Sunday, August 24, 2008

The folly of Obamanomics

The NYT Magazine this week has a feature article on Obama's economic vision, and the article is a lot less interesting or novel than the author himself imagines. Basically, it rehashes the standard narrative of Obamanomics: acknowledge the good in markets, raise taxes for the richest quintile and lower them for the rest, and then spend massive amounts of money on infrastructure and energy-efficient technology. The author reveals, from the beginning, that this is going to be a standard liberal narrative, and that he isn't going to question the central tenets which underpin American liberal economic thinking:

In its more extreme forms, the Chicago School’s ideas have some obvious flaws. History has shown that free markets aren’t so good at, say, preventing pollution or the issuance of fantastically unrealistic mortgages.

Really?! It's "obvious" that the free market has failed us when it comes to pollution and the mortgage market? Because last I checked, one of the biggest determinants of energy use – transportation – is an almost entirely nationalized industry in the US, its closely-related cousins of land use and construction are highly regulated and 25% nationalized, and the field of energy generation is regulated to the point where efficiency is punished by bureaucracy. And then there is the American mortgage market, which since the middle of the 20th century has been used as a public policy tool, up until today when 40% of all mortgages go through the decidedly anti-market institutions of Fannie Mae and Freddie Mac, including many that turned toxic when the mortgage market collapsed last year.

Admittedly, this is the NYT's David Leonhardt speaking, not Obama. But in the world of American politics and economics, they might as well be one in the same – there are few who will try to refute Leonhardt's statement; even conservatives and liberatarians, whose economic ideas are being attacked, are more likely to try to convince you that everything's not as bad as it seems, rather than try to explain how these supposed market failures are actually failures of the government.

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