Near the end of his speech yesterday in Denver, after declaring at length how his economic program will create prosperity “from the bottom up”, Barack Obama struck a discordant note:
Now, make no mistake: the change we need won’t come easy or without cost. We will all need to tighten our belts, we will all need to sacrifice and we will all need to pull our weight because now more than ever, we are all in this together.
Up to that point, the spectators were being reassured that an Obama Administration would lower their taxes, cut their health care bills, create millions of new jobs, lift wages, relieve mortgage indebtedness, reduce the cost of college education, etc. Not a word to intimate that any belts would have to be tightened, sacrifices undertaken or weights pulled. What was the candidate thinking?
Further on, there is a slight hint:
We can do this. Americans have done this before. Some of us had grandparents or parents who said maybe I can’t go to college but my child can; maybe I can’t have my own business but my child can. I may have to rent, but maybe my children will have a home they can call their own. I may not have a lot of money but maybe my child will run for Senate [not, let’s note, “maybe my child will start his own business and get rich”]. I might live in a small village but maybe someday my son can be president of the United States of America.
Maybe this is all disconnected rhetoric - “just words”. Or maybe Senator Obama has no expectation, or intention, that prosperity will return soon. He certainly seems to be preparing for the possibility that, for the next several years, the upshot of taxing away the capital of “the rich” so that the government can allocate it to its favored enterprises will be the same stagnation in incomes and jobs that has afflicted Europe for two decades.
There are circumstances when a leader must call for sacrifice, as when Abraham Lincoln faced a rebellion by nearly half the country or Winston Churchill defied the victorious Nazis or brave Iraqis in Anbar rose against al-Qa’eda. A recession is not like that. What is needed now is the production of goods and services that customers want to buy. The “sacrifice” involved is metaphorical and self-interested. Again and again, the economy has slumped, and human action has righted it. The pain of liquidating unprofitable investments has sometimes been sharp, but rarely long –
With one conspicuous exception. That was, of course, the Great Depression, where, as Amity Shlaes has usefully recounted in The Forgotten Man, the pain went on and on. The Hoover Administration and the New Deal anticipated the key points of the Obama Prescription: Taxes on “the rich” were kept high. The government directed a large portion of the country’s investment. Money was funneled to the less affluent through a wide range of welfare programs and the creation of make-work jobs. (Senator Obama calls them “green jobs”, but they produce nothing that anyone will buy at market prices.) Government regulation tightened its grip. International commerce was choked by protectionism. (A columnist for The Times of India helpfully compares the candidates’ positions on trade, just in case anyone doubts that Mr. Obama’s real middle name is “Smoot-Hawley”.)
FDR flourished politically despite his disastrous economic record. Why and how can be summarized in three principles:
First, he incessantly blamed his predecessor for all that was wrong. In his Denver speech, Senator Obama does the same, drawing on the superstition that the President is the mainspring of the economy. The uninformed listener might be unaware that the government has more branches than just the Executive.
It is striking – just a coincidence? – that a long boom, interrupted by a single short, mild recession, took off in 1995, after the election of a Republican Congress and continued through 2007, when the Democrats took control of both Houses. For the past two years, the President has been a Republican, but no one can reasonably say that he has been more than a bystander in the formulation of economic policy. Over his ineffectual resistance, Congress has sharply boosted government spending, thrown taxpayers into a slough of uncertainty about the future shape of the Internal Revenue Code, killed free trade agreements, raised the job-killing minimum wage and otherwise pursued a liberal Democratic agenda. And in lockstep with those measures, economic growth first slowed, then began its present decline.
Second, while the Roosevelt Administration’s policies couldn’t create productive jobs, they did make millions of people dependent on government aid. Senator Obama is cleverer than FDR in one respect. He will have the IRS write the checks, which he calls “tax credits”. Otherwise, he aims to practice the same short-sighted bribery that perpetuated poverty throughout the 1930’s.
Finally, President Roosevelt was an inspiring orator, who persuaded the majority of voters to look ahead to a bright tomorrow that steadily receded. Barack Obama is inspiring, too.
Ronald Reagan ran for President when times were worse than they are now. His message was not “sacrifice”, in the form of a perpetuity of zero growth, but the removal of barriers to entrepreneurship and success. Barack Obama is, here as in so many other areas, the anti-Reagan. He all but promises a return to the policies of Jimmy Carter (minus the Carter Administration’s tentative steps toward trade liberalization and deregulation). He may dream of “spreading the wealth”, but all there will be to pass around will be the “sacrifice”, which will look strangely like poverty.
Comments