Obama’s State of the Union, Part 1

[morgan_polotan]

Last night I watched President Obama’s State of the Union Address. I agree with some things he said and disagree with others, and I want to comment on certain parts of his speech.

*Obama’s words are in quotes and italics.

“America still has the largest, most prosperous economy in the world. No workers are more productive than ours. No country has more successful companies, or grants more patents to inventors and entrepreneurs. We are home to the world’s best colleges and universities, where more students come to study than any other place on Earth.”

I’m glad he pointed out some of the positive aspects of America’s economy. The steady growth in American productivity from 1947 has led to higher living standards, and is something to be celebrated.

Rate of Worker Productivity Growth (BLS)

America also still has the world’s largest economy, measured in nominal GDP.

Ten Largest Economies In The World (IMF)

America has also seen steady growth in the number of patents given. See this table by the U.S. Patent & Trademark Office.

“What’s more, we are the first nation to be founded for the sake of an idea – the idea that each of us deserves the chance to shape our own destiny. That is why centuries of pioneers and immigrants have risked everything to come here.”

I also applaud Obama’s confidence in celebrating the moral ideals of our Founding Fathers. America is a country based on freedom and natural rights. Immigrants continue to flock to our shores in the hopes that they will be able to escape oppression and make a better life for themselves. Many people shy away from discussing morality, but we must never forget the morals that created the United States.

“Our free enterprise system is what drives innovation. But because it’s not always profitable for companies to invest in basic research, throughout history our government has provided cutting-edge scientists and inventors with the support that they need. That’s what planted the seeds for the Internet. That’s what helped make possible things like computer chips and GPS. Just think of all the good jobs – from manufacturing to retail – that have come from those breakthroughs.”

Here Obama argues that it is necessary for government to intervene in the free markets because companies can’t afford to invest in their own R&D. He uses government involvement in the Internet as a case study.

Obama confuses correlation with causation. The government did in fact control Internet technology in the 1980′s, and only allowed universities and the military to use it. However it wasn’t until the 1990′s, when key resources were privatized and everyone was allowed access, that the Internet revolutionized industry and created all those jobs cited by Obama.

If the Internet had never been privatized, the public would not have benefited from this technology. Tyler Cowen, a professor of economics at George Mason University, wrote a blog post refuting the notion that the government was responsible for inventing the Internet we have today.

In Part 2 I will examine more of Obama’s claims made in the State of the Union Address.

Do you agree or disagree? I welcome rational arguments in the comments.

Cross post