Listen to the president's speech again -- it's the "planes, trains and cars with a few teachers temporarily thrown into the bargain" solution that I feared (see: http://jgcaesarea.blogspot.com/2011/09/paul-krugmans-fatal-distraction-nobel.html).
Where is the candid discussion in Obama's speech concerning the problems that have gotten us into our current mess? No mention of American reliance upon expensive foreign oil, which is destroying the US balance of trade. No mention that America is being forced to compete with countries, e.g. China and Pakistan, whose products are manufactured and subsidized by slave labor. No mention of the predatory financial practices, e.g., share manipulation via unrestricted short sales, that are destroying investment in innovative businesses.
David Brooks, whom I respect, has responded enthusiastically to Obama's speech in a New York Times op-ed entitled "Stimulus for Skeptics" (http://www.nytimes.com/2011/09/09/opinion/brooks-stimulus-for-skeptics.html?_r=1&ref=opinion). Brooks writes:
"Suppose in the middle of the winter of recuperation the economy stops recuperating? Suppose instead of grinding forward, the economy starts sliding back? In these circumstances, do you still have the luxury of thinking about the long term? Don’t you have to try to reverse things here and now?
This is the problem the Obama administration is facing. Like everybody else, it has seen a sluggish economy come grinding to a halt. There is clearly now a significant risk of a double-dip recession. That would be terrible for America’s workers, fiscal situation and psyche. This prospect is enough to shock even us stimulus skeptics out of our long-term focus. It’s enough to force us to contemplate the possibility of another stimulus package."
Brooks in essence is responding out of fear. Sorry, but I try not to respond to fear with a panic-stricken response catering to short-term concerns. Rather, I would be turning to industry and America's educational system with a long-term carrot and stick approach.
In his speech, Obama says:
"If Americans can buy Kias and Hyundais, I want to see folks in South Korea driving Fords and Chevys and Chryslers."
Well, no one is going to buy Fords and Chevys and Chryslers in South Korea unless these American cars offer competitive advantages, e.g., price, safety and fuel economy, over their foreign competition. The question then is how to induce American industry to build a better car that is going to drive the competition off the side of the road. Answer: Reward those US companies which are able to obtain better fleet mileage with tax credits. Moreover, the prospect of heightened sales will also bring hiring, first the engineers needed to design these cars, then the assembly line workers.
Education? Reward those schools that are better able to motivate their students with grants. Sure, there will be cheating in order to obtain better results on standardized tests, but employment benefits will also be realized, as schools hire teachers, particularly talented ones.
Higher education? Subsidize advanced degrees in fields, e.g. engineering, which are apt to promote long-term growth. Keeping students in school and temporarily out of the work force is a better alternative to reducing working hours to maintain jobs.
And it's also high time to bring back the uptick rule to prevent predatory hedge funds from destroying promising hi-tech firms in their infancy (see: http://jgcaesarea.blogspot.com/2011/08/paul-krugman-hijacked-crisis-paul-heres.html).
Sorry to be a naysayer, David, but Obama's latest $447 billion stimulus plan is just a boodoggle, born out of panic, which does not address the roots of the problem.
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