Obamanomics: Like economics, but backwards

posted at 8:28 am on April 14, 2009 by Karl
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Robert J. Samuelson deconstructs Pres. Obama’s economic vision:

What Obama proposes is a “post-material economy.” He would de-emphasize the production of ever-more private goods and services, harnessing the economy to achieve broad social goals. In the process, he sets aside the standard logic of economic progress.

Since the dawn of the Industrial Age, this has been simple: produce more with less. (“Productivity,” in economic jargon.) Mass markets developed for clothes, cars, computers and much more because declining costs expanded production. Living standards rose. By contrast, the logic of the “post-material economy” is just the opposite: Spend more and get less.

Consider global warming. The centerpiece of Obama’s agenda is a “cap-and-trade” program. This would be, in effect, a tax on fossil fuels (oil, coal, natural gas). The idea is to raise their prices so that households and businesses use less or switch to costlier “alternative” energy sources such as solar. In general, we would spend more on energy and get less of it.

The story for health care is similar, though the cause is different…

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Together, health care and energy constitute about a quarter of the U.S. economy. If their costs increase, they will crowd out other spending. The president’s policies might, as he says, create high-paying “green” or medical jobs. But if so, they will destroy old jobs elsewhere. Think about it. If you spend more for gasoline or electricity — or for health insurance premiums — then you spend less on other things, from meals out to home repair. Jobs in those sectors suffer.

We already have an example of how this plays out in the energy sector. Obama has used Spain’s green initiative as a blueprint, but a study from King Juan Carlos University in Madrid found that every green job created by the Spanish government destroyed an average of 2.2 other jobs, and that only one in 10 were permanent. Obama promised to create three million “green jobs,” which suggests he would kill at least 6.6 million (or as many as 11 million) jobs elsewhere in the economy.

Obamanomics: Progressive, but not progress.

[Cross-posted at Patterico.]

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