A couple days ago I suggested that Obama might not be particularly well-informed about economics:
It seems increasingly clear that Obama doesn’t have a good understanding of economics. He approaches issues like a very bright non-economist using his common sense.
It now appears that it’s even worse than I thought. I found this quotation from Ron Suskind over at DeLong’s blog.
Both, in fact, were concerned by something the President had said in a morning briefing: that he thought the high unemployment was due to productivity gains in the economy. Summers and Romer were startled.
“What was driving unemployment was clearly deficient aggregate demand,” Romer said. “We wondered where this could be coming from. We both tried to convince him otherwise. He wouldn’t budge.”
I recall reading similar statements by his former colleagues at the University of Chicago. They’d make arguments to him, and he just wouldn’t seem to get the point. He’s obviously very bright, but it’s also clear that he falls into that relatively large group of Americans who have their own very strong views on economics, and couldn’t care less what professional economists think. (An issue recently discussed by Noahpinion, Robin Hanson, and Sean Carrol.)
Update. I took another look at Richard Epstein’s comments that I was thinking about when I wrote the passage above. He claimed Obama was a sort of blank slate. When discussing issues you couldn’t tell what Obama thought, as he wouldn’t put his ideas out there. I think the way I wrote the comment above left the impression the Chicago people thought he wasn’t bright, which isn’t necessarily correct. The first 2:30 here are interesting, see what you think.
So for 200 year rapid productivity growth didn’t cause any serious unemployment problems in America, but now, right after NGDP collapses, we are to believe it is producing mass unemployment, even though recent productivity gains have been rather low. I’m at a loss for words. We elected a Luddite as President of the United States.
PS. Regarding the three links above, I’m not a big fan of physics vs. economics debates. To me it’s like arguing; “Which is the most important part of a newspaper, ink or paper?” Without both you have nothing. Without the physical sciences we are back in the Stone Age. Without sound economic policy we are North Korea–which means back in the Stone Age. Physicists can predict well when the problems are ultra-simple, like a rocket to the moon. Ditto for economics. Applied physics does horribly when asked to predict the weather, earthquakes, tsunamis, and other complex events. That’s the sort of applied physics that would be valuable—going to the moon was a waste of money.
In the end I think physics is a vastly superior field, but for aesthetic reasons not practical reasons. Both (in their applied versions; engineering and economic policy) are essential to modern life.