Dear Mr. Obama

[Ardentfrost]

Dear Mr. Obama,

I was just reading through your economic plans for this country, and while there are some aspects I would love to see enacted, I wanted to express some concerns, citing your website (Barack Obama | Change We Can Believe In | Economy) as I go.

Throughout the document, the phrase “create new jobs” is used. When someone in the government says this, it worries me greatly. The only way jobs can be created is if a company who is making more money decides to hire additional workers. It is completely impossible for anything the government does to “create” jobs, because it lacks the ability to make money, or even help a company make more money so that it can create jobs. Instead, the government ONLY has the ability to block money or funnel it to a different destination, thereby destroying jobs and never creating them. For instance, if the government blocks trade with a country, it has destroyed jobs relying on funds coming from that country. If the government increases tariffs for a country, it has destroyed a portion of jobs that rely on funds from that country. If the government increases taxes to spend the money on specific industries, it has destroyed jobs in industries that would have received that money naturally from citizens and moved a portion of them to the industry on which the money is being spent. All jobs do not get moved, however, as all industries are not linear in job creation, and it costs money to tax and spend money.

The only way the government could enter a situation in which more jobs were created would be to repeal previous legislation that destroyed jobs.

Using these concepts, let me point out a few examples of what is worrying me specifically about the plan outlined:

Obama will fight for a trade policy that opens up foreign markets to support good American jobs. He will use trade agreements to spread good labor and environmental standards around the world and stand firm against agreements like the Central American Free Trade Agreement that fail to live up to those important benchmarks. Obama will also pressure the World Trade Organization to enforce trade agreements and stop countries from continuing unfair government subsidies to foreign exporters and nontariff barriers on U.S. exports.

While this certainly sounds good on the surface, every time trade is blocked, domestic jobs are destroyed. While foreign countries subsidizing industries may allow them to out sell our own industries, edging them out and causing them to decrease in size, that also causes fewer domestic resources that must be used on that good. Jobs in OTHER industries are created in response because more money is being spent elsewhere in the economy. And while it would seem that by buying goods from foreign countries we are taking money OUT of our economy, that is actually not true as the dollars we use to buy the goods are only usable in America. That is, the sellers of the foreign goods will either have to buy our goods (doing so through other parties is acceptable), or invest the dollars in our market. Either way, we are made better off.

Barack Obama believes we need to double federal funding for basic research and make the research and development tax credit permanent to help create high-paying, secure jobs. Obama will also make long-term investments in education, training, and workforce development so that Americans can leverage our strengths - our ingenuity and entrepreneurialism - to create new high-wage jobs and prosper in a world economy.

Again, the creation of jobs by the government is impossible. Funding things such as research creates jobs in one industry at the cost of jobs in another since the government must take money from the pockets of citizens who would have spent their money otherwise.

The Obama plan will create new federal policies, and expand existing ones, that have been proven to create new American jobs. Obama will create a federal Renewable Portfolio Standard (RPS) that will require 25 percent of American electricity be derived from renewable sources by 2025, which has the potential to create hundreds of thousands of new jobs on its own. Obama will also extend the Production Tax Credit, a credit used successfully by American farmers and investors to increase renewable energy production and create new local jobs.

Mandating something such as 25% of power must come from renewable resources is no different than taxing. Instead of taxing people directly with an income tax, this sort of action forces companies to divert their resources they would have spent efficiently (thus minimizing job loss over time) into something they may have not done naturally for a few more years. While it sounds good on the surface to decrease our dependence on fossil fuels, doing so in this way does not create jobs as the excerpt suggests. Instead, both CAN be achieved by repealing the legislation that makes it difficult for other forms of energy to be researched and implemented.

Barack Obama will raise the minimum wage, index it to inflation and increase the Earned Income Tax Credit to make sure that full-time workers earn a living wage that allows them to raise their families and pay for basic needs.

This is another feel-good excerpt that does far more harm than good. Minimum wage + welfare creates a situation where people must rate what they feel their time is worth, and decide if working for minimum wage is worth it to them over getting the amount of money they would in welfare. Eg., if welfare pays $300/wk and minimum wage pays $380/wk working 40 hours, the person making the choice must decide that his/her time is worth $2/hr or less in order for the switch to be worth it to them. Furthermore, setting a minimum wage for $380/wk destroys jobs that are worth less than that. It does not bring up the wage of those jobs, which is surely the intention. Even worse, minimum wage acts to increase the overhead of companies, thereby increasing the cost of living. This creates a situation in which those that are on welfare can no longer afford to live, and welfare rates must then be increased, thereby creating an inescapable upward-moving cycle that destroys low-paying jobs over time.

Obama will create a fund to help people refinance their mortgages and provide comprehensive supports to innocent homeowners. The fund will be partially paid for by Obama’s increased penalties on lenders who act irresponsibly and commit fraud.

