Obama Exhorts Businesses to Boost Economy

Barack Obama’s rhetoric and approach to America’s economy is reminiscent of FDR. The New Deal was a disaster, and prolonged the depression. Here is an excerpt from Jim Powell’s book, “FDR’s Folly”:


Some economists claimed the economy declined because the federal government had cut government spending in 1937, after having splurged the previous year to help assure that FDR would win the election. This line of thinking implicitly suggested that the economy had become dependent on government spending and that FDR hadn’t prepared a transition toward private investment and private employment.


The bottom line was a chronic low level of business investment. The National Industrial Conference Board reported that the amount of investment capital per employee was much lower in the 1930s than it had been during the 1920s. Less capital meant fewer people could be employed. Economist Roose added that low working capital was an issue during the 1937-1938 recession, as evidenced by a dramatic increase in corporate accounts payable (unpaid bills).


A substantial portion of business investment was short term, as had been the case throughout the New Deal period. Economist H. Gregg Lewis observed, “The situation was dominated by the short-run outlook, and was for that reason vulnerable. All the elements of a short run boom were there, but the requirement for a sustained recovery – recovery in outlays made on the basis of a long term outlook – was lacking. Reasonable certainty as to the future was absent.


Employers were wary of long-term risks, one of which was a president and Congress threatening those with “idle”capital to invest. Many economists then and now recognized how bashing employers can destroy jobs. Joseph Schumpeter wrote in his 1939 book Business Cycles that employers felt threatened: “They realize that they are on trial before judges who have the verdict in their pocket beforehand, that an increasing part of public opinion is impervious to their point of view, and that any particular indictment will, if successfully met, at once be replaced by another. Again, we may differ in our estimates of the importance of both of this factor and the functions it tends to paralyze, but it should not be overlooked.



Here we have Obama telling businesses it is their “obligation” to provide jobs.



(Reuters) - President Barack Obama called on U.S. businesses on Saturday to do more to boost the economy by hiring more workers and making investments.


The government has an obligation to make the United States the best place to do business, by providing the best schools, incentives to innovate and the best infrastructure, he said, but added that businesses also have to do their part.


"If we make America the best place to do business, businesses should make their mark in America," Obama said in his weekly radio address. "They should set up shop here, and hire our workers, and pay decent wages and invest in the future of this nation. That's their obligation



Barack Obama is about as clueless as FDR. History can guide us away from the pitfalls of the past. Unfortunately, today’s intellectual elites skipped that class.