Monday, October 29, 2012

Conservative calls out Romney as greatest liar in Presidential campaign history

Here is Norm Ornstein of the conservative think tank, American Enterprise Institute:

“I think there’s nobody like Romney,” says Ornstein. “Romney is like the Michael Phelps of presidential candidates. If you’re looking for gold medals in terms of audacious lying, and adamant refusal to turn over personal information, nobody comes close. I’m sure others would’ve liked to have done it, but the culture in the past was one where lying attracted some level of approbation and shame.”

What is outstanding here is not the observation, but the source, a respected observer of politics at a conservative think tanks. For a catalog of Romney's lies see Steve Benen's series at Maddowblog, Chronicling Mitt's Mendacity, now up to installment forty!

Friday, October 26, 2012

Yes, government is an engine of job creation!

Of all the damaging myths about the economy, the top one is probably that the government is not an engine of job growth. The latest evidence of this myth is a Washington Post column by Robert Samuelson attacking a New York Times editorial supporting the idea that government creates jobs, accusing it of having a 'flat earth' view of the economy.

But the 'flat earther' here is Samuelson. As we have discussed earlier in this blog, former World Bank economist Isabelle Tsakok in her book Success in Agricultural Transformation has looked across countries and history to identify what was necessary to transform from a poor economy with subsistence agriculture to a rich, modern society. In 100% of cases sustained investment by the government in public goods was key. These investments include in infrastructure, education, and research.

Her cases include the USA. The first huge investment was in the Erie Canal, which Thomas Jefferson labeled as "a little short of madness" as a big government, big debt project. But New York Gov. Dewitt Clinton got it funded by New York State government, and when it was built it reduced the price of Midwest grain by 90%, broke the trade barriers in Europe, enabling midwest grain to go all over the world and making New York the biggest city in the world. In other words, government investment in infrastructure was the key to making the US a world economic power.

And it didn't end there. There was a fellow in the then frontier West who aspired to be the DeWitt Clinton of his state. And when he was elected President, Abraham Lincoln in fact became the 'great investor' in the USA, with the homestead act, initiating the transcontinental railroad, the land grant colleges, and many other projects.

And this critical role of government investment in public goods remains the foundation of job growth in the US. The Apollo funded the creation of the microchip, foundation of the US computer industry. And DARPA, the defense department investment program, funded the beginning of the internet.

Samuelson's key argument is that while the government creates government jobs, that money could be used to create a private sector job. He writes, "Government is not creating jobs. It’s substituting public-sector workers for private-sector workers."

The huge blunder and hole in this argument is the assumption that the government job does nothing to leverage private sector jobs. But in the USA from the Erie Canal to the Internet, and from worldwide evidence over all of history cited by Tsakok, this assumption is the opposite of the truth. Government investment is in fact a necessary, critical engine of progress. Samuelson here is the flat earther, not the New York Times.

Wednesday, October 17, 2012

Investing in America: What Romney and Obama got right and wrong in the debate

In the second Presidential debate yesterday, the heart of Romney's economic case was wrong, and Obama pointed it out—partly, but only partly. Simply cutting taxes on the rich is not going to create a boom in economic growth and jobs; it never has.

But Romney is now arguing that his lowering of rates on the rich he is going to make revenue neutral from each income level—or that's what I think he's arguing, it's hard to tell. But how is this supposed to suddenly create jobs? If it's revenue neutral, then there is no more money in the hands of the 'job creators,' so why under Romney's theory would there be any more job growth? In reality, when there was such a restructuring of the tax code, in 1986 there was no significant impact on job growth in the subsequent five years, as Bruce Bartlett, who was a Reagan advisor, points out. He also links to a report of Martin Feldstein, Romney defender, who says that the 1986 restructuring had no effect on employment.

Obama's attack on the failure of 'trickle down' is on target. But his failure to articulate the key role of government is extremely disappointing. Here is what he said in answer to a question from a 'Barry':

"Barry, I think a lot of this campaign, maybe over the last four years, has been devoted to this notion that I think government creates jobs, that that somehow is the answer. That’s not what I believe.

