Wednesday, July 08, 2009

Mean Street: Human Nature and the Coming Failure of Obamanomics - Deal Journal - WSJ

And herein lies the real shortcoming of Obamanomics. It is an invention of academics and bureaucrats. And it takes little account of human behavior — how individuals and businesses operate in the real economy.

As I tried to illustrate in my columns, the economy is the sum of billions of individual decisions. Should I modify my mortgage or walk away? Should I buy the car or wait until I really need a new one? Should I fire more staff or take a hit to this quarter’s earnings?

Our behavior may be unpredictable, but it’s not that complicated. Individuals fight to protect their own interests. Businesses fight to protect their profits. That’s what we do — and what we’re supposed to do.

So why did the White House believe that new income and capital gains taxes on the wealthy would keep them spending and investing?

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