Obama's America: What Is Economic Growth For?
Fed chairman Ben Bernake, along with other Obama economic team officials, tells us that economic growth is returning, and that it is "very likely" the recession has ended. With ten percent unemployment in many parts of the country, this might seem like less than great news. Certainly, in conventional political terms it is progress--but that's the problem. It's a conventional view--not the Change We Need.
The economic crisis from which we are slowly emerging is, at its base, a moral and an intellectual failure. As Robert Skidelsky, the award winning biographer of the great economist John Maynard Keynes, writes: "At the heart of the moral failure is the worship of economic growth for its own sake, rather than as a way to achieve the 'good life'. As a result, economic efficiency--the means to economic growth--has been given absolute priority in our thinking and policy." (Check out Skidelsky"s new book, Keynes-The Return of the Master, which explains Keynes' relevance for today's economic crisis, as well as the failure of almost the entire economics profession.)
Keynes understood in the 1930s that capitalism needed to be stabilized through government action--primarily government spending--and most importantly, reformed to reduce systemic weaknesses that caused the Depression (and the current global economic crisis). The New Deal in the US and social democratic governments in Europe, both before and after World War II, took measures to stabilize their economies and to reform them. Efforts were also made to do this at the international level through the Bretton Woods agreements of which Keynes was a prime thinker and mover.
These policies of stabilization followed by significant structural reform and ongoing programs of government spending (in the US, the GI Bill, national education and transportation acts, etc.--and similar programs in Europe, Australia and Japan, including the creation of national health systems), laid the foundations for the economic growth of the post-war period in the 50s and 60s when real improvements in living standards, reduction in poverty and inequality, and the wide spread provision of health and welfare benefits created a thriving middle class in most non-communist nations.
In speeches earlier this year, most notably at Georgetown University, President Obama said that he wants to lay the foundation for new economic growth--growth that improves citizens' lives and does less damage to the environment. Unfortunately, while his words are bold, he acts cautiously when it comes to actual reforms that are necessary to create this new foundation for economic growth, and he runs the risk of returning to the same old "money values" that underpin Reaganomics, which brought us the recent economic crisis.
His proposals, and his economic team, seem at variance with his rhetoric. Whether this is a function of his true beliefs about what his goals really are, or simply his political calculus of what is possible, is difficult to know. On the evidence, we do know that his choice of economic advisers and appointees has not been reformist. Instead of Joe Stiglitz, James Galbraith, Paul Krugman or Barry Bluestone, he has selected Larry Summers, Tim Geithner and Christina Roemer. Even Laura Tyson and Robert Reich, both of whom endorsed and campaigned for Obama, would have been more progressive and reform-minded.
In Washington, personnel is, in large part, policy--and who you see in power is what you get. Obama picked stabilizers not reformers. His recent speech to Wall Street spoke more about responsibility than about reform, as if it were personal failings rather than an unbalanced system that caused the crisis. Obama's proposed reforms are moderate and in the analysis of many experts like Simon Johnson of MIT, insufficient to prevent a future meltdown. Wall Street seems to have returned to its old ways of doing business, only with even larger financial conglomerates like the new Bank of America which swallowed Countrywide and Merrill Lynch and is surely "too big to fail." The message seems to be that the Obama government will bail out the big companies to get back to stability and growth, but not significantly change the way the system operates to prevent future bailouts.
As with economic policy, so it is with health care. Obama's approach has been to move to the center even before the debate began. He could have said at the outset that a single payer system was, in fact, the most ideal, and then moved away from it towards the center as politics dictated. Sadly, thinking that he was avoiding all of the mistakes of the Clinton administration, he recreated Bill Clinton's approach of making too rationale a case for health care reform, instead of a moral one. There has been too much talk of "bending the cost curve" and not enough talk about how a decent country should treat all of its citizens.
As TR Reid writes, "The question facing Americans this fall is: what should be the ethical basis of America's health-care system?" (Reid's new book, The Healing of America: A Global Quest for Better, Cheaper and Fairer Health Care, surveys the leading universal health care systems in such countries as Canada, Great Britain, Japan, France and New Zealand and finds lessons for the US).
