Thursday, June 11, 2009

Obama & Ahmadinejad, Redistributing the Wealth?

Barack Obama and his Iranian counterpart, Mahmoud Ahmadinejad, have a lot in common, at least in terms of their economic policies.

Both Obama and Ahmadinejad won their respective presidencies - Obama in '08 and Ahmadinejad in '05 - based on a platform of economic justice and wealth redistribution, and both of them have embarked on massive government spending sprees to bring about their promise of economic salvation.

Meanwhile, the Iranian president's fiscal policies have only exacerbated Iran's economic woes. Since taking office Mahmoud Ahmadinejad has engaged in a populist spending campaign that critics say has severely boosted inflation and left the country's budget for the next Iranian year, ending March 20, 2010, with a fiscal deficit of up to $44 billion.

But in spite of this, the Iranian president insists his economic policies are working. Ahmadinejad recently claimed that the rate of inflation [in Iran] was standing at 15 percent. Financial officials maintain that the annual inflation rate is actually standing at 25 percent. [On Tuesday, Ahmadinejad acknowledged that inflation was at 25 percent.]

In 2006, Iran's Deputy Minister of Labor and Social Affairs stated that the government was determined to both cut the unemployment rate to 8.4 percent by the end of 2110 and to create 900,000 jobs each and every year during that period. Unemployment in Iran is now in double figures.

Likewise, the Obama administration has embarked on a massive government spending spree, and just a few months ago insisted that unemployment in the US would top out at 8 percent if congress passed the stimulus ["spending spree"] bill. The unemployment rate now stands at 9.4 percent, the highest in more than 25 years.

And while the US economy has lost nearly 1.6 million jobs since the stimulus bill was passed, the Obama administration claims the stimulus package "created or saved" over 150,000 jobs. But independent experts say those estimates are merely "based on macroeconomic models and projections", and contend that it is very difficult to measure the number of jobs created.

According to Harvard economist, Greg Mankiw, the expression 'create or save jobs' - a term regularly employed by the Obama administration - is both disingenuous and "an act of political genius."

"You can measure how many jobs are created between two points in time," Mankiw says , "but there is no way to measure how many jobs are saved."

Nevertheless, Barack Obama and his Iranian counterpart have pledged to stimulate their countries' economies and to spread their nations' wealth. But so far they've only managed to spread poverty and unemployment, and to stimulate government spending and deficits.

This would be the perfect time for these two distinguished leaders to meet with one another, not to discuss foreign policy, but to recalibrate their wealth redistribution policies. For indeed, as the old adage goes: "Two heads are better than one". All the more so, when you have two great minds that actually think alike...

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