Hoover Institution scholar Richard A. Epstein has a great article taking apart President Obama's basic economic philosophy, showing why his policies are failing the very people he claims to want to help; the poor and the Middle Class.
The President's speech at Knox College needs some close deconstruction because it sheds harsh light on a problem that has dogged his domestic policy agenda from the beginning: intellectual rigidity. The President, who has never worked a day in the private sector, has no systematic view of the way in which businesses operate or economies grow. He never starts a discussion by asking how the basic laws of supply and demand operate, and shows no faith that markets are the best mechanism for bringing these two forces into equilibrium.
Because he does not understand rudimentary economics, he relies on anecdotes to make his argument. He notes, for example, that the Maytag plant that used to be in Galesburg is no longer in operation-it closed in 2004-but he never asks what set of forces made it untenable for the business to continue to operate there. He never mentions that Maytag's relocation of its manufacturing operations to Mexico may have had something to do with a strong union presence or the dreadful economic climate in Illinois.
Unfortunately, our President rules out deregulation or lower taxes as a way to unleash productive forces in the country. Indeed, he is unable to grasp the simple point that the only engine of economic prosperity is an active market in which all parties benefit from voluntary exchange. Both taxes and regulation disrupt those exchanges, causing fewer exchanges to take place-and those which do occur have generated smaller gains than they should. The two-fold attraction of markets is that they foster better incentives for production as they lower administrative costs. Their comparative flexibility means that they have a capacity for self-correction that is lacking in a top-down regulatory framework that limits wages, prices, and the other conditions of voluntary exchange.
Epstein then points to one paragraph from the Knox College speech and shows the ignorance, the logical fallacies, and the faulty thinking that has gone into the formulation of Obama's policies. The president's reliance on labor unions and redistribution of wealth is killing jobs and making it impossible for the poor to climb out of poverty.
Thankfully, there's an answer to Obama's misinformed policies; the simple application of the free market where taxes and regulations are cut to a minimum and businesses and industry are allowed to flourish. It obviously won't happen as long as Barack Obama is president. But 2016 is approaching and choosing the right leader who actually believes in the free market will be of paramount importance.