Opinion

Opinion

Bad luck and bad faith a bad combination

August 20, 2011

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— “We had reversed the recession, avoided a depression, got the economy moving again. ... But over the last six months, we’ve had a run of bad luck.”

— President Obama, Decorah, Iowa, Aug. 15

A troubled nation wonders: How did we get mired in 9.1 percent unemployment, 0.9 percent growth and an economic outlook so bad that the Federal Reserve pledges to keep interest rates at zero through mid-2013 — an admission that it sees little hope on the horizon?

Bad luck, explains our president. Out of nowhere came Japan and its supply-chain disruptions, Europe and its debt problems, the Arab Spring and those oil spikes. Kicked off, presumably, by various acts of God (should He not be held accountable too?): earthquake and tsunami. (Tomorrow: pestilence and famine. Maybe frogs.)

Well yes, but what leader is not subject to external events? Were the minor disruptions of the current Arab Spring remotely as damaging as the Arab oil embargo of 1973-74? Were the supply disruptions of Japan 2011 anything like the Asian financial collapse of 1997-98? Events happen. Leaders are elected to lead (from the front, incidentally). That means dealing with events, not plaintively claiming to be their victim.

Moreover, luck is the residue of design, as Branch Rickey immortally observed. And Obama’s design for the economy was a near-$1 trillion stimulus that left not a trace, the heavy hand of Obamacare and a flurry of regulatory zeal that seeks to stifle everything from domestic energy production to Boeing’s manufacturing expansion into South Carolina.

He sowed, he reaps.

In Obama’s recounting, however, luck is only half the story. His economic recovery was ruined not just by acts of God and (foreign) men, but by Americans who care nothing for their country. These people, who inhabit Congress (guess what party?), refuse to set aside “politics” for the good of the nation. They serve special interests and lobbyists, care only about the next election, place party ahead of country. Indeed, they “would rather see their opponents lose than see America win.” The blaggards!

For weeks, these calumnies have been Obama staples. Calumnies, because they give not an iota of credit to the opposition for trying to promote the public good, as presumably Obama does, but from different premises and principles. Calumnies, because they deny the legitimacy to those on the other side of the great national debate about the size and scope and reach of government.

Charging one’s opponents with bad faith is the ultimate political ad hominem. It obviates argument, fact, logic, history. Conservatives resist Obama’s social-democratic, avowedly transformational agenda not just on principle but on empirical grounds, as well — the economic and moral unraveling of Europe’s social-democratic experiment, on display today from Athens to the streets of London.

Obama’s answer? He doesn’t even engage. That’s the point of these ugly accusations of bad faith. They are the equivalent of branding Republicans enemies of the people. Gov. Rick Perry has been rightly chided for throwing around the word”treasonous” in reference to the Fed. Obama gets a pass for doing the same, only slightly more artfully, regarding Republicans. After all, he is accusing them of wishing to see America fail for their own political gain. What is that if not a charge of betraying one’s country?

The charge is not just ugly. It’s laughable. All but five Republican members of the House — moderate, establishment, tea party, freshmen alike — voted for a budget containing radical Medicare reform knowing it could very well end many of their careers. Democrats launched gleefully into Mediscare attacks, hardly believing their luck that Republicans should have proposed something so politically risky in pursuit of fiscal solvency. Yet Obama accuses Republicans of acting for nothing but partisan advantage.

This from a man who has cagily refused to propose a single structural reform to entitlements in his three years in office. A man who ordered that the Afghan surge be unwound by September 2012, a date that makes no military sense (it occurs during the fighting season), a date not recommended by his commanders, a date whose sole purpose is to give Obama political relief on the eve of the 2012 election. And Obama dares accuse others of placing politics above country?

A plague of bad luck and bad faith — a recalcitrant providence and an unpatriotic opposition. Our president wrestles with angels, monsters of mythic proportions.

A comforting fantasy. But a sorry excuse for a failing economy and a flailing presidency.

Charles Krauthammer is a columnist for Washington Post Writers Group.

