Thursday, April 26, 2012

An Obama Re-election strategy: Embrace Constanza


I have a simple plan for Obama to get re-elected. All he has to do is embrace the philosophy of George Constanza in "The Opposite." In that Seinfeld episode George realizes in order to be successful he must do the opposite of what his instinct tells him. As Jerry says, "If every instinct you have is wrong, then the opposite would have to be right."

A Real Clear Markets story today, "Will Unemployment Misbehave Before the Election?" worries unemployment ratios and the employment rates will be negatively impacted by the expiration of unemployment benefits. The story concludes, not too helpfully, that unemployment could increase or fall depending on whether it is increasing or falling.

Let's assume Obama really wants to extend unemployment benefits. If he does that, the incentive, at the margin, will be for beneficiaries to continue looking for work, but stay unemployed. (Calm down. Everything takes place at the margin, and at the margin are those who determine it is better to stay unemployed and collect benefits. This is not the same as what happens to the average or median beneficiary. It does not mean people are stupid and lazy. It means the exact opposite: People are rational wealth maximizers). If that happens, the unemployment rate stays elevated.

Now let's assume Obama does The Opposite. He let's unemployment benefits lapse. At the margin the incentive is for workers to get back in the labor force, unemployment rates go down and Obama is re-elected. He can even make a faux effort to get benefits extended. Let the Republicans shoot it down and get a double benefit: He can tar the Republicans as heartless and claim credit for an improving economy. In this case, since he would have done a Constanza, he would deserve credit for the improving economy.

Yes, it's a brilliant plan. All Obama needs to do is embrace his inner George and recognize "that every decision I've ever made, in my entire life, has been wrong."



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