News from Cleveland: Obama’s Empty Economic Policy

In an extensive post on National Review’s blog The Corner, I dissect the economic policy components of President Obama’s speech in Parma, Ohio. President Obama’s understanding of economics, let alone the market economy, is strikingly shallow. This becomes apparent through the President’s actual words: The middle class was created by labor unions and government programs. In short, entrepreneurs are simply not relevant in Obama’s conception of the economy.

This explains why his economic policy focus is almost solely on using government spending to boost aggregate demand. If how resources are allocated in the economy does not significantly effect economic growth (which the White House appears to measure solely by jobs created, irrespective of wealth creation), then pumping money into household checking accounts, and steering private investment in politically correct direction, is as economically viable as letting the profit motive drive private spending and investment. Unfortunately for President Obama, aggregate demand is only half of the macroeconomic equation.

More importantly, we learned from the 1970s (or should have learned) that the supply side equally as important and how investment is allocated makes a world of difference in determining long-run economic growth. Entrepreneurship matters.