Comments

Liberty_One 3 years, 9 months ago

Here's the pattern: 1. A crisis happens which the political elite and their supporters claim necessitates government action. No proof is given that things will get worse or won't get better on their own.

  1. The political elite and their supporters put forth a solution of more government intervention which is supposed to produce beneficial result A. Critics claim that it will produce negative result X. They are dismissed and ridiculed.

  2. X happens.

  3. Critics point towards the policies as the cause of X. The political elite and their supporters dismiss the critics and claim that if it wasn't for the policies things would have been even worse. No proof is given.

This is exactly what's happening now. We told everyone this would happen. We warned you that stimulus spending and government intervention in the economy would make things worse. It has and it is getting worse. It's time to give up on Keynesianism and return to laissez-faire capitalism. Unless you like economic depressions.

Even though the kind of economic news we've been having should be a resounding death knell for Keynesianism, all they are going to say is the same thing they say every time their policies fail: the government didn't do enough.

Any objective person can see that stimulus deficit spending does not work. It didn't work when Hoover tried it, it didn't work when FDR tried it, it didn't work when Bush tried it, and it isn't working now either. Between Bush and Obama the government has paid out $11 trillion in stimulus money over the last decade which has made the economy steadily worse, especially for the poor and the young while the rich have gotten richer.

Even so, nothing can change the mind of the true believers, and unfortunately they are in power. Thus I foresee that when the economy worsens the ultimate government stimulus plan will be put into action: war.

just_another_bozo_on_this_bus 3 years, 9 months ago

"Even so, nothing can change the mind of the true believers, and unfortunately they are in power. Thus I foresee that when the economy worsens the ultimate government stimulus plan will be put into action: war."

The people in power are hard-core capitalists, doing what they always do-- attempting satiate their insatiable greed any way they can, including the distortion and corruption of government.

This is what laissez-faire capitalism looks like in practice.

Jimo 3 years, 9 months ago

Here's what happens: a crisis occurs or is engineered. Nutjobs materialize claiming that the existing system is a failure and push their wacked out theories as the solution to the crisis.

When the public looks upon the nutjobs with the disgust that attains normally to those farting up the room, the nutjobs then attack existing knowledge as a means to make the wacked out theories seem no worse.

See evolution vs. creationism. See gravity vs. demons who push people down. Ditto Keynesian economics - a/k/a, Post-Stone Age Economics.

akuna 3 years, 9 months ago

Did trickle down economics work? Did the money trickle down to the middle class? Has the incredibly low tax rate on the wealthiest spawned more jobs or a better economy? Has less regulations spawned more development and more jobs while not causing indirect ramifications? Don't forget that these failed Republican ideals have played out in the past few decades.

The only difference is that Obama can't cover up a failing economy like his predecessors did. He can't borrow and tax his way out like Reagan, Bush I and Bush II did. Every single one of them raised taxes AND increased the debt. None of their policy worked. They all left American more in debt than when they began office.

akuna 3 years, 9 months ago

Interesting... Could you point me to any reading material that would suggest solutions? I'd like to learn more. Thanks Liberty.

cato_the_elder 3 years, 9 months ago

Excellent column. Describes with precision why Obama's presidency has already failed.

cato_the_elder 3 years, 9 months ago

Wrong again, tange. The odds are pretty good that I'm considerably taller than you are.

cato_the_elder 3 years, 9 months ago

My obvious stature is that the odds are pretty good that I'm considerably taller than you are.

cato_the_elder 3 years, 9 months ago

But not duck. The leftists who troll this forum couldn't intellectually punch their way out of a paper bag.

cato_the_elder 3 years, 9 months ago

Obama does a pretty good job of bashing himself these days. At least, the American people seem to think so:

http://www.realclearpolitics.com/epolls/other/president_obama_job_approval-1044.html

cato_the_elder 3 years, 9 months ago

Who's the whiner, the guy asking for money or the one who seeks to help him by refusing to give it to him?

