Streetwise Professor

The annals of presidential idiocy on economics could fill libraries, but Barack Obama deserves pride of place for this gem:

President Obama explained to NBC News that the reason companies aren’t hiring is not because of his policies, it’s because the economy is so automated. … “There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM, you don’t go to a bank teller, or you go to the airport and you’re using a kiosk instead of checking in at the gate.”

Read it.  Savor it.  Breathe deep the inanity.

Where to begin?

Let’s start with an easy one–the empirical issue.  What, did automation start in the past 2+ years?  Wasn’t there growing use of automation in the ’80s, ’90s, and early ’00s when employment was growing and the unemployment rate shrinking? No, Obama can’t blame the jobless non-recovery on some technological boom.

Now for something only slightly more mentally challenging–the economic logic.  Growing use of capital makes individuals more productive, which increases their standard of living, ceteris paribus.  Yes, automating some functions eliminates some functions: just a couple of days ago, to their disbelief and amazement, I was telling my kids about how once upon a time actual real, live people dressed in jaunty uniforms operated elevators (“5th floor! Lingere! Ladies’ footware.  Housewares.”)  But that frees up labor and human capital that can be used to do other things, and if labor markets are allowed to function, that’s just what will happen.  People will flow to their highest value occupations.  With greater technology and more capital, the same number of people can make more stuff, meaning there is more stuff per person.  (Yes, the transitional and distributive impacts of technological shocks are complex, and can harm some workers.  But that’s a completely different issue from the impact of technological change and capital accumulation on employment and total output.)

Obama, on the other hand, seems to believe that there is only a certain amount of stuff to be produced, and if each person becomes more productive, that means fewer people are required to produce it.  That gets an F- in Econ 101.  It’s the kind of muddled non-thinking that led to such marvelous innovations as the mandated 35 hour work week in France.

It is kind of pathetic, actually, that Obama is resorting to such lame excuses for the appalling state of the US labor market–the main threat to his re-election.  He cannot admit that his proposed solutions have failed to perform as promise.  He definitely cannot admit the very real possibility that his legislative and regulatory onslaught, and the likely prospect for far higher taxes, is a drag on growth and hiring.  So he is reduced to blaming it on ATMs.  Like I say: pathetic.

We’ve been told so often how smart and informed this guy is.  Repetition does not create truth.  I’m still waiting for evidence of said smartness and knowledge.  Any evidence.  Because what I read and hear on a daily basis is evidence of the exact opposite.