Obamanomics

Following on from my post yesterday about Barak Obama, there is a simmering issue amongst economist about his economics. In particular, he said this:

This time we want to talk about the fact that the real problem is not that someone who doesn’t look like you might take your job; it’s that the corporation you work for will ship it overseas for nothing more than a profit.

This hits at the heart of the economist’s soul (assuming that exists). And I agree. Economic and moral calculations should not end at the US border. But let’s face it, Obama is being no different from 99 percent of US (or other) politicians in expressing such views. As The Economist blog points out, this is actually unlikely to matter much for policy.

But I would go further. This was 10 seconds in a 40 minute speech that encompassed the deepest and most accurate economic thinking that I have heard from any politician. His view of discrimination, its costs and its intractability represents the best of economic thinking on the subject. Consider this:

A lack of economic opportunity among black men, and the shame and frustration that came from not being able to provide for one’s family, contributed to the erosion of black families – a problem that welfare policies for many years may have worsened. And the lack of basic services in so many urban black neighborhoods – parks for kids to play in, police walking the beat, regular garbage pick-up and building code enforcement – all helped create a cycle of violence, blight and neglect that continue to haunt us.

His characterisation of coalitional game theory is at the forefront of modern political economy.

And yet, to wish away the resentments of white Americans, to label them as misguided or even racist, without recognizing they are grounded in legitimate concerns – this too widens the racial divide, and blocks the path to understanding.

And his view of inequality, its persistence and what it means is, actually, far ahead of what most economists understand and can deal with.

But for all those who scratched and clawed their way to get a piece of the American Dream, there were many who didn’t make it – those who were ultimately defeated, in one way or another, by discrimination. That legacy of defeat was passed on to future generations – those young men and increasingly young women who we see standing on street corners or languishing in our prisons, without hope or prospects for the future.

Obama thinks not just about primary effects but about equilibrium too. I’ll trade-off populist views on free trade and American jobs for all of that any day.

6 thoughts on “Obamanomics”

  1. I think you are giving Obama a free pass here. Many republicans do support free trade in public. McCain is even against ethanol subsidies despite that hurting him greatly in Iowa.

    Obama should pilloried on his economics. He is trying to present himself as a new type of politican that speaks candidly and truthfully. Yet, on economic issues, he is playing the same old tired tunes. As economic issues move to the forefront, this inconsistency could hurt his credibility.

    Further, weren’t you the other day arguing that it is legitimate to attack politicans on their stated reasons for policies, even though they may have more legitimate, yet secret, other rationales?

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  2. I don’t think it is a secret agenda at all. I don’t expect Obama to be a free trade advocate. I just think that is less important than other things at the moment.

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  3. Like I said in another comment, I’m worried about the damage Obama could do with the power of good intention. Cheap protectionism points to someone who will have trouble governing for the medium to long term.

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  4. I think Josh is pointing out that Obama has more than good intentions; he has penetrating analysis. The combination of rich system analysis skills and strong political ability comes along once in a blue moon and has the potential to be incredibly powerful. US voters should grab while it’s there.

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