31 January 2012

SoTU 2012

I haven't had much to say about this. It's largely because the speech read and sounded like a campaign stump speech more so than is typical for Obama. Kind of like a Clinton speech actually now that I've recalled some of the days of Bill's oratory.

Some thoughts though. I really hated the protectionist rhetoric and industrial policy segments. In fact, I'd be hard pressed to think of economists who didn't, even on the left. Personally I usually hate the protectionist parts. It's one thing to call on the ingenuity and hard-working spirits of mythical Americans typically invoked in such speeches. It's quite another to suggest political strategies in trade that somehow "benefit" them that don't involve mutual and mostly free trade accords with other nations. Because I'm not aware of any. It's a further strangeness to call for more manufacturing jobs. Steve Jobs' point some months ago was right. Those jobs are gone. Fuck it and forget about it. Learning to do something else is a far stronger industrial policy. Americans still make lots of things here, but with far fewer workers and a lot more robots and computer programmes. That's not the strangest part though. The real strange part isn't so much the divorce from reality of manufacturing today it suggests, but the feature that somehow manufacturing jobs should be favoured by government largess in the first place. That's a bug, not a feature. If we should be favouring anything, it would be high-tech jobs in fields like biochemistry and various types of engineering. And that's a very strong "if we should be" qualifier. The best thing we could be doing for growth in these areas is a) dramatically expand the number of H1 visas we issue for immigrants and b) dramatically improve our primary education system, in the areas of math and science in particular, so more "American" students are prepared to enter these fields. Or others that will inevitably appear 20 or 30 years from now. We wouldn't need to mess with anything besides that. The whole increasing complexity of the tax code does little to create innovation and stimulate job growth anyway. It simply entrenches current economic power within the available players and shuts down others from getting into it.

This is just as true regarding environmental policies as it is for manufacturing. The safest way to realistically shift environmental policy away from oil or coal is actually to decrease the amount of existing tax credits already in the system for things like ethanol, oil, and coal, not grant new but smaller tax credits for solar or wind power, and to decrease the number of federal regulatory agencies involved in things like nuclear or hydroelectric power to boot in order to make smaller scale generation of power by these means possible in the nearer term while more solar or wind power comes on line and newer batteries or smart grids are created (along with California not encouraging people to move to Arizona or Nevada or Texas with its stringent land use policies, but that's a state matter).

Secondly, I'm greatly disappointed in the Iran war drums. I'd have thought Obama was smarter than that after Egypt, but not so much after Libya. One could write this off as campaign statements to garner the "rally around the flag" voters who like wars so much. But the evidence suggests that voters are weary of wars, and soldiers and their families in particular are weary of enduring them in their endless state by which we now conduct them. One could theorize that people believe that bombing Iranian nuclear sites wouldn't start another shooting war. But that theory would be wrong. One could also theorize that bombing these sites would matter very much. But that theory also would be wrong. Available evidence suggests a) that Iran is doing something related to nuclear technology, but more likely targeting breakout capability than an actual weapon, as there is less public support for nuclear weapons than nuclear power, b) Iran is still pretty far away from either, relatively so that it might not even matter in any putative Obama second term, c) our joint campaign with the Israelis of shadow warfare (cyberwarfare, espionage, assassinations of scientists) is about as effective as dropping bombs would be for delaying any hostile action of nuclear science (ie, creating a real bomb). Without the higher cost in diplomatic and fiscal consequences, and finally d) Iranian nuclear weapons do not threaten American security or interests. They threaten Israeli security or interests, but Israel can handle itself to defend itself against Iran, to retaliate if necessary, and could rely on international support (probably including most of the Arab states too) were it to be attacked by Iran in such a way. Even if it were through irregular forces like Hamas or Hezbollah. Iran is mostly a pariah state, but it would really be a pariah state if it attacked.

Perhaps assuming total rationality from actors playing the part of Iran's power structure is implausible, but it's still not a threat WE need to be worrying about even if the threat is far more real than the creation of a nuclear deterrent power in the Middle East that isn't a US client state (ie, Israel).
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