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.
Obamanomics is riddled with similar absurdities.
Talbott suggests that the vast numbers of Americans abandoning the
precepts of religion — a wild and erroneous assumption that he
takes as self-evident — can substitute Obama’s bottom-up economy
for their moral needs. Perhaps his most laughable claim comes when
he outlines the greatest threats facing the world economy. He
places Animal Rights, threat number 13 (a very ambiguous threat, to
say the least), far ahead of Terrorism, threat number 25. No
explanation is given for this ordering.
The book is a mess because Obama’s economic theories are all
about buying votes. Talbott should have recognized that a populist
candidate isn’t going to promote a coherent economic agenda. Thus,
there is no unified “Obamanomics” for him to explicate.
In fact, Talbott is hamstrung in a few examples by Obama’s
pandering. In one typical passage beginning with “Obama believes,”
Talbott preaches, “it has to be unjust that campaign contributions
dominate our elections, because it violates the theory of one man
one vote.” How was Talbott to know Obama would forgo public funding
in order to spend enormous sums on his own election?
Attempts are made to shoehorn Obama’s “bottom-up” economics into
some sort of meaningful unified theory. Ultimately it’s not
possible to do so without embracing socialism, and indeed Talbott
conflates “economic justice,” “ethical behavior,” and
“productivity.” He buys wholeheartedly into the easily debunked
myth that the free market has decreased workers’ wages since 1973
and says that the time has come for the government to step in as,
in Obama’s words, “my brother’s keeper.”
Under an Obama administration, says this acolyte, big brother
will be watching out for you.
