DeLong, being a professional economist, included the most revealing passage concerning Obama's view of the nation's economy as he had entered office and during his first years in office, the passage there that actually explained Obama's entire economic policy. This passage referred to the President's two leading economic advisors, Christina Romer and Lawrence Summers:
Both ... were concerned by something the president had said in a morning briefing: that he thought the high unemployment was due to productivity gains in the economy. Summers and Romer were startled.
'What was driving unemployment was clearly deficient demand,' Romer said. "We wondered where this could have been coming from. We both tried to convince him otherwise. He wouldn't budge.'
Summers had been focused intently on how to spur demand, and on what might drive a meaningful recovery. Since the summer, in meeting after meeting, he'd ticked off the possible candidates, and then discussed them -- 'it won't be construction, it won't be exports, it won't be the consumer.' But without a rise in demand, in Summers's view, nothing else would work. What's more, in such a sluggish, low-demand environment, Summers felt that banks probably shouldn't be lending. 'No one wants banks to offer credit to people who shouldn't be taking on more credit.'
But productivity? The implications were significant. If Obama felt that 10-percent unemployment was the product of sound, productivity-driven decisions by American businesses, then short-term government measures to spur hiring were not only futile but unwise.
The two economists strained their shared memory of dozens of meetings: had they said something he'd misconstrued? At one point, Summers had mentioned how Keynes once wrote in a 1938 letter that the labor movement depressed productivity, and maybe Obama saw that the disruptions in the economy from the Great Panic gave employers an opportunity -- an excuse, essentially -- to harvest latent productivity gains.
After a month, frustration turned to resignation. 'The president seems to have developed his own view,' Romer said.
In other words, as the first of the many reader-responses to this posting said -- and DeLong's blog was regularly read by large numbers of Democratic economists, so these comments were mainly from professional economists who were on the liberal side of that very conservative profession: "Obama is now on record as to the right of Larry Summers on stimulus vs. deficit reduction. At that point, we are beyond 'Obama as Rubinite' or 'Obama as blue dog' and well into 'Obama as GOP mole' territory. This disgraceful shill for global capital has destroyed the Democratic party for a generation."
Another said: "And I was always joking about Obama as the 'Manchurian Candidate' from the U of Chicago [a notoriously right-wing faculty]. Productivity? Really?"
Another said: "Law and economics [the associated far-Right UC viewpoint in political theory] background. Depressing."
Another said: "I'm totally blown away. ... To read that he espouses crank nonsense like this is frightening."
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