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Barack Obama, the Miniaturist



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E. J. Dionne produced an embarrassing amount of treacle in his most recent piece, and also an economic claim I constantly hear repeated in various forms:

Mitt Romney can promise 12 million more jobs in the coming four years because Obama’s policies have already put us on track to produce them, courtesy of a revival of manufacturing, a rise in exports and a new wave of research and innovation.

Three supporting claims: As usual, I wonder whether a single one of them is true. Let’s have a look.

Revival of manufacturing?

No. Manufacturing is down compared with 2007. Mining is up. Mining in government data includes oil and gas extraction, which is where the action is, and, as you know if you are paying attention at all, energy production on federal lands is down because of the policies of the Obama administration. In terms of manufacturing, we’re still a couple million jobs shy of returning to pre-recession levels, and the recent trend has been toward factories shedding jobs, not adding them. The long-term trend in American manufacturing — more output but fewer jobs — shows no sign of changing.

A rise in exports? Obama did promise to double them in five years. (The man loves a five-year plan.) Are we on the way toward making that happen?

No. In 2008, exports were just under 13 percent of GDP and growing at about 12 percent a year. In 2012 exports are a bit under 14 percent of GDP and are growing nowhere near so fast as they did before the Obama administration and its ingenious economic policies. In fact, they declined by 1.6 percent in the last quarter, and grew at 5.3, 4.4, and 1.4 in the quarters before that. And remember, that 14 percent total is relative to a GDP that is growing at well under the rate suggested by its earlier trendline, meaning that exports, like the economy at large, are still underperforming. Our 2012 exports will be just under $2 trillion; if they’d continued growing at their 2008 rate, they’d be closer to $3 trillion.

So, strike two. What about that wave of research and innovation? Is such export growth as we have seen being driven by fresh, innovative sectors like green energy?

No. It’s being driven in no small part by refined-petroleum exports and old-school firms like Caterpillar. More generally, it’s being driven by the higher wages and rising standards of living in places such as India and China, as well as in nearby trading partners Canada and Mexico. While Obama & Co. are raging xenophobically about the scheming Orientals stealing American jobs, it turns out that people in China and India want to eat, drive cars, and live indoors, which is good news for farmers, Buick, and Caterpillar. They also want to have clean clothes: Procter and Gamble’s annual sales in China are more than twice the entire market capitalization of the biggest U.S. solar firm. As an economic thinker, Obama is a miniaturist.

In the domestic economy, the significant gains are not being had from innovation in green energy or other trendy sectors. The real innovation engine? Retail. Take a look at the details and you will conclude that Amazon is a great American success story, and the Obama administration is not, E. J. Dionne’s perfervid imagination notwithstanding.



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