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Who Is Obama Speaking To About the Economy?
Barack Obama has come home from the Mideast and Europe to talk about the economy. Among his first public announcements is that he will meet with former Treasury Secretaries Bob Rubin and Lawrence Summers, former Federal Reserve Chairman Paul Volcker, and billionaires Warren Buffet and Eric Schmidt, head of Google.
I am all for Obama's speaking to these people. I only hope he will speak to lots of others who can't be so easily heard, are not just good photo ops, and may have something more original to say. We already mostly know what these men will say.
Rubin and Summers speak as one. They will say that free trade must be maintained and that to deal with the pains of globalization, we need to expand the safety net -- unemployment insurance, job training, food stamps, aid to states. But they will also warn that we must continue to be wary of a budget deficit and therefore will be a singular voice for cautionary spending. They will favor modest infrastructure expansion, but as I say it will be modest. They will by and large favor Obama's ideas about tax increases for the rich, but no broad tax increases to support needed social spending.
Volcker will probably warn about a new round of inflation and how much the current scenario looks like the 1970s -- the lower dollar, higher energy and food prices, etcetera. He is a smart man so he won't push this too hard because in fact today is little like the 1970s. Wages are not automatically indexed to inflation anymore. But those kinds of issues are the ones on which he honed his instincts, and he and most of the others will again urge caution about too much stimulus becuse of future inflation. It is an old and outdated saw.
Obama may hear something fresh on energy and infrastructure, including broadband, from the two moguls. Hope so.
But Obama should be asking these men some serious question about how we got here. Why did the Clinton administration tolerate wholesale financial deregulation at home, and even the end of capital controls in developing nations? Why, when we had enormous surpluses, didn't we spend more of GDP on infrastructure? Why could Greenspan and the SEC get away with so much tolerance of banking excesses? Why was so little done about energy alternatives?
Enough of the past. I'd like to ask them about the future.
I'd want to know whether wages will ever rise along with productivity without government help? Shouldn't the minimum wage be still higher? I'd like to know what kinds of infrastructure investments to make. Can we any longer make transportation, energy and urban policy in isolation from each other. the Departments of Energy, Transporation and aprts of HUD should be merged. I'd like to get their opinions about the degree to which corporate lawlessness accounts for low wages and inequality -- the failure to abide by wage and hour laws, union organizing regulations, the prudent investment of pensions.
I'd like them to make a list of priorities. We can't do everything all at once. Which comes first, healthcare reform, energy conservation, or the budget deficit? Which comes first, reregulating Wall Street vigorously or minimal reregulation and oversight to rid the Street of "a few bad apples?" Which comes first, the principles of free trade or some pressure in trade agreements for developing trading partners to improve wages and working regulations at home and pressure on our own upsides of agricultural production? Which comes first, stanch adherence to a low inflation policy or recognition that the unemployment rate should be lower and that the low-inflation advocates just go too far?
Then I'd ask them for a list of other economists, businessmen, and advocacy groups who they respect but with whom they don't agree. And then I'd invite those people to lunch.
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Instead of consulting with the "experts" who pushed all kinds of agendas that got us here, I'd be more comforted if Obama consulted with the middle-class American "experts" - like me - who are coping with this mess, using real skills to deal with a real problem - not enough money.
If he comes to my kitchen table, the first thing I"d tell him is he needs a squad of "waste detectors" who spend 8 hours a day, 40 days a week, rooting out the $850 toilets and $3800 desks that program directors buy for themselves - only to be replaced with another $5,000 leather-topped model by the next director who comes along.
I'd make it the squad's priority to root out $10-million a day, per squad member, in waste, and I'd have one of them go on TV every bloody night and tell the American public just exactly what they found and how much they saved us today.
Next I'd put a ban on buying one single more laptop for any government worker until every department accounted for the thousands that are missing - and now living in someone's living room, being used permanently for personal use, paid for by my dime.