In 1992, I advised President Clinton not to put Hillary Clinton in charge of health care inside the White House. I wanted her to lead the reform effort outside--to follow the model of Eleanor Roosevelt--to travel around the country visiting hospitals, community clinics, health coops, model health centers, to gather stories and build grass roots support for reform by creating a compelling narrative based on peoples lives. At the same time, I counseled that a key Senator like Jay Rockefeller who represents a white-working class state, West Virginia, should hold hearings on the experience of other countries in covering all of their citizens-- telling the story that Reid reports in his new book. The facts about alternative health care systems would then have been presented to the public without much distortion. Clinton chose not to follow this advice, and Obama has not followed this path either. Obama's team learned the wrong lessons form Clinton's experience with health care. It was not the content of Clinton's plan that doomed it to failure, but the political strategy that he adopted. I hope that will not be the case with Obama and his efforts.
Obama chose not to give Michelle a role, perhaps fearing a comparison with Hillary. She is not out collecting human stories of the failure of the health care system, and instead, is confining herself to the White House food garden and opening a farmers market near the White House. Worthy projects, but not the optimal use of her time nor her abilities. Hearings were not promoted by the White House on health care systems in other advanced democracies and Obama has not spoken about these other models in his speeches. This silence let opponents of reform offer false and politically damaging characterizations of how health care is delivered in Great Britain, Canada and France. Wild charges that Teddy Kennedy would not have been treated by the National Health Service in England or that physicist Stephen Hawkings would have been left to die have gone unanswered. Instead, the human narrative comes from the Right about Obama's death panels and letting Granny die.
All these miscues are enough to make a good Democrat doubt the political bona fides of Rahm Emmanuel, David Axelrod and Valerie Jarrett. What were they thinking?
Political mistakes in the Obama White House have been compounded by the misuse of an asset that Bill Clinton did not have--10 million or more names of activists on computer. Obama's campaign army for change could have been used as a real potent force for political change; instead, it is just an email list which the White House uses in support of whatever stands Obama is taking.
Had Obama turned the names over to a nonprofit group--one independent of the White House--perhaps run by someone like Marshall Ganz, the legendary organizer who helped train Obama's campaign staff, he could have created a political force outside of conventional Washington which would have organized grassroots support for strong reforms like single payer and put pressure on both the Congress and the White House for a truly ethical health care system. It was a missed opportunity, but it can be remedied, although not in time for the passage of a good health care bill this fall.
I'm afraid that letting Max Baucus take the lead on health care reform in the Senate and pushing aside tougher reformers like Jay Rockefeller is another political error with consequences for the shape of any health legislation this fall. I don't expect much. If my leader and hometown Congressman Henry Waxman (one of my few personal heroes) votes for a final bill, then I will support it. Some kind of reforming the health care system, if Henry supports it, will be better than nothing--but things could have been so much better. It's deja vu all over again.
I am reluctantly coming to the conclusion that President Obama's governing style is not going to produce the kind of reforms which his millions of supporters had hoped for. We know that he is a powerful speech maker, but he has the unfortunate habit (as Frank Rich pointed out in his Sunday New York Times commentary) of thinking it is a more powerful tool than it is--and he has a tendency to think so much of his own powers of persuasion that he is in serious danger of overexposure or creating a kind of cult of personality. After all, this weekend he is appearing on all five national talks shows on Sunday, followed by an appearance on Letterman on Monday night--all to argue for health care reform. Is there no one else of stature in this administration who can make the case for reform? Where is Obama's Frances Perkins or his Senator Wagner--just two of the great Americans who brought us the New Deal as part of FDR's team?
The power of rhetoric, even that of great presidential orators, is overrated in politics, and is, I believe, less effective the more that it is used. In any case, it doesn't substitute for a more aggressive and smarter political strategy and bolder policy initiatives that wake up supporters in the progressive camp--and it doesn't work if there is only one voice speaking for change. Obama is clearly the One, but he needs others too.
