Saturday, February 26, 2011

Obama's No Lincoln, Plus a Quick Economics Lesson

Hailed as America’s first truly cosmopolitan president, Mr. Obama seems to have learned nothing from his youthful years on the international scene. It's no exaggeration to say that the typical Army Sergeant has more real-life experience than this elitist metrosexual poser.

He’s not like Lincoln because he’s shown no humility...

"I have been driven many times upon my knees by the overwhelming conviction that I had no where else to go. My own wisdom and that of all about me insufficient for that day."
  -- Abraham Lincoln
Lincoln had seen success and failure in his life,and he understood all too well our flawed and fallen nature. He had a deep humility borne of this knowledge.

It is impossible to imagine Obama saying something like that.  Instead, he and his wife lecture us on how stupid we are.  Obama juts his chin in the air and fills it with flowery words that have no basis in real-world experience. He’s an inexperienced, unlearned man, but this does not stop him from loudly calling out enemies and lecturing us on how to eat, how to live, how to sneeze and how to spend our money.

To comprehend economics, avoid Paul Krugman, read Greg Mankiw

Harvard Economics professor Greg Mankiw has a gift for explaining the dismal science. Here he explains how economic transactions in a free market are not a zero sum game, but rather, they are win-win situations:
… let’s start with a basic economic transaction. You have a driveway covered in snow and would be willing to pay $40 to have it shoveled. The boy next door can do it in two hours, or he can spend that time playing on his Xbox, an activity he values at $20. The solution is obvious: You offer him $30 to shovel your drive, and he happily agrees.

The key here is that everyone gains from trade. By buying something for $30 that you value at $40, you get $10 of what economists call “consumer surplus.” Similarly, your young neighbor gets $10 of “producer surplus,” because he earns $30 of income by incurring only $20 of cost. Unlike a sports contest, which by necessity has a winner and a loser, a voluntary economic transaction between consenting consumers and producers typically benefits both parties. (Greg Mankiw - Emerging Markets)
This also explains why trade deficits are not always bad. Think about it: Your household runs a permanent trade deficit with the grocer and the utility company. If they were simply vacuuming money out of your pocket this would be a bad thing, but it is not because you get a product back (food, heat) for the money you hand over. In turn, those products enable you to continue widening the trade surplus with your employer.

Finally, this is why I think, on balance Wikileaks helps more than hurts...

China has us by the balls:
An October 2008 cable, released by WikiLeaks, showed a senior Chinese official linking questions about much-needed Chinese investment to sensitive military sales to Taiwan.
His comments came days after the Pentagon notified Congress it was poised to sell $6.5 billion worth of arms to China's arch rival Taiwan.
The much-delayed package was eventually sold, but did not include requested F-16 jets. (AP - Breitbart)


Christopher - Conservative Perspective said...

As I agree with the Economics 101 your China-US relations is off.

China can at any given time completely cripple the US at least for a couple of decades if not permanently simply by currency manipulation, namely further devaluation of their Yuan.

I need not explain what that would mean as anyone who understands currency markets and our indebtedness to China already knows or should.

If that is not China having the U.S. by "the balls" I do not know what is?

Silverfiddle said...

No doubt Christopher, but that has nothing to do with the transaction economic lesson from Mankiw.

I guess I don't understand your comment. I clearly state that China does indeed have us by the balls, as evidenced by the wikileak excerpt.

Christopher - Conservative Perspective said...

Well the excerpt you posted seems to suggest they (China) do not have us by the balls by a very ordinary arms sale.

I also take issue with the term the author uses to describe a tiny break-away provinice of China as an "arch rival"? Can this person be taken seriously? Arch rival?

Not that it is in the news much but India could better be described that way better than Taiwan.

WomanHonorThyself said...

o gosh he is Sooooooooooooooo not Lincoln!...Have a great rest of the weekend pal!:)

Mike aka Proof said...

A Lincoln? More like an AMC Gremlin.

Silverfiddle said...

LOL! Good one, Proof!

Divine Theatre said...

Obama and my seven year old have similar economic views.
Me, "Gracie we cannot afford to buy another toy, we are on a budget".
Gracie, "That's okay Mom, we can get money from the ATM, the bank is always making money for us to use"!

Fredd said...

That's a great Mankiw example of how free market capitalism works. I think I will steal it from time to time.

Silverfiddle said...

Fredd: Since I stole it from Mankiw, you are free to steal it from me...