Can Seinfeld Help Obama Start Making Better Policy Decisions?

By Stephanie Kelton

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:

6 responses to “Can Seinfeld Help Obama Start Making Better Policy Decisions?

  1. Are you actually suggesting Obama should go live with his mother?

  2. Best pick-up line ever… Seriously, its right up there with: "I haven't showered in days" and "Guess what I've got in my pocket…".

  3. Hi Stephanie,Tell me if i'm wrong but did I just sum up the heart of MMT into the Austin’s Law of Monetary Optimization (for lack of a better name ;-0 )"Monetary optimization at any level of public spending requires balancing tax revenues with spending while running deficits at a rate corresponding to users saving rate." The US government as a currency issuer should never seek to balance the budget, but rather optimize it for a desired output level within the real constraints, such as production capacity, of the marketplace.For an explanation visit link below: no idea if it’s valid nor not. Care to comment?

  4. Seinfeld AND MMT! Can it get any better?!

  5. Thank you for the levity and the FDR/Obama comparison (contrast). I think the Greatest Generation would collectively roll over in their graves if they saw what our political system had become. I guess there is not enough pain for the majority to take a stand… yet. Or maybe they thought they were with Obama and didn’t realize he was just another Wall Street puppet. Is it just me, or does it seem like Jamie Dimon is writing his deficit reduction speeches?

  6. FDR enlarging on your mother's advice:"The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach."Address at Oglethorpe University, May 22, 1932