In the climactic scene of the movie, “Good Will Hunting,” the psychiatrist talks to his patient about what happened to him in his childhood. Ten times he says, “It’s not your fault,” before the patient tearfully accepts absolution.
Regarding the economy, Mr. President, listen to me, sir. Listen. It’s not your fault… it’s not your fault. The state of the economy is due to four factors, only loosely related causally: one, globalization; two, oil prices; three, an unrestrained Wall Street; and four, speculative housing.
1. Globalization began decades before you took office with GATT starting in 1947 and WTO in 1995. It has resulted in high unemployment in the US and Europe. Actually, more people are employed now than in 1995, but they are in China and India. The employment picture in the West will improve when the average worker in China is making wages acceptable to the American worker. This may take a while, certainly more than two years, probably more than six. There’s little you can do about it, and in any case, Mr. President, it’s not your fault.
2. When oil prices go up, gasoline prices go up and people have less money to spend on other goods and services. Buying goes down, so production goes down, making employment go down, which reduces spending money, thus further lowering buying, and the vicious cycle is underway. And, of course, with lower employment comes a reduction in tax revenues. High oil prices by themselves are enough to cause and sustain a recession. By the way, where does the extra money we pay for gasoline go? Is it becoming more expensive to drill for oil or is someone getting richer while we get poorer? Check out Dubai. So far, Mr. President, no one has blamed you for high oil prices. Mr. President, it’s not your fault.
3. The problems with Wall Street began under the reign of George I and the lack of necessary restraints went unaddressed by both Mr. Clinton and George II. You did what you could about it; you continued TARP and the bailouts initiated by George II and instituted new regulations. Mr. President, it’s not your fault.
4. The housing situation is little more than a new version of “tulipomania” exacerbated by Wall Street selling packaged mortgages. With obstructionist elements in Congress, you have done as much as could be done. Again, Mr. President, it’s not your fault.
The mid-term elections are, of course, disappointing for you and some have said the results are an indictment of your policies. No, there is nothing in what you did that inhibited a recovery from this recession. Your opposition has complained about the high rate of deficit spending, but the overwhelming consensus of economists is that this spending is exactly the correct course in a recession. The fact is, people vote with their wallets and when the economy is in poor shape, they vote the incumbents out, no matter who they might be. Ask Britons to name the greatest Briton of all time, and most answer “Winston Churchill.” He is regarded as their savior. Yet right after WWII, economies everywhere tanked, as they invariably do after war, and the Brits actually voted him out of office. Our 2010 election results are no more than the same kind of unavoidable, knee-jerk reaction by a disgruntled public, and there is nothing you could have done about it. You may feel you’ve taken, as you say, a shellacking; but Mr. President, it’s not your fault. It’s not your fault.
