Biden "misread the economy"

Vice President Biden recently claimed that he and everyone else misread the economy when he was questioned on ABC about the rising unemployment numbers. The administration team was talking down the economy for the entire duration of the campaign leading up to the '08 election, so maybe he's admitting to some pre-election hyperbole. Or perhaps he and the President are not cognizant of the effect they themselves have had on the economy. Or more likely, both are true. But so far they've done little to reassure any citizen who has a basic understanding of economics.

For Mr. Biden, it's a case of vision shaped by a lifetime in government. For Mr. Obama, it's the vision of a naive ideologue with a remarkable understanding of how to get people to vote for him but a misguided belief that he can change fundamental human behavior.

There are giant deficit causing spending programs, threats of higher taxes, bank takeovers, auto industry takeovers, threats to credit companies, threats to cut executives' pay, threats to hinder the energy industry, threats to alter the health care profession, union favoritism, and other threats and actions Obama and team have made to the health of the economy. They may relish the power that results from the fear they cause, but everyone else has to suffer because of it.

The same thing happened during the Great Depression. See Great Depression 2.0 and Regime Uncertainty, inside. "Regime Uncertainty" is a phrase coined by Robert Higgs to describe the fear that a government can create in the business world, and that fear inhibits any desire in the private sector to make investments.

Listen to a podcast interview with Mr. Higgs at econtalk.org. And read his paper titled Regime Uncertainty (PDF) in which he discussed the years following the crash in which the economy operated substantially below it's capability to produce, and fear of the government prolonged the Great Depression by several years.

We hear talk about not repeating the mistakes of the Great Depression, but when Obama/Biden say it, they are probably not thinking beyond trade tariffs. They seem unwilling to admit to the fear they've created in the investment world and among the people and industries they expect will help lower the unemployment rate.

Comments

[Redman]

Good post.

We must start with the understanding that the Political Class never wants to solve a problem; that is not in their own best interest, which is the motivating factor behind all they do.

Really, if a problem was solved what would happen to the political power on that issue? It would evaporate.

Instead, the POlitical Class seeks to at least prolong, if not magnify the problem, since both increases it power.

[Geo]

Good point, Redman.

Maybe it's like a case of Munchausen syndrome by proxy. They don't want to kill the patient, they just want him to stay sick enough to need them.