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.