Very Harsh Words from Germany for Obama (Berlin Report #6))

The Spiegel is Germany’s most widely read political magazine. Like other German print media, it gushed with enthusiasm for Obama, but no more. The Spiegel’s adulation has turned to a scorn that approaches rage.

Heinrich von Kleist’s play “The Broken Mug” introduced Village Judge Adam as one of the classic  comedy figures of world literature.  One of Judge Adam’s many tricks was to sentence others for the same crimes that he committed. At the end of the play, Judge Adam  flees before angry villagers can capture him.

The Spiegel does not restrain its scorn: “ Barack Obama is a modern variant of  Kleist’s village  judge. In ever growing volume, he condemns the Europeans, complaining their restrained fiscal policies are making the crisis worse. But the European public understands that the miseries about which Obama complains originated no where else but in the Obama-run USA.”

The Spiegel particularly does not appreciate Obama’s preaching of “Turbo-Keynesianism.” Instead of focusing on long-term growth policies, Obama’s use of Keynesian stimulus has not brought the U.S. on course but on a “crash course.” And now Obama advises Europe to adopt his failed policies of easy credit and fiscal stimulus. “Like a doctor caught doping, Obama does not want to put aside his steroids but to administer them to all athletes.”

The Spiegel ends with this advice: Obama should recall his proposals. Otherwise, he could end up like the village judge of Kleist’s comedy. “As his swindles are discovered, he must flee and his days in office will end.” On other words, Obama should butt out and come back with his advice when he has some successes to boast about.

I find the bitter tone of the Spiegel article reminiscent of a nasty divorce of a couple that was once deeply in love.  Such animosity can only be explained by the deep disappointment of an estranged lover.

Michael Sauga, “Der Dorfrichter von Washington: Kommentar,” Der Spiegel, October 1, 2011.

Berlin Report #5: The German Press Really, Really Does Not Like Herman Cain

The Berliner Morgenpost is a middle-of-the-road daily newspaper. Its recent piece on Herman Cain is one of the most vitriolic hatchet jobs I have ever read. I imagine it expresses the German press’s and public’s disquiet about the Cain candidacy.

It warns that Cain’s candidacy may be a serious one. Now that he is surging in the polls, he is no longer “playing the role of a comedic Uncle Tom” (Yes, that is what it says).

What does the Morgenpost not like about Cain?

First, he has Tea Party support, which, in Germany, immediately brands you as an eccentric, fool, or idiot. Anyone supported by the Tea Party, the German establishment will dislike.

Second, the German press cannot understand how American voters could take a non-politician seriously. German parliamentary coalition politics requires a long grooming period  in the bank benches. Only gradually do you work your way up  into the leadership ranks. Thus, almost by definition, American politics is made up of amateurs, at least until they have built up considerable seniority.  How could the Americans even think of electing a rank amateur? They do not understand that the American people may be fed up with “politics as usual” and is looking for an untainted candidate.

Third, the Morgenpost did its homework on Cain’s business background. It tutors its readers that Cain’s pizza company did not expand under Cain, its revenues fluctuated, and Cain’s claims of business success are exaggerated.

If Cain is the republican nominee, it will be interesting, to say the least, to follow the German press.

Thomas Sargent, Rational Expectations and The Keynesian Consensus

The Nobel Committee has again awarded the Nobel Prize in Economics to an economist who helped shatter the Keynesian consensus. We can now add Thomas Sargent’s name to a growing list of  Nobel laureate Keynesian skeptics. According to my count, we now have eight Nobel Prizes  to economists who cast doubt on the Keynesian model, and zero to economists for advancing the Keynesian agenda.
Whereas Robert Lucas (Nobel Prize 1995) provided the theoretical foundations of rational expectations theory, Thomas Sargent tested rational expectations against real-world data. Lucas’s and Sargent’s seminal research was carried out in the 1970s during the era of stagflation that was ended by Ronald Reagan and Paul Volcker.
Newspaper explanations of the contributions of Nobel laureates in economics leave readers more confused than enlightened. Readers either wonder why a Nobel Prize was awarded for such an obvious idea or their heads spin from the reported complexity of the idea.  The accounts of the Sargent award in both the Wall Street Journal and New York Times are less than clear. This is a shame because Sargent’s work speaks directly to policy issues as relevant today as they were in the 1970s. It is noteworthy that the New York Times account does not mention its anti-Keynesian implications.
Continue reading Paul Gregory…

My Comment on Robert Reich's SF Chronicle Piece: I Guess It Was Rejected

I sent this comment off to SFGate. I have heard nothing back; so I guess I have to self publish. Here it is:

Robert Reich in his “Poor bear brunt of GOP’s morally bankrupt plans” provides a laundry list of government programs for the poor that republicans are itching to cut. Clearly, the democrats are the party of the poor, the republicans of the rich. Reich neglects democrat programs that damage the poor in the market place. Obama’s limited drilling and European-style gas prices hit  poor families hardest. They spend more than $1,300 at the gas pump. (If the price dropped to pre-Obama levels, the poor would be $500 richer).  The children of the poor, denied access to decent schools by democrat (and teacher union) opposition to vouchers, earn, on average, $20,000 less per year, according to government statistics. Democrat support of open borders has flooded our labor force with some ten million undocumented workers who push down the wages of the fifteen  million high school drop outs in the labor force. Economists agree the effect on unskilled wages is negative but disagree on its size. Reich’s programs of welfare dependency are no substitute for giving the poor a chance to escape poverty. Until the democrats support school vouchers for the poor, they cannot claim to be the party of the poor.

The Polish Plumber Who Never Came: A Lesson for us (Berlin Journal #4)

Germany and Austria delayed free immigration from the Eastern European Union states for six years. Other EU countries began the free movement of labor from countries like Poland, Czech Republic and Hungary much earlier. German and Austrian labor unions particularly feared being flooded with cheap Polish plumbers and other craftspersons.

The six years are up, and there are few Polish plumbers in sight in Germany.  Even though Germany is undergoing a shortage of skilled labor, German firms have little success in recruiting in Poland and Hungary. Polish and Hungarian workers have concluded their own economies are more dynamic and offer them more promising careers. In Germany and Austria, they do not earn well, and their living conditions are better at home. Polish workers in particular are reluctant to leave an economy that is growing rapidly.

Poland and Germany show how easily our  illegal immigration problem could be solved by dynamic growth south of the border. If Mexico, El Salvador, and Columbia could match Poland’s growth, their citizens would stay put to take advantage of more rewarding careers at home.

Advice to Obama's DOE From a Former Soviet Planner

To: Jonathan Silver
Head of Department of Energy Loan Program Office
From: Alexander Vaibakov
Former Head Technology Planning, USSR State Planning Commission (Gosplan)
October 10, 2011
Dear Mr. Silver:
I see from the New York Times article “Market Risks Are Seen in Energy Innovations” that you could benefit from my over thirty years of experience with Gosplan (The USSR State Planning Commission). Apparently, Congress has given you the job of the central planning of new green new technologies. I cite your testimony: “Congress directed us to identify technologies that could be brought to market in an effort to leapfrog the United States forward and re-establish innovation leadership. Our job is to identify those technologies and build them out.” I appreciate your command of jargon and buzzwords. We were masters of that in Gosplan. With the Solyndra case heating up, you need to be able to speak so that no one understands you.

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