The government often gets into the business of lending people money who otherwise would not be able to borrow it (subsidizing). This is a very bad use of taxpayer money because these people have been assessed as a poor risk by professional risk managers, which increases the probability that they will not be able to pay back the money. Every time someone defaults on a government loan, the entire economy is destimulated by the remainder of the loan amount minus recouped costs from liquidation.

I certainly don’t disagree with everything you have to say, Mr. Obama. However, I am made uneasy by some of your economic ideas. Don’t miss the opportunity to put us on the road to economic repair.

[bheld]

Dear Ardentfrost,

While I appreciate your dedication to antiquated and disproved economic models, the fact remains that the assertions you make are not in concordance with modern economic thought. Please stop using your tired economic concepts as axioms upon which to build misguided arguments.

[Thorgrim]

Originally Posted by bheld

Dear Ardentfrost,

While I appreciate your dedication to antiquated and disproved economic models, the fact remains that the assertions you make are not in concordance with modern economic thought. Please stop using your tired economic concepts as axioms upon which to build misguided arguments.

As motivez can testify, I am very hawkish on reporting people, normally I would report this post, however he makes an excellent point

What do you hope to accomplish by writing an open letter for us to comment on...that revolves around telling the most liberal candidate that he should abandon his values and adopt your particular libertarian economics?

I do not see ANY constructive point in any of this OP

Theories are grey but real life is green, let's be realistic and practical, and not ask our members to engage in high-minded libertarianism on what we know has been reviewed and rejected by this particular person for decades

[Ardentfrost]

Originally Posted by bheld

Dear Ardentfrost,

While I appreciate your dedication to antiquated and disproved economic models, the fact remains that the assertions you make are not in concordance with modern economic thought. Please stop using your tired economic concepts as axioms upon which to build misguided arguments.

Disproved? By whom? The principles outlined have held true since Bastiat wrote them down. At no point in history has any country adhering to that mindset ever failed economically, and most showed unparalleled economic growth in the years they were implemented. Only when they abandoned them for what you hail to be "modern" (which I can only assume to insinuate "better") have countries given into decreasing and even stagnant growth.

[Ardentfrost]

Originally Posted by Thorgrim

As motivez can testify, I am very hawkish on reporting people, normally I would report this post, however he makes an excellent point

What do you hope to accomplish by writing an open letter for us to comment on...that revolves around telling the most liberal candidate that he should abandon his values and adopt your particular libertarian economics?

I do not see ANY constructive point in any of this OP

Theories are grey but real life is green, let's be realistic and practical, and not ask our members to engage in high-minded libertarianism on what we know has been reviewed and rejected by this particular person for decades

There are democrats that realize the effects of direct spending. I'm asking that Obama become one of these democrats. It's not too late to alter his views on economics... he's still young

[bheld]

Originally Posted by Ardentfrost

Disproved? By whom? The principles outlined have held true since Bastiat wrote them down. At no point in history has any country adhering to that mindset ever failed economically, and most showed unparalleled economic growth in the years they were implemented. Only when they abandoned them for what you hail to be "modern" (which I can only assume to insinuate "better") have countries given into decreasing and even stagnant growth.

If things were going so well why did those stupid countries mess with such a good thing?

[bheld]

Originally Posted by Ardentfrost

There are democrats that realize the effects of direct spending. I'm asking that Obama become one of these democrats. It's not too late to alter his views on economics... he's still young

You're attacking Democrats for not understanding economics?

Meanwhile the Bush economy sputters on...

[Ardentfrost]

Originally Posted by bheld

If things were going so well why did those stupid countries mess with such a good thing?

Because rich people feel guilty I guess

Realistically, it's likely a different reason for each country. But largely I think it's because it's the nature of power to try to increase itself. America resisted for so long because of the nature of our founding. Older countries implemented it for a while, but their governments were easier to take over by those wishing to expand its power.

[Thorgrim]

Originally Posted by Ardentfrost

There are democrats that realize the effects of direct spending. I'm asking that Obama become one of these democrats. It's not too late to alter his views on economics... he's still young

Yes it is, because his supporters, fans, and friends are all die-hard liberals, even if you got 30 minutes alone with him, he's heard these economic arguments in politics for many years in the IL legislature and now US Senate, you'd barely make a dent and even if you did, his friends would bombard him instantly and you'd be forgotten instantly

He's 46 not 26, and he's a US Senator who was the editor of the Harvard Law Review and a law professor, not a confused high school graduate

[Ardentfrost]

Originally Posted by bheld

You're attacking Democrats for not understanding economics?

Meanwhile the Bush economy sputters on...

I'm certainly not saying Bush is better, lord no.

