The other day, I heard President Obama saying his administration had created 78,000 or so jobs in the past month, and if you believe that, I’ve got some nice waterfront property in Parkwood to sell you.
Not that Obama wouldn’t have liked to create jobs. It’s just that presidents, contrary to popular election myth, have very little influence over the economy. About all any president — or any other elected official, for that matter — can do to create jobs is expand the government bureaucracy.
That job-creation myth, and four others, were explained by Jesse Anttila-Hughes and Bruce Wydick, professors in the economics department at the University of San Francisco, in a piece they wrote for the Sunday San Francisco Chronicle.
They point out economic factors are largely out of the control of any president regardless of party. A president can act like he’s doing something, but his effectiveness is not unlike that of the man behind the curtain in “The Wizard of Oz.”
Myth 2: Raising taxes on the rich would hurt economic growth. “In truth,” the professors say, “there is little evidence that raising taxes on high incomes impedes economic growth. They point out that in America, during the high-growth 1950s, taxes on incomes over $300,000 were 90 percent.
Myth 3: Government programs that promise big benefits deliver big benefits. Only if those benefits exceed cost of the benefits, which seldom is the case.
Myth 4: The free market is the best way to allocate health care. They point out the free market is good for allocating products and most private services. But, they point out, health care is perverse, in that low prices don’t generate demand, but high prices do.
Myth 5: The fiscal stimulus plan was obviously too big (or too small). Nobody really knows. The only thing economists know is that a lot of money had to be borrowed to finance it.
Our ratio of deficit to Gross Domestic Product, at 7.8 percent, is about the same as that of Greece. You can see how good that’s been for that country.