If we keep concentrating on the big picture, the huge picture, the uncomprehendingly gigantic picture, we'll never get anything done.
How do you eat an elephant? One bite at a time.
Don't kid yourself. This is no help. The minute I saw he was meeting with Rubin I shuttered in fear. Here is a guy who was a huge architect of what is going on right now. Him and his buddies the Clintons helped set all this in motion in the nineties by buddying up to Wall Street. Rich elitists who fixed things for themselves will be no help in turning things around now. I just read Kevin Phillips' new book "Bad Money" he spells it all out. Rubin was right in the middle of it. Kuttner's book also goes over in detail how democrats and republicans alike led by the likes of "experts" such as Rubin pushed for deregulation which led to out of control hedge funds which has led to this. As I have said Edwards was the only answer as he had the courage to take on the corporate interests by taking no soft money. This is just more of the same. Rome is burning and the rich people in their expensive suits are sitting around tables posing for the cameras. What a joke.
O is suppose to be representing THE PEOPLE! Period. I am assuming O is assembling all of these business men to receive input. After receiving the input, O will analzye what he has been told.
IMO, the days of the rich taking from the poor is ending. I could be wrong, but the economy has to go from trickle up to trickle down. This economy is a mess and it is the people at the top who are responsible. They lined their own pockets well enough, but others suffered (think Enron). People are tired of this!!
If O represents change, this is an area were change needs to be implimented. The fact that only about 1% of the pop. account for about 95% of the wealth is grossly wrong for what is suppose to be a democratic country.
Whatever he decides, it will be painful as all out hell! No feel good policies, just come right out an do what needs to be done. It took years for us to get into this situation, so it cannot be cured over night.
EXACTLY !
The one thing I will cling to is Obama's ability to intake information and LEARN from it. Just talking to these men is not damning in itself, but halting his learning process after he receives their (obviously slanted) input would be the crime.
Nice article. I like it when the bloggers talk about problems AND solutions. I hope the Obama people are rading this, and forming plans like this to present to Mr O after his inauguration. War funds (and 50% of the Pentagon budget) need to be re-routed to peaceful purposes. Period.
Obama know he only has to roll back all the Financial laws past sonce Regean and regain regualtor control of Wallstreet and their crap.
Why won't Bush do it no one knows.
They can't give up that liplock on the U.S. Treasury where they are sucking the country dry.
Mr. Madrick: your last paragraph was the best advice. Volcker, Rubin, Greenspan and Bernacke and several Presidents were the people who helped dig the hole we are in. If Obama takes their advice en toto, our economic future will continue to deteroirate.
You never mention protectionism or tariffs but did infer that fair trade measures should be on the table. Suggesting that tariffs must be imposed to revitalize our manufacturing and technology is akin to shouting "fire" in a crowded theater, according to our censored media and despicable officials. In these declining times the obvious is not at all obvious to American corporate and political leaders. However, ask any ordinary American and he will tell you that he has seen the obvious from the start of our decline.
Nicely put Madrick. How we got here is as obvious as the day is long. It is time to get on with the cure. And the cure will not be to business leadership's liking.
Take a look at the poor nations, the one's we used to call Third World. What typifies them is a huge gap between their wealthy citizens and the working class. Now consider the path on which American business interests have set us. They uniformly advocate lower wages as low wages increase profits. And since Milton Friedman gave them a reason to believe it, they believe that concentration of wealth is good for the economy. Meanwhile, nothing could be further from the truth. Concentrating wealth is what you do if you are creating a Third World country out of a First World country.
Americans need a raise, a big one, and soon. And for the businessmen whose profits will be impacted, they need to know one thing. That thing is that money is on as valuable as the strength of the economy that backs the currency. As a class, businessmen make more dollars by paying less but gain less value because of the aggregate loss of purchasing power by their and others employees means sales are a decreasing function of time. In other words, by lowering wages, you are driving yourself out of business.
