The American Spectator

The Public Policy

Down With Trickle Down

By Joseph Lawler on 8.25.08 @ 12:07AM

Obamanomics: How Bottom-Up Economic Prosperity Will Replace Trickle-Down Economics
By John R. Talbott
(Seven Stories, 256 pages, $16.95)

Once, I observed a close friend tell his baby brother that, no, he couldn't have ice cream. It would spoil his dinner. The brother cried out, in his most plaintive toddler's voice, "But Daddy says I love to!" We tried but couldn't keep from laughing. The kid sure knew what he wanted, but he had no idea how to form an argument.

Unfortunately, the 4-year-old's attempt to score some ice cream far surpasses John R. Talbott's ravings in Obamanomics in terms of logic, coherence, and sheer entertainment value. There might conceivably be some overarching design to the Democratic nominee's plans for America's economic leadership, but you wouldn't guess it from Talbott's book.

The author makes his adulation of Democratic leaders clear in the introduction, when he remarks, "Of course, to describe Bobby Kennedy as a great speaker betrays his legacy. It would be like saying that Beethoven was a piano player, or that Michelangelo painted ceilings."

If you can believe it, Talbott reserves his real hero worship for Barack Obama. Approximately 30 percent of the paragraphs in Obamanomics begin with some variation of "Obama thinks..." Every few chapters or so Talbott ventures slightly outside the coloring lines provided by barackobama.com (from which he excerpts liberally and at great length), and the obsequiousness is almost palpable.

Although the reader can almost picture Talbott wringing his hands a la Uriah Heep when he makes a few minor suggestions on how to implement Obama's plans for regulating the financial industry, the crescendo comes in the last chapter, when he ascribes the Golden Rule to Obama.

NO DOUBT IT WAS Talbott's idolatry of all things Obama that led him to sign off on some truly nutty economic ideas here. The only time he even comes close to making sense is when he notes Fannie Mae and Freddie Mac's implicit backing from the government led to too much subsidized risk and subsequently to the crash in the housing market.

In fact, Talbott predicted the housing crash in The Coming Crash in the Housing Market (2003) and Sell Now: The End of the Housing Bubble (2006). He also seems justified in blaming the Fed for creating the expectation that it would bail out failed banks, creating incentives for bankers to take on more risk.

Alas, he concludes that the solution in both cases of government gone wrong is... more government. He argues in favor of crippling regulations and government intrusion into the capital and housing markets, without addressing the government-created distortions that he himself blames for causing the problem. He argues at length for the reinstitution of the "Glass-Steagle Act," the New Deal law that regulated speculation and banned financial conglomerates like Citigroup. (Department of egregious typos: It's the Glass-Steagall Act.)

Frequently, Talbott is forced to turn a blind eye to elementary economics to support Obama's plans. In arguing for living wages, he ignores the real possibility that above-market wages will lead to excess supply of labor and end up hurting the same low-wage workers the living wage was intended to help. Rather, he assumes the only possible objection to a living wage is inflation within the service sector.

"Most Americans would be glad to pay 10 percent more for their hamburgers, if it meant knowing that their fellow Americans could work their way out of poverty, feed their families, pay their rent, and have enough time left at the end of the day to show their children how much they truly loved them," Talbott argues.

Ignore the facts that (a) Talbott arbitrarily arrives at only a 10 percent increase in the price of service industry products; (b) the very-lowest skilled workers laid off following the implementation of the living wage couldn't afford a burger at the original price; and (c) most Americans express their altruism through much simpler, more efficient cash donations or volunteer work.

Instead focus on the fact that Talbott would see no problem whatsoever with intentionally creating 10 percent inflation in a sector of the economy that accounts for 70 percent of GDP. That's pretty nonchalant, for someone who also bemoans the state of an economy currently beset by only 5.6 percent inflation.

TALBOTT ALSO SCRAPES bottom for ways to save money under Obama's healthcare plan without piling taxes onto the already European-level taxes Obama recommends, and comes up with... cutting the number of patents to discourage research into new medicines.

True, this would discourage innovation of life-saving drugs, but Talbott rhetorically asks, "isn't that just what we want?" I won't trouble you with Talbott's reasoning on why new drugs are bad, but I will warn you that wherever costs could be cut by devaluing human life, Talbott says go for it.

Letter to the Editor

topics:
Taxes, Barack Obama, Economics, Religion, Law, Socialism, Oil