I don't want to be too pessimistic. Situations change, and personnel can be replaced. There are mid-course corrections in any presidential administration, and there will certainly be ones in the Obama administration.
As to the answer of what is economic growth for--the question posed in my title--for now, we have to look across the waters to France where President Sarkozy has just released the report of his commission on how to measure economic growth. Co-chaired by Nobel prize winner Joe Stiglitz, the report suggests new ways to measure a society's well being other than simply the growth of GNP. Sarkozy has indicated that the French statistics agency will be incorporating new indicators in its accounting of national income statistics. Perhaps, he will give President Obama and the other leaders at the G-20 meeting in Pittsburgh copies of the report.(the commission report is available online at: www.stiglitz-sen-fitoussi.fr) And perhaps, President Obama will give some serious thought to trading in Larry Summers for Joe Stiglitz , letting Jay Rockefeller take over for Max Baucus, or calling populist Democrats like Byron Dorgan and Sherrod Brown off the back benches and onto center court.
Huffington Post: G-20 Pittsburgh Summit: HuffPost Bloggers' Analysis and Commentary
Read the latest commentary, analysis and reporting from HuffPost bloggers from the G-20 summit in Pittsburgh.
Loading comments…
Want to reply to a comment? Hint: Click "Reply" at the bottom of the comment; after being approved your comment will appear directly underneath the comment you replied to
the interests of the economy seems to be almost diametrically opposed to the interests of middle class america. some corporation lays people off = their stock price goes up. how is that a good incentive for a strong society?
watch elizabeth warren talk about the crisis ofthe middle class in the US.
http://www.youtube.com/watch?v=akVL7QY0S8A
Obama may say he is against the protests at the G20 this week publicly, but you can bet he'll be using the protests as a threat to try to get the banks to agree to the limited reforms he wants soon enough. he will say, "look, you deal with me, and agree to these reforms, or you'll have to deal with these angry mobs of people more and more in the future...." it's just like how MLK used to specter of more riots to get leaders to the table and get civil rights enacted.
support these protesters: http://www.resistg20.org
indy media on the protests: http://indypgh.org/g20/
the bigger, louder, and more often protests like this happen, the better the reforms will be. the more room progrssive dems will have to push on obama, and the more room he'll have to push on the banks. protests are the tip you can see of an iceberg of change that they create. today and tomorrow are the big days of protest i think. please donate and support these folks!
Our government has proven how well it performs the function of policing trade laws. Our good Corporate Citizens that try to stay here and produce goods and provide jobs to folks...get their heads handed to them in the market place. Is it fair that they contribute to employment, pay taxes, and abide by environmental laws here in the states, and their competitors from overseas contribute nothing to the society but get the benefit of selling into our ' free market' ... with no societal costs or benefits to be considered at all?
And if he tried to do everything at once what would the media narrative be?
I think we can guess. It's not been even 12 months yet. I think we can give a bit more time to enact more campaign promises.
"His proposals, and his economic team, seem at variance with his rhetoric."
I think that says it all. Obama talks like he sees the problem but acts like he doesn't think it's really a problem. I choose to judge a politician by his acts and not his speeches. And his actions say that Obama is not the president we need for these times.
Americans are not fed up with The System -- they are fed up with the cheaters. Would Madoff have ever happened if the SEC did its job? People want to succeed. But what they live in is a world where the crooks get to skim the cream while they constantly get pushed down for doing good work, or acting logically, or speaking the truth.
We need a return to manufacturing.
Obama wont renegotiate bad trade deals like he promised.
We need a 20% tariff on all Chinese goods.
20% tariffs on imported cars and auto parts.
So our prices will go up, more people we be pushed over the edge, and China will put tariff on our goods reducing exports.
Think FAIR trade. Yes, we may occasionally need to put tariffs on certain foreign products to coerce workers rights and unfair dumping and tariffs. Long term low trade barriers are what the people benefit most from. Trade wars make depressions worse.
Invest in Americans and Main Street.
Install rooftop solar and waste biochar.