Great post. Greed is a consuming and completely addictive state of mind, and this country has been shoting highly refined doses of greed for a long time. Expectations of what money can buy have been set high by advertising, the MSM, and Hollywood. Dreaming of winning the lottery has become a national pastime. We have forfieted any hope of a strong country by selling our children's educations for a bigger and better military, and fear of 'anyone who is different' has been effectively used to quell our instict to seek the truth of our spiritual connection to each other. The average white guy (wage earner) has been led like a sheep to the slaughter into compliance with the movement of neo-fascism, and can not see past the lies on his TV or the fears of his father. The whole thing has been orchestrated by corporate Napoleons willing to sell the soul of humanity for increased profits. Good luck to us in fixing this mess.
Obama is going to talk to some billionaires.......I'm so relieved now. Maybe if he talked with Ross Perot I might perk up a bit. You hear that sucking sound Jeff?........yep, Ross Perot said we'd hear it...and its loud and clear now....like a speeding freight train with Bernanke blowing the horn trying to save insolvent banks and other America's wealth pilferer's while America's economy is stuck on the tracks with the engine cranking but no economic spark coming to get it going.
Buffett must be a little aggravated that he sold off the 130 million ounces of silver he had bought in 1998 now.
As is always the case, room here will not allow adequate comment on your Post, you might want to talk to the guys at huffpost about that.
Obama this weekend paraphrased Einstein saying that we can't continue to do the samethigns and expect different results.
Our whole economic model(s) were built in a unique Post-WWII environment that no longer exists. We learned a little bit about managiong the Economy after the great depression, but only a little because here we go again.
Trade is vital and we need to build Trade Groups that deal with the real structures of all world economies. We can not assume that ours is the template to follow. Wages and pricces have to be determined by real standards based upon the the value of what is produced rather than speculation on a currency.
There are two major problems with Capitalism. First is the concept that money can be made from money rather than actually adding value to the economy. That also includes the concept of interest on money rather than earnings.
Second is the notion that the invisible hand does not have two sides to it and in real terms the economy must provide for the times when the hand moves forward and for the backhand that is quite often given.
I have come to the decision that McCain has no clue what is going on in the economy and little chance of fixing it . . . on the the other hand I think Obama has offered nothing to take advatage of McCain's weakness and the #1 concern among Americans when it comes to voting.
At the end of the day, I think both of these guys have nothing concrete to do anything.
Asking how we got here is un-American. It's all about neoliberal economics. That is as American as apple pie and mom. I don't think Obama is asking any questions about what is known as the Washington Consensus. He has already flip-flopped on what is know as free trade - which is hardly about the issue of tariffs. Rubin and Summers were involved every step of the way with the neoliberalism that created the problem. Outsourcing jobs and free trade as in lack of tariffs are not the same thing. Obama must play the game. Whatever. Too bad that the test for Democrats in setting policy is not what is best for the middle class but what benefits Wall Street and the MIC. Obama is as DLC as one can be without actually being a Republican. But that is the only way to be elected. Is that change that we can believe in? Perhaps not but it is still better4 than McCain. The lesser of two evils. Nice rhetoric however, a little JFK, MLK, and some Ronald Reagan.
Jeff, are you kidding me, or what?
Maybe you're another believers in another round of banking regulation with higher deposit ratios and all that crap for a while as we carry out this part, the sorry part, of the business cycle.
Sorry 'bout that, America.
When you finally get Greenspan and Bernanke on the business end of a water board after giving them some truth serum, you know what they are going to tell you?
They did it because they had to.
(Debt-Money System Collapse)
And because they could.
No substantive congressional review of the FED's money-making powers has ever been undertaken.
"Please come in, sit down, and tell us what we know we don't know anything about.
Thank you for coming in.
Keep up the good work".
In the hundred or so years that the private bankers have had the money-creation powers in this country, there has never been an audit of the FED.
So, who understands their financial statements?
Sorry, Barney.
