Thursday, June 26, 2008

Matt Kinnaman on Obama and the Economy
Obama on auto pilot
By Matt Kinnaman
Thursday, June 26

What in the world is he talking about? On June 16, Barack Obama explained his vision for the economy and he said, "Globalization and technology and automation all weaken the position of workers."

Did Obama forget that 96 percent of the world's people live outside the United States, that they hold 75 percent of the world's purchasing potential, and that the expansion of free enterprise, powered by advanced technology, provides workers in America and worldwide with their most promising prospects in history?

In decrying globalization, technology and automation, is Obama calling for a return to the mass human impoverishment and deprivation that characterized the pre-technological age of closed and hierarchical economic arrangements? He couldn't mean that. So what he does mean?

Obama believes technology, automation and globalization weaken the position of workers? They definitely don't weaken the position of his candidacy, which virtually came out of nowhere using automated Internet switches and routers to grab globalized attention. Would Obama like his multimillion-piece campaign mailings to be hand-stuffed and handled by Pony Express instead of automated sorters? Would he like his Internet fundraising enterprise to be replaced by solicitation of door-to-door donations by volunteers on foot in Appalachia? Of course not. So what is he thinking?

Is Obama sleepwalking through the greatest growth ever in human well-being, and the greatest potential ever to help the world's poor escape poverty? The most magnificent quantifiable human success stories in history are happening right now -- in agricultural productivity, nutrition, disease eradication, literacy and increased overall life span -- and are being powered by advanced global capabilities in technology and automation. Obama is bright. He knows this is true. So what's going on?

On June 19, three days after Obama's economic policy pronouncements, Daniel T. Griswold, director of the Center for Trade Policy Studies at the libertarian Cato Institute, testified before the House Small Business Committee. Too bad Obama didn't check in to witness the testimony.

He would have heard that since 1990, the percentage of U.S. gross domestic product originating from exports and foreign investment has risen 45 percent, and now accounts for nearly one-fifth of our total economic output. Last year alone, earnings on U.S. overseas investments rose 20 percent, and exports of goods and services rose more than 12 percent. These increases in global trade and investment helped offset the effects of a slowing (but still growing) domestic economy, highlighting the increasing importance of global economic interaction.

Globalization of trade and investment boosts American GDP, which means it boosts American workers. Of the quarter-million-plus American companies that export goods and services, most are small- to medium-sized business of 500 employees or less. The American workers in these companies are direct beneficiaries of globalization.

Technology and automation are the prime factors empowering a growing global web of economic opportunity. Of the world's 1.3 billion Internet users, 85 percent now shop online, across national borders. The number of transactions is increasing, and the cost of these transactions is dropping. High overhead and heavy hierarchies that once controlled global supply chains, sales infrastructures and product-delivery capabilities are being overthrown by technology and automation, empowering workers in small to medium-sized businesses to reach new opportunities in new markets.

Obama is not just a community organizer or a state senator anymore. If elected president, his influence will be globally consequential for billions of impoverished people worldwide. These are people who need more technology and automation and globalization, not less.

Here's something for Obama to consider prior to pursuing new political restrictions on technology, automation and globalization: Restricting these things restricts economic growth. And restricting economic growth restricts life. The best way to meet human needs for food, clothing, shelter, literacy and medicine is to maximize economic growth. The best way to maximize economic growth is through low-tax free-enterprise pursuits that maximize the benefits of technology, automation and globalization. This combination creates new markets without borders for goods and services offered by entrepreneurs who have abundant supplies of creativity and enthusiasm.

But harnessing this entrepreneurial creativity and enthusiasm requires a creative and enthusiastic embrace of policies that incentivize the spread of advanced technology and automation around the globe, in a vibrant arena of planetary trade.

Is Obama a good talker? Yes. Is Obama making sense? No.

Even though he makes it sound good in speeches and interviews, Obama's high-tax, big government, protectionist and redistributionist policy instincts and proposals are deadly to economic growth and opportunity.

If Obama becomes president, will the whole world pay the price? Absolutely.