Tuesday, 18 January 2011

Obama the imbecile versus the Chinese.

We should never lose sight of the sheer stupidity of our rulers (and/or those that advise them). I’m referring to Obama’s three great ideas for creating jobs.

The first idea was that since corporations had large cash piles, they should invest them so as to create jobs. Just one problem: there is no point in investing in new plant, factories, office blocks, etc unless the demand is there for the relevant products. I.e. put the demand in place, and employers will automatically invest in capital equipment, and they’ll do it without the sort of moron advice they get from politicians.

The second idea was that the U.S. should export more. Problem here is that every other country is trying to do likewise. Just in case Obama and his advisors haven’t noticed, China is trying every trick in the book to maximise its exports, including currency manipulation.

Rationalising international trade would be a good idea. But the simplistic idea “let’s export more” is plain daft.

And the third idea was that the U.S. can create jobs by exploiting its technological superiority. Obama proposed this idea at the carefully choreographed press conference just before Xmas 2010. Unlike Clinton, Obama seems to have a problem doing live interviews with journalists.

The problem with this “advanced technology” idea is that the Chinese are rapidly catching up with U.S. technology. As the entire world knows (apart from Obama and his advisors), the Chinese are producing stealth fighters.

And not only that, but the bulk of jobs even in advanced economies are pretty mundane: driving trucks, laying bricks, serving in restaurants and so on. Being technologically advanced is nice, but it does not have a huge effect on employment levels. That is, a technologically backward country can perfectly well achieve decent employment levels, if it organises its labour market efficiently.

Faced with this bunch of economic illiterates, the Chinese ought to come out on top in the current negotiations even if they were blindfolded, drunk, and had both hands tied behind their backs.

Afterthought dated 20th Jan 2011. For more imbecility in Washington DC, this time by Alan Greenspan, see here and here.

And for more on the stupidity of Obama’s export idea, see here.

Afterthought (25th Jan 2011). Would you credit it? A few days after setting out the above three imbecile economic policies, Obama comes up with a fourth: “competitiveness”.

As Robert Reich and others point out, the term is meaningless.

3rd Feb. For more on the irrelevance of the "innovation" idea, see here.


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