The FED allowed, and the Congress ignored, those infamous, innovative financial instruments, about which NOBODY understands the risks.
Neither do the lawmakers really understand the financial and economic implications of the house of cards the FED has built.
The American taxpayers are becoming enslaved in these financial services games that are going on today as we speak.
That's the part that needs to be reversed.
You can't let the money changers make the rules for who benefits and who loses for this fiasco.
Amen to that.
The Stock Exchange is now a large Casino with derivatives bing glorified gambling. Not risk, but out right gambling.
Remind me again?
What is O's economic plan? How will he create new jobs? I keep hearing claims he knows what to do but I never hear specifics.
That is what my post was just about, neither of these guys have a clue or haven't addressed the most important issue on most people's minds.
Uh, hate to point out the obvious, but read it on Obama's website. It's all there, quite clear, quite in-depth, and ought to answer your questions, if you weren't just venting.
We know that we need long term planning for energy, transportation, population control, and infrastructure but you can't do that with the unnatural size and power of the present financial sector including the archaic, fascistic, malevolant FED. They own our political system. We don't even have our hands on our own purse strings. We'll just hum along in their generic, downloaded.global labor pool until they level the U.S. and meld us with the fertility cultures to the south. Look at how "they" destolyed the major craft sectors of the economy and closed down our vocational base and vocational high schools. The owners of the FED and their friends in the major financial houses don't care about the long term physical and mental health of the American people. We lose good jobs and thier stock goes up. They certainly don't give a darn about our posterity. Any "economist" or politician that thinks the removal of our vocational base in tandem with no 30-year energy, infrastructure, water and transportation plan, etc. is o.k. because it jibes with "free trade" or "globalization" is insane. And we don't need wto be "retrained". We need an economic revolution at least on the level implemented by Franklin Roosevelt with much of the judiciary and military in support.
julianne,
I agree with everything you wrote.
But we need to do more than FDR did in terms of putting the economy back to work "of, by and for the American people".
You correctly observe that we cannot proceed with "the archaic, fascistic, malevolant FED".
May I ask, "And replace it with what?".
FDR put that question to the Chicago School economists, and in 1933 he received their reply in what became known as the Chicago Plan.
It called for a government-issue, debt-free money creation system in this country, putting the people back in control of their economic well-being, and bankers in charge of lending out their own money.
The Chicago School Plan foundered on what many believe was FDR's fear of directly confronting the debt-based money creation cartel.
Is the economic situation today as bad as 1932?
No, but we have not yet confronted rounds two and three of the financial crisis, better known as Option-ARM/ALT-A and Commercial Lending respectively.
Unlike today, our economy will be at a standstill.
And Obama will call for more Stimulus, which is more debt.
Just look at the people in the room.
We need to end the debt-money system in this country, if we ever want to see economic democracy in our time.
Please see :
http://www.monetary.org/amacolorpamphlet.pdf
THE AMERICAN MONETARY ACT
An Act to restore the Constitutional power to create Money to
the Congress of the United States
We know that we need long term planning for energy, transportation, population control, and infrastructure but you can't do that with the unnatural size and power of the present financial sector including the archaic, fascistic, malevolant FED. They own our political system. We don't even have our hands on our own pursestrings. We'll just hum along in their generic, downloaded.global labor pool until they level the U.S. and meld us with the fertility cultures to the south. Look at how "they" destrlyed the major craft sectors of the economy and closed down our vocational base and vocational high schools. The owners of the FED don't care about the long term physical and mental health of the American people. They don't give a darn about our posterity. Any "economist" or politician that thinks the removal of our vocational base in tandem with no 30 year energy, infrastructure, and transportation plan is o.k. because it jibes with "free trade" or "globalization" is insane. And we don't need "retraining". We need an economic revolution at least on the level implemented by Franklin Roosevelt with much of the judiciary and military in support.
Population control? Are we talking enacting China's plan of 1 child or what?
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Posted July 28, 2008 | 10:20 AM (EST)