Our problem is our insistence on practicing flatland economics in a 3d world. Flatlanders are mythical 2D creatures that live on a flat plane. In geometry, a plane is infinite. A flatlander can go north, south east and west, but has no concept of up or down. They can only move around on their flat surface and can only see in the 2D space. A flatlander can be a circle, square, triangle or any other polygon. The beauty of flatland is that since a plane is infinite in the direction of north, south , east and west, flatlander’s can never overpopulate their world. Flatlander’s can procreate all they want and never run out of resources that sustain them. Resources themselves are not a problem for the same reason, resources are infinite on a flat plane the goes off infinitely in four directions. Pollution will never be a problem either. If a region of the plane becomes overpopulated or over polluted, just move either north, south, east or west, and keep doing so forever.
Our economic model of infinite growth would be perfect in flatland. Unfortunately, human beings live on a 3D ball in 3D space with limited surface area. Our ball is just under 8,000 miles in diameter, 24,000 miles around with a total surface area of just under 190,000,000 sq miles. The earth’s resources are finite. We do not have infinite resources at our disposal, nor do we have infinite land or water to dump our pollution. Unlike flatlanders, we cannot procreate forever without consequence.
As a result, infinite growth on a sphere is madness. But we continue to apply flatland economics to our 3D world living on a finite sphere forever.
Thankfully there are those who dare to question our oracles (economists) and high priests (politicians) who consider to spoon feed the masses propaganda and dogma about how infinite growth on a ball is both possible and desirable. These whistle blowers explain their theories of resource constraints with funny words like PEAK OIL, and LIMITS TO GROWTH. Others do research on funny ideas like POPUATION DYNAMICS.
Flatland economic theory should not be applied to a ball. We human beings need to learn to live sustainably. We need to learn to live within natural limits. We need to begin to question our oracles and high priests.
Growth for the sake of growth is the ideology of a cancer cell.
Left untreated, cancer grows until is kills the host. The Earth is like a human being except people obtain energy and raw material from food. The earth only obtains energy from the sun, not raw material. Occasional meteor and comet strikes no longer make much difference.
The earth is still like a human being in the sense that it can only handle so much exponential growth in people and consumption before the whole thing crumbles.
Three separate posts that could have been summed up with one sentence.
Go green, America.
Thanks for the eyestrain, Wordsworth!
The phrase “just go green,” is too vague. There are different types of belief systems. Most people are Cornucopian’s, some are “Green Cornucopian’s, very few of us are Neo-Malthusian. My three posts make it very clear I’m Neo-Malthusian.
Obama is like an emergency room doctor that greets a stroke victim with a warm smile and bottle of aspirin.
I suppose your're trying to make a point. The truth is that when you have a stroke or heart attack, that is the first thing a physician does, give the patient an asprin.
Smart, you're not.
Why are we talking about economic growth when we can't even acheive economic stability? How many ups and downs, debts and surpluses, recessions and periods of prosperity do we have to go through to realize that, until there is serious responsibility placed on ALL aspects of the financial sector, from the tiniest one man home business all the way up to the giant mega-corporations, there will be no financial stability, let alone growth
Classic metaphor, we're building a financial mansion on swamp land here.
It will not be until and unless we truly address the REAL needs of the people, the homeless and unemployed that anyone will even come close to being able to talk about stability, let alone growth
Otherwise, don't we all just look like a bunch of selfish mizers? What happened to the good old days of charity and Comic Relief (for the homeless)??
"What is economic growth for?"
Apparently it's for a small handful of people to get obscenely wealthy and devil take the hindmost.
Yes, let's get off the economic growth path that will only take us to a social and environmental abyss and opt instead for a steady state economy. (www.steadystate.org)
Very simple:
If all other industrialized nations have single payer health care and they all work better and cost less than our system.
Then single payer is good government, and good health care.
Stop talking the republican's language and defending from their arguments.
We are right on this. Not them.
The Republican party does not want this President to succeed at any thing when Americans realize this they might understand the political landscape better the more doom & gloom the better for them to take over in 2010 and the future!
You must be logged in to comment. Log in or connect with