Make no mistake, just because I hate how it is, doesn't mean I have to like the Democrats' ideas. The Republicans are to economics as a 60 year old grand mother who reads an Idiot's Guide to Technology is to a computer. They know JUST enough to sound knowledgeable, then they end up fucking everything up.

Don't forget that Bush won in 2000 saying he was going to decrease our foreign involvement, have huge swooping tax cuts, and decrease government spending. How much of that happened? Exactly none.

[Ardentfrost]

Originally Posted by Thorgrim

Yes it is, because his supporters, fans, and friends are all die-hard liberals, even if you got 30 minutes alone with him, he's heard these economic arguments in politics for many years in the IL legislature and now US Senate, you'd barely make a dent and even if you did, his friends would bombard him instantly and you'd be forgotten instantly

He's 46 not 26, and he's a US Senator who was the editor of the Harvard Law Review and a law professor, not a confused high school graduate

This sort of logic should make everyone depressed as shit. It just means that politics in America is 100% hopeless.

[bheld]

Originally Posted by Ardentfrost

Because rich people feel guilty I guess

Realistically, it's likely a different reason for each country. But largely I think it's because it's the nature of power to try to increase itself. America resisted for so long because of the nature of our founding. Older countries implemented it for a while, but their governments were easier to take over by those wishing to expand its power.

That's not a very academic response.

Here's a more plausible answer.

1. Economy going along great with no restrictions. Mega growth and yada.
2. Uh oh, our world has limited resources, now what?
3. Action taken by government (a proxy for the industry captains).
4. War
5. Economic bad news.

Now I guess you could fault the government intervention, but that's a bit short-sighted don't you think? Nobody expands government power just for the hell of it, although it's a convenient argument to make in your case.

[Thorgrim]

Originally Posted by Ardentfrost

This sort of logic should make everyone depressed as shit. It just means that politics in America is 100% hopeless.

Yes, if Ron Paul didn't depress you, then this should, this is politics 101

I've said on this board countless times, if libertarians want a thread that actually means something, they should recommend subtle changes to legislation being enacted OR they could come up with new ideas that haven't been discussed that could be bi-partisan solution

Going on these philosophical journeys is like if we invited a marxist on here...Communist Party was more popular in America than the libertarian party ever was...why not spend our time discussing all the different aspects of a communist revolution?

Because it's not going to happen and we'd be wasting our time

[Ardentfrost]

Originally Posted by bheld

That's not a very academic response.

Here's a more plausible answer.

1. Economy going along great with no restrictions. Mega growth and yada.
2. Uh oh, our world has limited resources, now what?
3. Action taken by government (a proxy for the industry captains).
4. War
5. Economic bad news.

Now I guess you could fault the government intervention, but that's a bit short-sighted don't you think? Nobody expands government power just for the hell of it, although it's a convenient argument to make in your case.

Is this what you suggest is the cause of economic problems? Is this sequential? If so, at least you see that war is bad for the economy.

As for your #2, is that what you suggest is the reason for slow down? The world has limited resources? THAT is why government needs to set minimum wage? That is why government limits trade? That is why governments subsidize agriculture (which completely doesn't make sense b/c the subsidizing causes excess product)?

And you don't think governments naturally want more power? I think the trap of communism pretty much destroys that idea.

[thewise1]

Originally Posted by bheld

Dear Ardentfrost,

While I appreciate your dedication to antiquated and disproved economic models, the fact remains that the assertions you make are not in concordance with modern economic thought. Please stop using your tired economic concepts as axioms upon which to build misguided arguments.

Modern Economic Thought™ has done quite well for Bear Stearns, hasn't it.

[RMNIXON]

Originally Posted by bheld

Dear Ardentfrost,

While I appreciate your dedication to antiquated and disproved economic models, the fact remains that the assertions you make are not in concordance with modern economic thought. Please stop using your tired economic concepts as axioms upon which to build misguided arguments.

To bad they for you that they are all so well grounded in economic reality. Bloviating does not change the simple fact that such plans of action have actual consequences no matter how hard you try to bend everyone to the will of central planers.

[motivez]

Originally Posted by thewise1

Modern Economic Thought™ has done quite well for Bear Stearns, hasn't it.

You can't be serious

[Publius]

Originally Posted by motivez

You can't be serious

Bear Stearns' collapse is the direct result of the housing market meltdown. The housing market meltdown is a direct result of too much easy credit being available. Too much easy credit being available is a direct result of the Federal Reserve keeping interest rates artificially low for most of the last ~15 years.

Further, the lending culture had been influenced by the view of "Modern Economic Thought" that everyone should be given the opportunity to own their home (or business should own their own space rather than lease it, depending on the particular area of the market), whether they could actually afford it or not. Thus their lending practices were not kept to stringent, high standards. Bear Stearns was invested heavily in this area, and thus collapsed as a direct result of lenders making bad loans.

He's absolutely right, sorry.

[bheld]

Originally Posted by Publius