cato_the_elder 3 years, 9 months ago

Gandalf, speaking of "brownie," your usually bad typing is much worse today. Are you eating brownies right now? If so, is anything in 'em?

quik 3 years, 9 months ago

They say, "luck is the residue of desire." If that is true, we can probably expect the president's policies to continue to fail but we may be treated to a live shot of a Barack Obama hole-in-one sometime soon. That should be good for a temporary 5-point popularity bump.

cato_the_elder 3 years, 9 months ago

After another 1 1/2 years of Obama, Americans may be eating nothing but brine cabbage, pal.

cato_the_elder 3 years, 9 months ago

Nope, never tried it. One reason to get Obama unelected is so that I don't have to.

just_another_bozo_on_this_bus 3 years, 9 months ago

The reason, Chuck, that the economy is still lagging is that the "recovery" has been founded primarily on Republican and Republican-lite policies.

just_another_bozo_on_this_bus 3 years, 9 months ago

No, you asserted that. You haven't "established" anything.

Jimo 3 years, 9 months ago

Keynesianism has failed? Can you name a single serious economist who'll claim that? Of course not. Take your farts and go home.

jafs 3 years, 9 months ago

In all likelihood, the lack of private sector hiring, and massive layoffs to keep profits high, are also major factors.

jafs 3 years, 9 months ago

We've gone around on this one already.

The recent lack of hiring has to do with the perception that consumer demand is low and not getting any better.

And, thus we have the negative downward spiral.

Ironically, of course, if businesses started hiring, people would have jobs, and spend more money, and then that would benefit businesses, etc. and we'd have an upward positive spiral.

Ron Holzwarth 3 years, 9 months ago

"Why would one individual business not find it profitable to hire more employees?"

I'm not sure that profitability has all that much to do with it. There's the fear factor that things might get even worse, so I think that many believe it is better to keep staffing low if at all possible.

It's much cheaper to give the workers you already have a small amount of overtime temporarily than to hire additional employees.

Jimo 3 years, 9 months ago

"Businesses don't operate in the aggregate, they operate individually."

Hence Keynes. What's logical for individual actors can be illogical for the whole.

jafs 3 years, 9 months ago

"Why aren't firms hiring?"

You started discussing them as a plural aggregate, so I answered that way.

And, the same motivation applies on an individual basis.

jafs 3 years, 9 months ago

I've answered the question several times, on several different threads.

jafs 3 years, 9 months ago

Yes.

Because consumer demand is low.

That's what I've said.

jafs 3 years, 9 months ago

Round and round we go.

You're mixing up a couple of things there. An individual must earn money before they can spend it is correct. That's why laying off a lot of people lowers consumer demand.

But, for an individual to earn money, a business must believe there's enough demand for their goods and/or services to employ that individual.

You said it yourself, in a slightly different way - when hiring people costs more than the expected additional revenues, businesses don't hire people.

Expected additional revenues is just another term for perceived customer demand.

What's the disagreement exactly?

jafs 3 years, 9 months ago

What's your point already?

I don't care how we term things, individually or as a group - if a business doesn't perceive enough customer demand, they won't hire people.

Where on earth will the revenue come from if not from customers?

jafs 3 years, 9 months ago

You're the one who asked "why aren't firms hiring"?

Don't blame me for the aggregate - you started the discussion with it.

jafs 3 years, 9 months ago

Calm down.

When somebody uses a plural, that's generally considered to refer to a group, not an individual.

No side-stepping - I simply answered your question in the same form that you asked it.

But, there's not really an issue, is there? The same logic would apply for an individual business or a group of businesses.

If an individual business perceives low customer demand, they won't hire. If a group of businesses all perceive the same thing, they won't either.

jafs 3 years, 9 months ago

Do you want to continue talking with me or not?

If you do, you'll have to stop with the insults - otherwise I'll just stop responding.

A group is a collection of individuals - how the group acts is a reflection of how the individuals act - it's not fictional at all. If a bunch of people all vote for Ron Paul, then that group of people voted for him.

