Obama's Economic Fatalism
by Jason Williams, Sun Jul 10, 2011 at 05:27:03 PM EDT
Yglesias challenges (with graphs!) Obama's recent assertion on the Today Show that while the American Recovery and Reinvestment Act was a success, it's possible nothing more can be done about unemployment.
There are some structural issues with our economy where a lot of businesses have learned to be much more efficient with fewer workers. You see it when you go to a bank and you use an ATM, you don’t go to a bank teller. Or you see it when you go to the airport and you use a kiosk instead of checking at the gate
Maybe Barack Obama has some reason to believe that the pace of technological change accelerated in some unaccountable way during his time in office. But above I’ve illustrated my alternative theory of the recession. It shows that the housing crisis and the problems in the banking sector led to a historically unprecedented drop in personal consumption. It also shows that while consumption has ticked back up, it hasn’t returned to its pre-recession trend level. All else being equal, if households spend fewer dollars, then fewer people will be employed in providing them with goods and services. One strategy would be to ensure that all else is not equal and that government spending fills the gap opened up by the collapse in private spending. But that hasn’t happened. Federal spending has continued roughly at trend levels, and state/local spending has also fallen below trend. The result is mass unemployment.
Prolonged unemployment, the White House seems to be arguing, is simply a result of a sudden structural shift in the economy due to rapid technological advances -- advances that haven't accellerated during Obama's first term or since the recession began. The ARRA did all we could, and now we just wait and see what happens? The government spent some. Gave it an honest go. End of story?
Outside of the poor economic (anti)-policy behind this position, I don't see how "Not Much Else We Can Do" plays well as a 2012 campaign slogan.