Barack Obama may be an enigma to many, but Mr. Dow and Mr. Jones have given us their first impression of his Presidency, with the most impressive two-day stock market decline in 21 years. Why would anyone think, in the heady aftermath of his election triumph that the first Democrat since Jimmy Carter to gain a majority of the popular vote is likely to be a Presidential proof of the Peter Principle? Well, his record and rhetoric could lead an only mildly jaundiced observer to impressions like these:
He is an unimaginative “get-along, go-along” politician rather than an innovative leader. As a community organizer in Hyde Park, he hung out with radicals. In the Illinois legislature, he faithfully served the Chicago machine. In the U.S. Senate, he voted the party line. If he has ever had an audacious thought, he hasn’t uttered it. He shows only a tepid interest in public policy and a feeble knowledge of history. He appears reluctant to make decisions. In sum, he has so far been an oddly passive figure, “wafted by a favoring gale/ As one sometimes is in trances”, an actor who has mastered the lines given to him instead of the auteur of his own Presidency.
His perspective on foreign affairs is Panglossian, as diversely illustrated by his reduction of the Berlin Airlift to an example of the peoples of the world coming together to deal with a crisis, his insistence that we can hold fruitful negotiations with the Iranian mullarchy, and his tepid initial reaction to the Russian invasion of Georgia. The War on Terror, too, is no more than a limited conflict with al-Qa’eda, which exists only in Afghanistan and the nearby parts of Pakistan. Our other adversaries can be mollified by sincere diplomacy. At the same time, he expects other countries to act more in accord with their sentiments than their interests. Thus it is very important to close our prison at Guantanamo Bay, because foreign public opinion doesn’t like it, yet adopting protectionist policies won’t have any impact on relations with the neighbors we’re trying to beggar.
His notion of how the economy works is naively demand-sided. Putting money into the hands of poor and middle income consumers will create prosperity, because they’ll then buy more goods and services. Alas, goods and services must be produced before they can be bought with redistributed dollars. As Rudyard Kipling, a better economist than this acolyte of Saul Alinsky, put it:
In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money couldbuy. . . . To fund its beneficence, the government has to either take more from producers or manufacture money out of nothing. The latter course of action defeats itself through inflation. The former leaves the “rich” with less incentive to produce, less capital to invest in other productive enterprises and, for that matter, less wherewithal to spend on their own consumption. Unless one believes that the country is full of Uncle Scrooges hoarding their cash in money bins, it is absurd to think that dollars gain vigor by being shuffled from A to B. Nor is this just a matter of theory: For the past quarter century, the United States has practiced supply side, and Europe demand side, economics. Our economy has grown vigorously, modulated only by the inevitable business cycle. Europe has stagnated.
Side by side with demand side economics, he nourishes a contradictory readiness to reduce ordinary Americans’ purchasing power through a sharp rise in energy prices. As I noted in my last post, the natural outcome of his policies – an outcome that he half acknowledges – will be a lower standard of living and recession in perpetuity. That he is unfazed by that prospect suggests to me that his economic philosophy is, like that of many men who have given little attention to such matters, a vague jumble within which all varieties of delusion can readily find a place.
What these factors point to is a President who is by nature a party loyalist and Beltway insider, the sort who will drift along with liberal orthodoxies. The latest sign that he is no harbinger of innovative policymaking or a new kind of politics lies in his first two appointments: John Podesta to head his transition team, Rahm Emanuel as White House chief of staff: two Clinton retreads, one a left-wing ideologue, the other a classic “war room” politician.
No wonder Messrs. Dow and Jones are gloomy. It would be nice – and good for my portfolio – for them to be proven wrong, and I can fuzzily imagine a scenario in which President Obama, newly sworn in, throws off the mask and announces that he has long been a secret disciple of Milton Friedman. Now, that would be quite a denouement for this bizarre election cycle.
Some of the exuberant supporters of Change and Hope are discovering that the tabula rasa was written on by someone else first:
http://scienceblogs.com/insolence/2008/11/contact_the_obama_transition_team_to_tel.php
(On discovering that The One is considering Robert F. Kennedy, Jr. to head the EPA, if not the Department of the Interior.)
Posted by: Joseph T Major | Saturday, November 08, 2008 at 05:34 AM