What's the problem exactly?

You asked why "firms" aren't hiring - I answered with my understanding of why "firms" aren't hiring.

If you'd asked why McDonald's isn't hiring, I'd have answered that question.

For me, it's the same answer both ways - perceived lack of customer demand, combined with wanting to maximize profits.

Cait McKnelly 3 years, 9 months ago

Don't worry, Gandalf. Nothing ticks off a righty tighty more than to be laughed at.

cato_the_elder 3 years, 9 months ago

Which is nothing compared to Democrats who had strongly supported the Iraq invasion but thereafter changed into turncoats whose most fervent desire was for America to get bogged down in Iraq, which they did solely for partisan political gain.

just_another_bozo_on_this_bus 3 years, 9 months ago

The democrats who supported the war were idiots in the first place, and they likely still are.

But that doesn't mean that Republicans should be excused for their intransigence and pointless posturing, and general idiocy.

jafs 3 years, 9 months ago

So, partisan politics on the Democratic side of the aisle are reprehensible, but those same politics on the Republican side are excusable.

Hmm.

cato_the_elder 3 years, 9 months ago

No, he doesn't. What I said was that you can't criticize what you think Republicans have done in the deficit debate while ignoring the reprehensible conduct of the large majority of Democrats who strongly supported the Iraq invasion and then, when the going got tough, changed stripes overnight solely for partisan political gain.

Jimo 3 years, 9 months ago

"the large majority of Democrats who strongly supported the Iraq invasion"

H.J. Res. 114 Authorization for Use of Military Force Against Iraq Resolution of 2002, House of Representatives, Thursday afternoon at 3:05 p.m. EDT on October 10, 2002: 61% Democrats voted against. http://clerk.house.gov/evs/2002/roll455.xml

H.J. Res. 114, Senate, early Friday morning, at 12:50 a.m. EDT on October 11, 2002, 42% Democrats voted against. http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=107&session=2&vote=00237

So, "large majority" would be a lie, "strongly supported" would be a lie.

You may retract your statement and avoid being branded on these pages a liar. It's up to you. Just say you "misremembered."

cato_the_elder 3 years, 9 months ago

What makes you think I was limiting my statement to members of Congress? Democrats all over the country supported the invasion, but as soon as we got bogged down jumped ship and climbed on the partisan political gain bandwagon. Sure, not all of them initially supported the invasion, but a large majority did.

You need to learn how to read more carefully, Einstein.

camper 3 years, 9 months ago

Totally pathetic Cato. The support of the Iraq invasion was a mistake made by all. The invasion was predicated upon Weapons of Mass Destruction theory and the fact that Sadam Hussein was a despot. While we know the latter is true, and he was abdicated, who would have thought we'd be there ten years later.

Getting out now is the voice of reason. Claiming to stay and "rebuiild" is insane

cato_the_elder 3 years, 9 months ago

"While we know the latter is true, and he was abdicated, who would have thought we'd be there ten years later."

Saddam was "abdicated?" Really? Wouldn't you call that sorry misuse of the English language "pathetic," the word you threw at me?

camper 3 years, 9 months ago

Liberty, any political philosophy has it's flaws. Keynesianism might be summed as higher taxes in good times, lower taxes in bad times. Budget surpluses in good times. Budget defecits and stimulus in bad times.

I have to qualify my statement here by saying that I have studied and read much about the Great Depression. There will forever be much debate about Keynesian policy during this period. From a birds-eye view FDR's work programs (stimulus) brought down unemployment during his first term. But during his second term, political opponents reversed many of these measure, and the federal government decreased stimulus. Even FDR was wary of the level of government intervention. The nation then slipped into what can be called a double dip depression as some debate. It was not until wartime production geared up that the depression ended. And this wartime production was government spending (a terrible irony due to that terrible conflict).

Of course times are different now. I am not sure how well this will work as the US is no longer the manufacturing powerhouse it once was, so stimulus spending may have only temporary benefits. I give president Obama's stimulus a grade C. But it did help the auto industries, and it did help support state budgets for two years. It basically bought two years to allow the economy to rebound.