"I believe that the free enterprise system is the greatest engine of prosperity the world’s ever known. I believe in self-reliance and individual initiative and risk-takers being rewarded. But I also believe that everybody should have a fair shot and everybody should do their fair share and everybody should play by the same rules, because that’s how our economy is grown. That’s how we built the world’s greatest middle class."

First of all, the government does create jobs. Every government job is a job with real pay. This isn't to say that every single government program is a good idea and every single federal employee is productive, but they are real jobs. As someone pointed out, the sight of a bunch of congressmen, who all have real federal jobs, saying that the government doesn't create jobs is on its face self-refuting and ridiculous.

One way these government jobs are important is that they contribute to consumer demand, the 'multiplier' or 'ripple effect', where the spending of employed people boosts the economy. This is why the Republicans blocking the American Jobs Act, which would have reversed the contraction of 700,000 state and local workers—teachers, firefighters, and police—has contributed to the stagnation of the economy.

But aside from creating demand, which is a cyclical issue, there is a critical role of government in creating jobs in the private sector. This is not simply a matter of "fairness," as Obama has it, but of government investment in public goods, which creates the conditions for economics growth and jobs in the private sector. This includes investment in infrastructure, education, and research.

As mentioned before in this blog, the book Success in Agricultural Transformation looked all around the world and throughout history to see what was necessary to change from a poor, subsistence agricultural economy to a modern prosperous one. And in every case sustained investment in public goods was necessary, and key. And in recent times, we have seen this continue in the US. The microchip was invented as part of the moon landing program, a public program. And the internet began as part of DARPA, a defence department research organization.

The point is that investment in education—and Romney has poo-pooed investment in teachers—infrastructure, research, and—yes—keeping the population healthy all are critical government functions that are necessary for economic growth. Such government investment was historically around 15%, but the Romney austerity goals would reduce it to 5%. This is a policy of eating our seed corn. So it is harmful in the short term, because we still need counter-cyclical stimulus, and disastrous in the the long term.

Obama's motto should be "Invest in America"; he needs to get with the program. And yes government both creates jobs directly, and is plays an essential role in enabling private sector growth to happen. Admittedly, Obama has at times emphasized that these are investments. But he doesn't seem to 'get' that this is a core, essential role of government. Romney's basic argument is that a dollar in the hands of the rich is always better than a dollar taxed and then invested by the government in teachers, researchers, infrastructure, and health. But all of history refutes this. Obama needs to counter Romney's magical 'Believe in America' by saying that if you really believe in America you have to invest in America. Romney doesn't believe in America, he believes in the wealthy.

Monday, October 15, 2012

Exposing the Romney Shell Game

One of the difficulties that Obama had in dealing with Romney is that at their core, Romney's proposals are a shell game. On most issues he has different positions or promises that are inconsistent, either blatantly or subtly. When attacked on one, he asserts an inconsistent or incompatible one—the one his current audience wants to hear, he thinks.

Make no mistake, Romney is a clever deceiver. That is because he creates so much confusion that he is hard to get a handle on. The best approach is what the late Ted Kennedy did, to start by calling him 'multiple choice,' by revealing the game that he is playing.

For example Romney made very clear that he has contempt for the 47%. He has also said that he cares for the 100%. Which one is the real Romney? We don't know, but we do know that at least one of them is lying.

Will Obama expose the game tomorrow night? I'm afraid the presidency may hang on it.

Wednesday, October 3, 2012

Obama fails to call 'liar' on Romney

Romney tonight, in the first debate lied his head off about his own policies. And Obama looked down, refusing to call 'liar'. Can he win like this? As I've said earlier in this blog, I've advocated the necessity of calling liar on Romney. Others have done it. I think Obama could have done a lot better, by putting Romney on the spot by asking for specifics, instead of just complaining about the vagueness of Romney. He'd better figure out the formula for the next two debates.