Obama Gives Up on Demand

A blog about business and economics.
Sept. 6 2012 11:16 PM

Obama Gives Up on Demand

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President Barack Obama speaks on stage as he accepts the nomination for president during the final day of the Democratic National Convention at Time Warner Cable Arena on Sept. 6, 2012 in Charlotte, N.C.

Photograph by Alex Wong/Getty Images.

President Obama's speech seemed like a very confident front-runner's speech. Given that he's already seen tomorrow's jobs numbers, I'm tempted to believe this is evidence that it's a pretty strong number.

On content, what I think is interesting here is that in Obama's story about the national economy there's not a single hint of the (accurate) liberal conventional wisdom that persistent mass unemployment is primarily an issue of inadequate aggregate demand. There's nothing about monetary policy, of course, but also nothing about housing finance. There's nothing about fiscal stimulus even as a hypothetical. There's an eagerness to raise taxes on the richest Americans as soon as possible and a willingness to pare back spending prudently to achieve long-term budget balance. Democrats are eager to re-embrace their Bush-era posture as the fiscal scold party.

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There's a forward-looking economic vision here, but it's entirely a vision of structural transformation. A better health care system. Better schools. More domestic energy production, both renewable and natural gas. Better schools. Immigration reform.

That's all good stuff, though I continue to find Obama's obsession with manufacturing to be a bit daft. But it's simply not responsive to the short-term jobs problem. If you're an unemployed adult, then reforming high schools or creating quality early childhood education isn't going to help you. Building a foundation for long-term prosperity is important, but part of the way you build the foundation for long term unemployment is to not let millions of people waste months and years in idleness and unemployment.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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