My mother used to say, “If at first you don’t succeed, try, try again.” It’s good advice when you’re encouraging a child to take her first steps or hit a fastball out of the park. You pretty much want the person to stick with the general approach until the effort pays off. But it would be crazy to stand there and flap your arms, convinced that if you just keep trying you’ll eventually be soaring with the eagles.
Paul Samuelson described FDR as a president who “knew which whiskey wasn’t working.” With unemployment above 20 percent, the banking system in complete disarray, and the mortgage market in serious crisis, Roosevelt’s challenges were far more daunting than Obama’s. Of course, he didn’t get everything right on his first pass, but he didn’t stand there and flap his arms either.
When offering businesses a carrot (incentives) to hire the unemployed didn’t spur job creation, he created the Works Progress Administration (WPA), the Civilian Conservation Corps (CCC) and the National Youth Administration (NYA), and he hired the unemployed himself. When modest tweaks to banking laws failed to stabilize the financial system, the government created the Federal Deposit Insurance Corporation (FDIC) and the Security and Exchange Commission (SEC). When the housing market failed to stabilize, the National Housing Act of 1934 established new lending practices, propping up home values. And, when Americans struggled to make ends meet, Congress passed the Social Security Act and the Fair Labor Standards Act (which introduced a minimum wage). And he did much more.
President Obama, in contrast, seems determined to keep flapping. He thinks:
- Getting our fiscal house in order will create the confidence the business sector needs to start hiring again
- Removing $4 trillion of aggregate demand will help the economy
- The government is ‘out of money’
- We need to raise revenues in order to take care of seniors, poor kids, medical researchers, infrastructure, etc.
- Job training will fuel job growth
- When the private sector tightens its belt, the government should too
- We need to double our exports in order to grow jobs
- We need to appease the ratings agencies and the bond markets or the government won’t be able to raise money and pay its bills
- Entitlement reform will ‘make Social Security stronger’
It’s as if every instinct he has is wrong. So maybe he should start doing the opposite of whatever his gut (or Larry and Timmy) are telling him. The general approach is modeled beautifully here: