While Mr. Obama seeks to make Republicans the villains when it comes to the economy, he is also, more diplomatically, blaming Europe. In Minneapolis and Chicago on Friday, he cited the impact of the continent’s travails on the American economy.
Citing the jobs report, Mr. Obama said, “A lot of that is attributable to Europe and the cloud that’s coming over from the Atlantic, and the whole world economy has been weakened by it.”
Hoover also blamed Europe in the 1932 campaign. Today almost all macroeconomists believe the problem wasn’t Europe, but rather the failure of the Fed to boost NGDP with a sufficiently expansionary monetary policy. And what do these economists do when faced by another epic demand shortfall in their own lifetime?
As lackluster as the American jobs data was, with unemployment inching up one-tenth of a percentage point to 8.2 percent, the news from Europe was far worse: the jobless rate in the euro zone hit 11 percent, the highest since tracking began in 1995. “There’s really nothing the U.S. can do,” said Charles Calomiris, professor of finance and economics at Columbia Business School.
Alan J. Auerbach, an economist at the University of California, Berkeley, said, “Frankly, I don’t see what President Obama can do right now other than to forcefully present a detailed plan for action and challenge Congress to take it up.”
It’s easy to see the failure of others. Not so easy to see what went wrong when monetary policymakers following the consensus view of leading macroeconomists led us to the slowest growth in NGDP since Herbert Hoover was President. Our policies didn’t work? There can’t be anything wrong with our policy; the problem must be unsolvable.