Obama Interview

On the cover of The New York Times Magazine of May 3 was a picture of a thoughtful Barack Obama. It appears because this issue featured an interview of the president by David Leonhardt, entitled "After the Great Recession."

Overall, I think that Obama’s understanding of economic issues is better than that of all other presidents since World War II, with the exception of Bill Clinton. (I watched Clinton in the late fall of 1992, about a month after he won the presidency, at an economic conference which included top level economists and you would think that he too had a Ph. D. in economics.)

Obama is obviously highly intelligent and he surely knows his way around the economic mine fields. Even if there is nothing unexpected in what he is arguing for, or against, or explaining his positions, what he says is almost always stated clearly with a sophisticated take and backed by facts. Thus in arguing against restoring the Glass-Steagall Act of 1933, which prohibited commercial banks from also engaging in investment banking, he points out the success Canada has had in the banking area, even though it permits banks to be both investment banks and commercial banks.

He intelligently describes the shortcomings of our educational system, calling for more and better education, but understands that what is learned must be more effective in the economic realm. He specifically wants to see more math, science and engineering graduates. In arguing this, he acknowledges that "we are not going to return to an economy in which manufacturing is as large a percentage as it was back in the 1940s just because of automation and technological advance."

I have three doubts or criticisms about what he argues. First, while it is good for the mind to study and understand mathematics, many such graduates are limited to jobs as actuaries and there are only so many actuaries. There is no easy path for scientists unless there is a vast increase in research funding that I doubt will come about. And finally, it is all well and good to talk of "more folks in engineering," many of the engineering jobs of the future may well be outsourced to India and unless there is an enormous increase in infrastructure funding, civil engineers, who are on-the-spot workers, will not find jobs. Or, more to the point, students will not become civil engineers.

I doubt anyone believes that more education is unwise, but I think Obama does not appear to understand that the payoff to better education, if we are talking about starting from the kindergarten on, will take decades and decades. There is no indication, unless I missed it, that Obama recognizes that this needed improvement–better education at all levels–is not something whose benefits we will be reaping during his presidency or the one which follows or even the one which follows that (assuming all serve eight years), but a process that will take many generations.

Finally, I am amazed at the comment he made, that I quote above, on the size of manufacturing. Not only is it absurd to mention that we are not going to have manufacturing at the level it was in the 1940's, it is highly unlikely that as a percentage of GDP, we will ever get back the percentage that existed as recently as 1990, even if you are wildly optimistic. This one sentence, unlike almost all of what else he says, sounds more like George W. Bush than it does Barack Obama.

He pushes the case for the "smart grid," which a footnote describes as a more efficient system of transmitting energy and believes that one of the constraints is that "we don’t have enough trained electricians to lay down those lines." I would like to understand more about what this will accomplish. Is it simply a lesser dependence on Middle East oil; is it more a desire to preserve the environment; is it also a hope that the greater efficiency of appropriate technology will give us a meaningful, competitive advantage?

My fear is that behind all the high-sounding phrases (illustrated, often, one might add, with concrete and homey examples–there is one on his grandmother’s hip replacement) there is an emptiness. A feeling that beautiful and inspiring words are being spoken, but behind them is a an absence of substance–a shell.

That is, somehow, I feel Obama thinks we have lost our way and a return to our best traditions will restore us. Now there is of course some truth in this. But I think he assumes the present is more or less like the past, although he recognizes that "our long-term competition will be in the global economy–China, India, the E.U., Brazil, Korea" (countries that, to be sure, would not have been mentioned thirty years ago), following this up with a statement that success will come to those countries with a work force "whose education system emphasizes the sciences and mathematics . . . ."

Yes, all true. But another way of seeing the world is that we are in an altogether new situation. China, with a population of over 1 billion and 300 million people, and India, with a population of 1.1 billion, constitute nearly 40 % of the world’s population. These two countries, and others like Vietnam, are still very poor, but they are on the move. This wasn’t true as recently as two decades ago. And these countries have workers that make as little as $2 a day, a minute fraction of what our workers make. This means that all bets are off in virtually all areas of economics, especially manufacturing, and that barring a miraculous new development, we will in general be unable to compete–temporary or even permanent exceptions aside–however much we improve our educational system; however many mathematicians, scientists and engineers we graduate; or however much we develop a smart grid.

