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It wasn’t in his prepared remarks, but John McCain couldn’t resist one of his favorite economic anecdotes today. A minute into his speech to the National Federation of Independent Businesses he paid his respects to Meg Whitman, his campaign co-chair and the former CEO of eBay. He thanked her for her contributions to the global economy, most notably that “1.3 million people around the world make a living off eBay.”
As Daniel Gross wrote in Slate a few weeks ago, this is total bunk. The 1.3 million statistic is actually a reflection of how many people “use eBay as their primary or secondary source of income.” About half of those 1.3 million people are Americans, according to a report, and there’s no telling how many are making a living off eBay or merely exercising a hobby. But that hasn’t stopped McCain (or Whitman, who mentioned the same stat in her address to the NFIB conference a day earlier).
For Republicans, the eBay example is a handy one to pull out of their back pocket whenever they start yammering about the economy. The Web auctioneer is governed largely on conservative principles—the company provides a framework for a market, and buyers and sellers take it from there. The auction system means that the market’s prices regulate themselves, without much regulation from a higher power.
Even better, a market providing eBay services has naturally emerged to complement the traditional eBay market. If you’ve got a limited-edition Beanie Babies hippo you need to sell but can’t keep up with the demand, you can pay somebody else to do it for you. This injects middlemen into the transaction, which, in an ideal world, brings revenue to even more people. Voila! A new market deriving from another market. As far as Republicans are concerned, the more free markets the better.
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In a Wednesday post at National Review Online, Larry Kudlow, he of CNBC fame, asserts that the stock market likes Hillary Clinton more than Barack Obama. How does he know this? Because on two occasions, the stock market went up after Clinton won a primary, and down after Obama won.
The clearest example was Hillary’s massive West Virginia victory. Stocks opened strong the following day. But after Obama’s big North Carolina win, a night he nearly carried Indiana, stocks opened way down.
Even though Hillary clocked Obama in Kentucky, since Obama took Oregon convincingly, he really carried last night’s elections and now stands on the verge of gaining the Democratic nomination. Not surprisingly, stocks opened down 80 points this morning.
Kudlow, to put it simply, is off his rocker. He is asserting that the stock market would react strongly to a Democratic primary after the nominee has been all-but-anointed. One would think an economist like Kudlow would have more faith in the market than to think it was subject to the whims of a now-meaningless primary that pits two very similar candidates against one another.
Kudlow’s facts are right. The Dow went up by an unimpressive 73.26 points after Clinton won West Virginia. Why? Not because Clinton won; because Wall Street got good vibes from a new inflation report. The Dow went up even more after Obama won Wisconsin and Hawaii. He’s also right that the index plunged a substantial 196 points the day after Obama took North Carolina and made Clinton sweat in Indiana. But not because Obama won. AIG, a bellwhether for subprime-affected insurance corporations, was about to unleash a gnarly balance sheet the next day. As Kudlow notes, stocks tumbled nearly the same amount after Obama won in Oregon and clinched a pledged delegate majority. Why? Not because Obama is going to be the nominee; because oil prices hit a record high and inflation edged upward.
Kudlow doesn’t mention that the Dow rose 32 points during Obama’s streak of 10 straight victories, or that it went up after Obama’s South Carolina, Potomoc, and Wisconsin wins. Kudlow must have been dumbfounded when the market didn’t crater in response to Obama’s success. He must think the market agrees with Clinton and must not count caucuses as real votes.
All of those rebuttals take for granted a tacit, yet crucial, piece of Kudlow’s logic—that Clinton and Obama would be drastically different stewards for the economy. This, also, doesn’t make any sense.
Kudlow takes issue with Obama’s “class warfare” of repealing Bush tax cuts and other initiatives.
Obama then repeated his usual litany: big-government health care, an attack on oil companies, a big spending plan for education, big bailouts for housing, and a pension assault on corporations.
Clinton, of course, is for all of those things, as well. Superficially, Clinton is no more of a sure-thing bull economy than Obama is. Kudlow seems to recognize his argument’s flaw, and attempts to push it aside.
Interestingly, stocks have preferred Hillary in the Democratic fight a) because she was roughing up Obama for the general-election fight against McCain and b) because markets believe they can do business with Hillary in a way they can’t with Obama.
Personifying stocks is always a risky affair, because, oh, you know, they don’t have brains. Traders don’t think “they can do business with Hillary” any more than Kudlow does. Watch this clip of Kudlow castigating Clinton’s economic policies, and you’ll see that Kudlow isn’t exactly a Democratic cheerleader. He’s a staunch supply-side McCain supporter who is using his NRO platform to knock Obama and proliferate McCain talking points. Kudlow saying Obama would be bad for the markets is the same as Karl Rove saying Clinton is the stronger Democrat in November. Even in a quantifiable realm like economics, qualitative spin rules the day.
The Dow Jones is down nearly 150 points today. Maybe it’s because Obama picked up three new superdelegates.
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LOS ANGELES—Barack Obama supposedly hosted an economic town hall meeting today, but it sure didn’t seem like it. While giving a short stump speech and taking questions from the audience, he mentioned the downturn in the economy only once. To be fair, he spoke at length about the struggling middle class—but those lines are leftovers from the prerecession era of the campaign. The times demand irrational exuberance.
The problem isn’t that Obama broke his promise to talk about the economy—I doubt most of the supporters there knew or cared. It’s that the economy is the issue Obama struggles with most, yet he’s not trying to convince voters he knows how to shoot the bears and bring on the bulls.
If Obama wants to win California, he has to take care of two weaknesses: Latinos and the economy. On the latter, the latest Rasmussen tracking poll says nearly half of California Democrats think the economy is the top issue, and Clinton leads by 15 percentage points among those voters.
Obama finally tackled the issue at the end, but only after an eighth-grader asked him, “What would you do as a president to help make the economy get better, not worse?” Obama responded, “OK, that’s a good last question.” Damn right it’s a good question. Obama answered by talking about mortgages, bankruptcy, and tax codes, and he did it pretty well. But he didn’t talk about the Fed, Wall St., or interest rates. Instead of speaking in nitty-gritty financial terms, he reverted to stump snippets on health care and energy independence. He needs to start acting more like Hillary.
This is a problem across the board. Obama doesn’t seem to like talking about details. At the event, he threw out more policies than the crowd knew what to do with—health care, affordable housing, early childhood education, veterans care, immigration reform. Obama didn’t remember to tell people that he thought he could pay for all of these lofty programs until 45 minutes into the event. “And by the way, all these promises I’m making, I’d pay for them,” he said. “Don’t think I’m just making these loud promises. We’ve talked about how we’re going to pay for these initiatives.” Did he tell us what those measures were? No—he moved on instead.
I take Obama at his word—that he has had those discussions. (Indeed, his Web site outlines some of his planned spending.) But he has to start incorporating that wonky talk in his events. Obama doesn’t seem to trust the voters’ capacity to hear high-minded fiscal details every now and then. But if there’s anything he can learn from Hillary, it’s her ability to spew statistics without notes.
Obama has to find a way to talk both details and big ideas, and it would be best if he could figure it out before tonight’s debate. During his answer on the economy, Obama was numbering each of his policy points before he went into why he thought they were good ideas. (Perhaps he’s organized after all.) Near the end of the question, he forgot whether he had already said two or three of his proposals, which led to an unintentionally telling moment. After collecting himself, Obama said, “I’m losing track. I’ve got so many good ideas.” Enough with the ideas, Barack. We want some deets.