The Public Policy

Down With Trickle Down

Obama's economic platform is simple. Promise anything for votes.

By 8.25.08

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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.

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About the Author

Joseph Lawler, former managing editor of The American Spectator, is editor of Real Clear Policy. Follow him on twitter: @josephlawler.