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Monday, August 29, 2011

Thoughts on Obama's new economics guy

I've been reading about Alan Krueger, Obama's new econ guy, tapped to replace the unbeloved Austan Ghouls-bee. Basically, Krueger seems to be a decent fellow -- for 2009. In 2011, I don't see what he can really accomplish. The congressional changeover and the debt ceiling imbroglio have effectively tied his hands.

You have to wonder why Obama would pick someone whose soul does not belong to Lloyd Blankfein. That is so unlike our beloved president. There has to be an ulterior motive -- and I think I know what it is.

CNN's analyst damns Krueger as a "Keynesian," which is CNN's idea of an insult. CNN goes on to condemn this paragraph from a 2008 piece written by Krueger:
"Just as it has tried to with other government functions such as Social Security, the Census, the Federal Emergency Management Agency and national defense, the Bush administration has been trying to outsource or eliminate services for the unemployed."
Sounds like an uncontroversial statement to me. But from the standpoint of today's conventional-wisdom-shapers, such words constitute an affront worse than kicking a pregnant woman in the stomach. Here is CNN's bottom line on Krueger:
In general, this was a pretty uninspired choice by President Obama and unfortunately not a choice that is going to guide the President to a new way of thinking in attempting to solve the nation's economic woes.
By "new way of thinking," of course, they mean that Obama should have picked a YAFL. That's this blog's new acronym (pronounced "Yaffle"), signifying Yet Another Fucking Libertarian. As long-time readers know, I am sick and tired of Libertarians who insist on packaging their shitty ideas as "new" when in fact they have been tried repeatedly, and have failed repeatedly: Russia, Chile, most of South America, postwar Iraq, Somalia, Dubai, most of the 19th century...

Of course, even if Obama had picked a YAFL, the Republicans would still be calling him a godless Bolshie.

While researching Krueger, I came across this Steve Benen column from late 2009, which applauded Krueger's study demonstrating that raising the minimum wage does not reduce unemployment. Those results went against YAFL theology, of course. Naturally, the Fox News crowd tended then (and tends now) to stump for lower minimum wages. Benen:
As far as I can tell, congressional Republicans have not yet embraced the idea -- given that the minimum wage tends to be pretty popular, the GOP would have to tread carefully -- but it's something to keep an eye on. Indeed, if anyone sees GOP lawmakers call for cutting the minimum wage, let me know.
Wow. That was less than two years ago -- yet so much has changed.

Remember when Republicans actually felt compelled to give a rat's ass about whether or not their proposals were popular? Now, we see them calling in near-unison for raising taxes on the working class. Bachmann used "get rid of the EPA" as an applause line, even though the EPA is supported by something like three-fourths of the citizenry. And the guy whom everyone presumes will be the next GOP Vice Presidential candidate has called Social Security a grave mistake.

And sure enough, Michele Bachmann has signaled that she wants to lower the minimum wage to make U.S. labor competitive with the labor market in, say, Bangladesh. Let's repeat that: She wants working poor people to receive lower wages and to pay higher taxes -- and yet many of those same working people are going to vote for her.

Why would they do such a self-destructive thing? Apparently, any politician who says she loves Jesus and hates "socialism" can convince many a prole to fire a pistol at his own face. Can propaganda score any greater triumph?

By the way, Mr. Benen, I know of a Democratic politician who wants the minimum wage lowered -- albeit in another country. His name is Barack Obama.
WIKILEAKS: U.S. Fought To Lower Minimum Wage In Haiti So Hanes And Levis Would Stay Cheap
So what is the aforementioned ulterior motive for Obama's choice of Krueger? Simply this: An impotent Keynesian will do much to help Bachmann or Perry get elected.

If Krueger were in a position to accomplish something, I would say that maybe Obama has finally started to turn into a decent president. But Krueger's hands are tied.

Heretofore, the propagandists have encountered one key problem whenever they've tried to argue against Keynesian solutions: Obama never gave any actual power to any actual Keynesians. Decisions were made by Larry Summers, Tim Geithner, Peter Orzag and Ben Bernanke -- all of whom were beholden to the Wall Street mentality that got us into this mess.

Now here comes Krueger, a decent guy who will have no power. His sole purpose will be to take all the blame, to function as a lint trap for conservative outrage.

By picking a moderate Keynesian at this late, late stage of the game, Obama has handed the YAFL crowd an excellent propaganda meme: "See? We tried Keynesianism and it didn't work! Obama chose a radical socialist like Krueger and unemployment keeps climbing higher and higher!"

That's my take. Yeah, Krueger's not a bad fellow. So the Eff What?
Thank you Ron Reagan,
small typo.

While researching Krueger, I came across this Steve Benen column from late 2009, which applauded Krueger's study demonstrating that raising the minimum wage does not reduce (un)employment.

Also, the buzz in markets is that Bernanke speech set the scene for Obama to do something about the sh*tshow. There is evidence that the robot in the WH is now saying "danger Will Robinson". So I give it a high probability that Obama attempts to change direction.

I strongly suspect the priority was always re-election. Nothing else matters. However they didnt realise the economy was bad. I know I know, I didnt say O was smart. But I think he knows how to look out for number O.

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