One thing is certain, going half-way with stimulus really does not work. And our politicians seem to be taking the exact same path that they did during FDR's 2nd term.

just_another_bozo_on_this_bus 3 years, 9 months ago

But by that logic, giving tax breaks to the wealthy will only work if they use that money to build up the manufacturing base in this country, the the track record of the last thirty years of such tax breaks, they've done exactly the opposite.

The only "growth industry" that will come from further tax breaks is construction of gated, fortified communities and staffing security forces for the elites, who are becoming increasingly more isolated from the rest of society (and they were already very isolated.)

camper 3 years, 9 months ago

I agree BAA, most everything I read says that a worldwide economy and cheap foreign goods is good for us because it increases our standard of living. I am really beginning to seriously consider this. It would seem that laissez-faire (free) trade works best when countries import mostly those goods that they cannot produce themselves.

Like you, I really think we should reconsider some of our trade agreements. Corny as it sounds I think we should, as consumers try our best to support American Made products. I'm waiting for more entrepreneurs to take advantage of this sentiment too.

camper 3 years, 9 months ago

Reminds me of the quote..."I spent 90% of my money on women, drink, and fast cars. The rest I wasted"

Not sure Liberty that the 11 trillion was used wisely. Where the heck did it all go? Out of the country? How much went to mfg and construction?

camper 3 years, 9 months ago

It seems like there are only two things a president can accomlplish these days. Go to war and cut taxes. I'm afraid we are in a economic cycle that requires a little bit more.

Flap Doodle 3 years, 9 months ago

Nothing says "Go America" like driving around in a Canadian-made bus done up like Darth Vader's RV.

Andrew Reeves 3 years, 9 months ago

And the candidate who emerges from the Republican primaries will ride in the exact same bus.

Ron Holzwarth 3 years, 9 months ago

"a near-$1 trillion stimulus that left not a trace"

What? Not even an IOU?

camper 3 years, 9 months ago

From what I understand the 800B stimulus was allocated as follows:

1/3 Tax Reductions - Approximtely 80% Spent 1/3 Entitlements - Approximately 80% Spent 1/3 Loans and Grants - Approximately 67% Spent (some of which has also been recovered via GM I think)

It is still debatable on how succesful the stimulus was or where all the money went. Somehow I don't beieve it reached the places it needed to go. Almost like when you try to Aid Africa. Much of the money winds up in corrupt hands rather than those who need it. If there is an upside, much of the money went to support state budgets and initiatives and may have minimized the economic dowturn. Still seems like a lot of money though. Not a lot of bang for the buck. A trillion dollars is a staggering amount of money.

Jimo 3 years, 9 months ago

Of course it was nowhere near a trillion dollars - which is a key part of why it underperformed. Roughly $470 billion was stimulus. The rest was tax cuts, added to win over Republicans, that people saved and failed to stimulate anything. Being a Republican means living in a fact-free bubble.

But then this is an opinion piece and LJW doesn't believe it is their journalistic responsibility to fact check.

Corey Williams 3 years, 9 months ago

It's a good thing they are both in video form. I know how some people just don't like reading. Thank god for fox news

Jimo 3 years, 9 months ago

The Dow Jones Industrial Average actually declined under Bush's tenure, from 10,587 on the day he took office to 8,281 on the day he left. Between the recent stock market collapse and the housing crash, Bush destroyed more than $14 trillion in consumer wealth, a staggering, almost incomprehensible legacy of devastation that will haunt Americans for decades to come.

When George Bush left office, in January 2009, the unemployment rate stood at 7.2% and was skyrocketing. The economy was hemorrhaging 600,000 jobs per month -- and accelerating! Bush managed the lowest percentage level of job growth ever recorded for any eight year period outside of the Great Depression. At present rates, Obama will have exceeded Bush on job creation sometime in 2012. Unfortunately for the nation, the hole dug by Bush was so deep that it'll still take another four years to recover fully.

