Tuesday, August 17, 2010

In The New Republic, John Judis goes on for four (internet) pages, all to argue that everything would be fine economically only if Obama had taken a more 'populist' approach in dealing with the financial crisis.

I, on the other hand, will take far less than four (internet) pages to argue that Judis is wrong, wrong, wrong... and for those of you paying attention, you already know my response.

Nothing Judis argues for would have prompted businesses to start hiring and consumers to increase their spending... and without those two happening, as we have seen over the past year plus, there is no recovery.

Coming down harder on Wall Street would have made Main Street start hiring? People with money in the bank would have been spending that money on cars and refrigerators and the like but for Obama's reluctance to further demonize Wall Street? Passing an even stronger financial reform bill would have led businesses to increase their capital expenditures?

No way. The economy just doesn't work that way. The economy grows when businesses hire more people and sell more stuff, when consumers spend and buy more stuff. And the only way these two things happen is if both are relatively confident about the short, intermediate and, to a lesser degree, the long term future. Give people a reason to be optimistic (at a minimum, keep from continuing to scare them) and they'll naturally do what they're wired to do: buy more, spend more, try to grow and become more successful. It's human nature to want to improve one's current position in life. All that is needed is for government to stop scaring and discouraging us from being ourselves.