James R. Otteson of the Manhattan Institute begins his article “An Audacious Promise: The Moral Case for Capitalism” with a shameless distortion of a quote from President Obama:
“The market will take care of everything,” they tell us…. But here’s the problem: it doesn’t work. It has never worked. It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible postwar booms of the ’50s and ’60s. And it didn’t work when we tried it during the last decade. I mean, understand, it’s not as if we haven’t tried this theory.
—President Barack Obama, Osawatomie, Kansas, December 6, 2011
Clearly, Otteson wants you to think Obama attacked capitalism and the free market, but, of course, Obama did not. Here’s what Otteson elided between “they tell us” and “But here’s the problem”:
If we just cut more regulations and cut more taxes — especially for the wealthy — our economy will grow stronger. Sure, they say, there will be winners and losers. But if the winners do really well, then jobs and prosperity will eventually trickle down to everybody else. And, they argue, even if prosperity doesn’t trickle down, well, that’s the price of liberty. Now, it’s a simple theory. And we have to admit, it’s one that speaks to our rugged individualism and our healthy skepticism of too much government. That’s in America’s DNA. And that theory fits well on a bumper sticker.
In fact, Obama’s words make clear that he was criticizing Reaganite supply-side economics, which, as a professor of philosophy (Chair of the department at Yeshiva University, according to his bio!) should know, is not identical with “capitalism.” As a professor of economics, Otteson should also know that, at the very least, Obama’s case against trickle-down has some strong evidence to back him up. It should occur to anyone arguing in favor of supply-side to pause for a second and compare 30 years of predominating Reaganism with 30 years of Rooseveltian-Keynesian economics to consider which was more successful at resource distribution and scarcity management in the long run. I wouldn’t want to be on the Reaganist side of that debate if I wanted an easy win. Read the rest of this entry »
What’s wrong with this rosy picture of entrepreneurship painted by the Manhattan Institute’s Edward L. Glaeser in his article “Unleash the Entrepreneurs” at City Journal?:
Three years have passed since the financial crisis of 2008, and unemployment rates remain painfully high. As of August 2011, America employed 6.6 million fewer workers than it did four years earlier. To try to fix the problem, the Obama administration has pursued a variety of Keynesian measures—above all, the huge stimulus package of 2009, which included not only direct government spending but also such features as tax credits for home buyers and temporary tax cuts for most Americans.
Such policies ignore a simple but vital truth: job growth comes from entrepreneurs—and public spending projects are as likely to crowd out entrepreneurship as to encourage it. By putting a bit more cash in consumers’ pockets, the tax cuts in the stimulus package may have induced a bit more car- and home-buying, but the next Steve Jobs is not being held back by too little domestic consumer spending. Tax credits for home buyers and the infamous program Cash for Clunkers encourage spending on old industries, not the development of the new products that are likelier to bring America jobs and prosperity.
Unemployment represents a crisis of imagination, a failure to figure out how to make potential workers productive in the modern economy. The people who make creative leaps to solve that problem are entrepreneurs. If we want to bring America’s jobs back, our governments—federal, state, and local—need to tear down barriers to entrepreneurship, create a fertile field for start-up businesses, and unleash the risk-taking innovators who have always been at the heart of our economic growth.
Isn’t the default position of American economic policy precisely what Glaeser is selling as the solution to the nation’s economic problems? It looks to me like advocating hitting oneself in the head with a baseball bat to prevent injuries caused by hitting oneself in the head with a hammer. Glaeser and all “free marketers” are slaves to the notion that entrepreneurship in itself is a panacea for all economic and social ills. What they seem to ignore is that some entrepreneurship can cause economic and social ills. As an example, consider the many franchise-based companies (think food-service) that pay their employees unlivable wages with flimsy benefits packages, forcing many to supplement their incomes with public services like food stamps or to use emergency rooms as primary doctors offices. Read the rest of this entry »