evidence of this allegation. Additionally, it is not an issue of what you "like", or I "like", or what anyone else "likes." That's just bravo sierra to start with. The issue is what powers are delegated by the constitution to the federal government.

    • http://intensedebate.com/people/The_Inquisitor The_Inquisitor

      When has 'No Rules No Regulations' been tried?

      Here is a little of what 'No Rules No Regulations' means:

      1. End anti-trust laws.
      2. End labor and wage laws, especially union protected monopolies.
      3. Eliminate OSHA.
      4. End all trade restrictions and protective tariffs.
      5. End the government protected Fed banking monopoly.

      Item 2 alone would have made America 50 trillion dollars richer in the last half of the Twentieth Century.

  • Davarino

    I took an economics course in college and it was a breeze compared to the engineering courses I was taking. The tests were given on a multiple choice scantron, but there were liberal arts majors taking the course that were having a hard time understanding the material or acing a test…………………………. When you take a multiple choice test the answer is given to you. If you cant come up with the answer you are an idiot and shouldnt be allowed in college. Besides the fact that economics is not that hard to understand. Its a few graphs, supply and demand, and logic, which is lost on emotion thinkers.

    Where do your numbnut leftist government types come from, what type of education do they get? Come on you know this one. The answer is somewhere on this page hehehhehe

    You cant spend your way to prosperity, you cant over tax people, you cant over regulate, you cant print money and give it away, you cant freely trade with communist nations/unfair trading partners.

    For all you do gooders out there, what happens when you raise the minimum wage?
    Anybody, anybody………

  • ahem

    You know, Larry, I'm starting to wonder if it's the marxism or the years of cocaine.

  • USMCSniper

    BP's board was to meet on Monday to discuss deferring its second-quarter dividends (TO ITS STOCKHOLDERS) and putting the money into escrow until the company's liabilities from the spill are known. The White House wants an independent, third party to administer the escrow account and compensate those with "legitimate" claims for damages, he said. The amount of money set aside will be part of the White House discussions, but Axelrod said it should be "substantial."

    Of course, the independent third party will be Comrade Buraq Hussein Obama's lawyer cronies for "class action" damages in amounts to be determined by Judges chosen by the Obama adminstration. Lawyers get 1/3 minimum plus substantial fees for administering the escrow account.

  • Gommbah

    Obama is not worried about national economic impact. In Chicago style politics, the public treasury exists to be raided and distributed among friends. Obama is, by that set of rules, playing very well. Even if he is rejected for a second term, he and his will have enjoyed four years at the taxpayer's expense.

    • Jim C.

      And this differs from Mr. Bush how. exactly? Were you carping then, too?

      • Syd Barrett

        It sure as shootin' differs in scale, Jim. Obama has spent far more than any American president, ever, and has already spent more than Bush spent over two terms.

        And…Obama's just getting warmed up.

      • coyote3

        Yes, I was complaining then. If by that you mean the treasury being raided so that the federal government could exercise powers not delegated by the constitution. Indeed, President Bush did violate these limitations.

  • Bobbie

    Cash for clunkers, Census job, etc. should count for something.

  • Eric

    What a great read, this was truly an entertaining article.
    Las Vegas chiropractor

  • http://www.mercurytaxisoftware.co.uk Taxi Software

    Thanks for your blog, however i think Obama is a good person and a good president. There's still a lot of time so let's give him a chance.

  • http://www.dognutritionguide.co.uk Dog nutrition guide

    Obama is not perfect but he is a good man. There's still time so let's give him a chance.