In short, I think Obama is thinking of the world he (and I) grew up in, not the new world we have entered where there are vast numbers of workers being organized to compete in the world economy at a wage a fraction of what our workers make.

Obama believes–and does he ever–in hope. But hope is not going to solve the problems we face. I have no idea how he should have brought these questions up, or even if he should have mentioned them at all. But to me, it seems as though he has no idea that this new world situation exists. He is, at bottom, however eloquent, an ordinary traditionalist. And this, I find distressing and disconcerting.

One last thought, since ending without it, may lead some to despair (or more likely, denial). Our living standards (along with those of much of Europe and Japan) are far higher–but really far higher--than the living standards of the average person in China and India. This can’t remain intact. Theirs will rise and ours will fall. But the process will be slow–decades from now our living standards will in all likelihood still be significantly higher than those in China and India, though the gap will likely be far less. There will be always be areas in which we can excel. Our land and climate, for example, is unusually good for the production of certain crops. There will always be new products and with a better education, we can produce our share.

But in the end, what is needed is a way of life in which happiness is not based as much on material wealth. Getting from here to there will, in my view, be the challenge of those who follow us. And coping with the politics of disappointment will be part of that challenge.

Endnote:

At one point, Obama is asked by Leonhardt about vigorous economic debate, mentioning Robert Rubin (the centrist) and Robert Reich (the liberal). Obama replies, "But I don’t have (on my team) Paul Krugman or Joseph Stiglitz" (Laughter). Later on he mentions that he has enormous respect for Stiglitz and reads "his stuff all the time. I actually am looking forward to having these folks in for ongoing discussion."

Krugman’s blog: May 5, 2009, 5:11 pm
Nothing to say (the title of his posting)

Andrew Leonard and Calculated Risk want to know why I didn’t blog about dinner at the White House. Um, because the conversation was off the record.

Clicking on Andrew Leonard, one gets the following"
Monday, May 4, 2009 11:27 PDT
Obama’s dinner with Stiglitz and Krugman

In David Leonhardt’s epic interview with President Obama, published in this past weekend’s New York times Magazine but which actuaoly took place on April 14, the president says he has "enormous respect" for economist Joseph Stiglitz and that "I actually am looking forward to having these folks in for ongoing discussion."

Now we learn from Newsweek, (via Taegan Goddard) that
On the night of April 27, for instance, the president invited to the White House some of his administration’s sharpest critics on the economy, including New York Times columnist Paul Krugman and Columbia University economist Joseph Stiglitz. Over a roast-beef dinner, Obama listened and questioned while Krugman and Stiglitz, both Nobel Prize winners, pushed for more aggressive government intervention in the banking system.

Not even a whisper of this momentous news made it into Paul Krugman’s blog, which seems to me to represent a misuse of the medium. I’m sure the conversation was designated off-the-record, which makes it understandable why we have no blow-by-blow from Krugman, but still: I promist all HTWW readers that if I ever have dinner with the president, I will at least mention it in this blog. What else are blogs for if not to tell people about your cool dinner dates?

Oh, but would I have loved to have been a mouse in that dining room.
KRUGMAN: If you do not nationalize Citigroup and Bank of America, you will have proven to the american people that the White House is owned, lock-stock-and-barrel, by Wall Street!
STIGLITZ: The Geithner plan to fix the banking system is outright robbery of the American people, Mr President!
OBAMA: How do you like your roast beef? Raw and bloody, I presume. Please, have some more.

One thing we so know: Paul Krugman’s oppositional stance was not ameliorated by the meeting, at least as judged by his last two blog posts, here and here. Although one does wonder if Obama’s harsh attack Thursday on the hedge funds who refused to budge on Chrysler was in any way influenced by the two Nobel Prize-winning economists.

In any case, although I feel inclined to agree with Newsweek’s Evan Thomas that "it will take more than a few dinner parties to avoid the fate of presidents who lost touch with reality," I’m still glad to hear that alternate points of view are making it into the White House.