During Bush's eight years in office, real GDP grew by less than 2.0% per year. So far, real GDP has grown by 2.07% per year during the Obama era. Yet, Bush got every economic policy he demanded while in office while Obama has gotten little that hasn't been watered down or denied.

And on and on ..... business starts, average real wages, unaffordable revenue cuts from the wealthy resulting in soaring (and still soaring) budget deficits, etc. The Bush years were remarkable for their bad luck and bad faith. And Kraut has the temerity to blame the black man working to clean up all the mess.

Jimo 3 years, 9 months ago

What's the distortion? The massaged stat?

Put up or shut up.

Jimo 3 years, 9 months ago

I should also not how rich this wholly unsubstantiated claim of "massaged stats" is coming from someone I exposed on these very pages a month or so ago as lying to readers. And from someone who proudly proclaims his holier-than-thou religion, didn't have the basic honesty God gave an atheist to admit his falsehood, repent, and ask forgiveness.

guess_again 3 years, 9 months ago

So which stats are wrong BornAA? They seem to me to be accurate....and significant.

Ron Holzwarth 3 years, 9 months ago

"Between the recent stock market collapse and the housing crash, Bush destroyed more than $14 trillion in consumer wealth"

I have nothing to say about the stock market crash because it was due to many reasons, and I'm sure that I'm only aware of a few of them.

But, as for the housing crash, I don't believe there was any real wealth destroyed at all. The losses were only on paper, and the wealth that was lost existed only in people's imaginations.

The reason is that home values became so high that they defied all logic and reason, due to absolutely insane speculation, extremely creative mortgage products, and the fact that very few applications for home mortgages had verification of income performed. Or even a credit check done, for that matter.

They were usually just approved by being rubber stamped, because real estate prices could only go up. So you couldn't ever lose by buying a house, you could just sell it if you ran short on cash.

Then, when real estate selling prices lowered to more realistic levels the selling prices went down, but the actual value of the real estate decreased only on paper. So, I don't believe it was a real loss at all. Nothing of any value was destroyed, except that many houses in foreclosure were trashed as the very angry former owners left.

The exact same thing happened in the wild and crazy days of the 1920s, when all you needed to do to become very rich was to borrow money and buy stocks with it. Then, since the value of stocks could only go up, you could sell later, pay the loans back, and then you would have so much money that you could hardly count it. An extremely large number of people heard about that magic plan to become rich, and so it became a very popular way to earn tons of money.

There was only one problem with that plan. It didn't work that way forever, and it ended in October, 1929.

But, it all does depend upon how you define "loss". If you're only considering numbers on paper, using GAAP, and therefore assuming that the value of the dollar is a constant, then I suppose it would appear to be a loss.

But, nothing of any actual value was destroyed, except in people's imaginations.

jafs 3 years, 9 months ago

I agree with your analysis that people got caught up in a speculative frenzy, and an abundance of "unrealistic optimism", just as happened in '29.

But, that doesn't mean there weren't "real" losses - getting foreclosed on and losing your house is a very real loss.

Cait McKnelly 3 years, 9 months ago

http://www.austinchronicle.com/rick-perry/ The Austin Chronicle is an independent newspaper similar to The Pitch. The Perry Trap is an ongoing column/section of the paper and a good source of independent information about the Gov. Give it a whirl.

Avery Pearson 3 years, 9 months ago

They did it for Bush. That man was an idiot. How is this surprising to you?

Flap Doodle 3 years, 9 months ago

The Chicago Way is in full swing. "Education Secretary Arne Duncan's insult to Texas public education was a politically motivated distortion that doesn't become a federal official in his position. What a load this guy is. We shouldn't hear lies come out of the mouth of the nation's top education official when he discusses the record of millions of students and dedicated educators. People work too hard to have their work dismissed with his pathetic statement about feeling "very, very badly for the children there."..." Read the rest at: http://dallasmorningviewsblog.dallasnews.com/archives/2011/08/robert-scott-fi.html

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