Wednesday, 21 January 2009

Can Obama lead the US out of the recession?

Investor's Chronicle asked Russell Roberts, professor of economics at George Mason University, for 350 words on whether Obama can lead the US out of recession. His answer takes 351 words to say no.
"I love the image of President Obama leading the country out of recession. America is lost. Adrift. Off the path. But the Great Leader with his torch (or lantern or GPS system, depending on one's taste for nostalgia versus gritty realism) will lead us home, into the light, into the future, towards prosperity.

It makes for a good future hagiography. For human beings in the real world - it's a fantasy. Barack Obama has no idea of how to get the economy out of the mess we're in. That doesn't mean we're not going to get out. Or that he might help. It's just that the phrase "lead us out of the recession" implies a plan and design that isn't plausible in the current economic environment.

Until a few months ago, a lot of economists, including not a few Nobel Laureates, thought that we'd whipped this whole business cycle thing. Over the last quarter century, the American economy has had only two very mild recessions. Now all of a sudden, people are worrying the economy is going to go Japanese and enter a decade of stagnation.

So it's a time for humility rather than hubris in my profession. Obama's economic team, for all its brain power and good intentions, is in uncharted territory. There's no recipe or manual or roadmap for getting the economy back on track. No one is quite sure how to correct imbalances in financial markets and the housing market. And no one knows how to create confidence, the biggest element lacking in the current economic climate.

No man or woman runs the economy. No man or woman or team of people can possibly plan the evolution of the economy in the coming months. America will come out of the recession but the time and pace are unknown. Obama can help. But he can just as easily slow down any recovery. Some part of the current mess we're in is the result of erratic government policy that has added to the uncertainty facing consumer, investors, and entrepreneurs."
(HT: Cafe Hayek)


Anonymous said...

Ha! 340 words!

Paul Walker said...

Damn! My word counter said 351.