Great catch by Hot Air’s Erika Johnsen of President Obama elaborating on his economic philosophy:
He told his audience Republicans, including presumptive presidential nominee Mitt Romney, “believe that we should go back to the top-down economics of the last decade.”
“They figure that if we simply eliminate regulations and cut taxes by trillions of dollars, then the market will solve all of our problems,” Obama said.
“They argue that if we help corporations and wealthy investors maximize their profits by whatever means necessary — whether through layoffs or outsourcing or union-busting — that it will automatically translate into jobs and prosperity that benefit all of us. …
“We don’t need more top-down economics,” he said. “What we need is some middle class-out economics, some bottom-up economics.”
Johnsen helpfully points out that the president somehow misses the point that his soft command-and-control economics is itself “top-down economics.” Government mandates, subsidies, and regulation are all examples of Washington trying to direct the economy from above. There’s nothing “bottom-up” about Big Government colluding with Big Business and Big Finance to create a false crony capitalist prosperity for the well-connected, rent-seeking class.
What’s more, Obama can offer no persuasive examples of where his philosophy has actually worked. He often mentions the 1950s and 1960s when taxes were higher, unions stronger, and incomes more equal. But those decades provide a poor road map for 2012 America. As former Bain Capital exec Ed Conard notes in his book Unintended Consequences:
The United States was prosperous for a unique set of reasons that are impossible to duplicate today, including a decade-long depression, the destruction of the rest of the world’s infrastructure, a failure of potential foreign competitors to educate their people, and a highly restricted supply of labor. For the sake of mankind, let’s hope those conditions aren’t repeated. It seems to me anyone who makes comparisons between today’s economy and that of the 1950s and 1960s without fully disclosing their differences is deceiving their readers.
And does the president not really understand how America’s turn toward more free-market policies — less statism, lower marginal tax rates — in the 1980s and 1990s reversed what many in the 1970s thought was an irreversible economic decline. I mean, there’s a reason America isn’t Italy or France.
America’s future power and prosperity depends on it being an Innovation State, not a Welfare State or a Consumer Spending State. And that means rewarding innovators and entrepreneurs — not bureaucrats and rent seekers — and allowing the creative destruction necessary for their innovations to take hold and diffuse throughout an economy.
That’s the real version of bottom-up economics.