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 It is an old and outdated saw.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.

Comments

[tiggrrl]

We've been doing some posts on the economy over at the CA NOW blog: http://www.canow.org/canoworg/economics/

Might be of interest.

[CriticalDune]

I'm sure you realize that Paul Volcker has been advising Barack Obama for quite a while now on a wide range of economic issues. He is not the one dimensional inflation hawk you portray. I think his fingerprints are all over Obama's March speech at Cooper Union in NYC and his knowledge of regulatory structures is critical to constructing more effective mechanisms going forward.
http://www.nytimes.com/2008/03/27/us/politics/27text-obama.html?pagewanted=print

I am also sure you know that many of Rubin's views on addressing long term issues can be gleaned from his work on the Hamilton Project at the Brookings Institution.
http://www.brookings.edu/PROJECTS/HAMILTONPROJECT.ASPX

I am not sure exactly whom you mean when you encourage Obama to invite people to lunch who have policies these leading minds disagree with. We've had eight long years of hearing what tthose people thought and seeing the effects of their short term winner takes all policies. Enough. If, instead of Republicans, you mean inviting the extreme left, No thanks. The economic problems are too serious to consider another ideological, rather than reality based, approach.

[hosshoss777]

The way our currency is created is the answer to all these questions. The people holiding sway over currency creation are not going to give it up so easily. Ron Paul is the only public figure speaking to this issue. Neither Obama nor McCain are going to confront this or their favorite pet Mid East chaos project, _-_-_- . They will do like all Presidents after 1913 and play along with the basic game while hopefully, occassionally ameliorating some of the pain for those most affected.
Inflation is the natural result of creating money out of nothing. The Petro Dollar is a cycle of dollars that requires a continuing Federal deficit to keep the game going. Clinton didn't get his chain jerked because of a closet dalliance gone exposed.
It's hard to wrap your mind around the fact that the current economic landscape in America was by design and that there are those most satisfied with the results.

[joebhed]

I completely agree about Ron Paul's position against the money creating cartel.

America owes him a great deal for his attempts to keep the failures of the illegal FED system so far out in front of the media, although they ignore him at all of our peril.

Ron Paul's problem is that he does not have a clue about what to do afterwards.
After we abolish the FED.

He falls back into some kind of laissez-faire wildcat banking scheme, somehow tied to monetization of the currency, which has nothing to do with the real problems of creating too much debt, and the enslavement of the American people.

Ron Paul needs to pay a visit to the monetary.org web site and get himself updated on a real solution.

Another similar view to the American Monetary Institute's reform legislation can be found at

http://www.neweconomics.org/gen/uploads/CreatingNewMoney.pdf

The private central bankers in this country feed themselves at the trough of the American taxpayers, and the taxpayers have no idea.

They will wake up at about $50TRILLION in debt to somebody, and unable to afford a box of Cheerios (which is pretty high these days).

Yes, the way that currency is created is the problem.
It's called the debt-money-creation system.

Until we end that, AND REPLACE IT WITH SOMETHING ELSE, we are doomed to second-class citizenship.

[booksnmore4you]

Relax. We're in the beauty contest phase of the election. Don't take it all at face value. It's messaging, not just in words but deeds.

[ubetchaiam]

Excellent questions that I would like to see answered as well. And the question, 'who is Obama speaking FOR?'

The situation calls for STUCTURAL change but that will be fought against tooth and nail by those who currently are the 'haves' because affluenza is within their bloodstream.

[gramofsam1]

Excellent piece-- and excellent list of questions. I hope Obama follows your advice.

[Henry]

You know, for example, that the NFL, MLB, and the NBA have farm leagues that are paid for by taxpayers. I mean the college system in this country hones their talent that would otherwise have to be set up by farm club systems that would take gazillions in investment. Why this "free lunch" for the likes of free loaders like GW and his Texas Rangers?
What I am getting at is this: University Cost & Expense should be the obligation of the industry that takes the talent, I mean it should be their investment.
Get rid of sports from schools except for physical education and have all corporations taxed for the purpose of funding colleges in this country. Why should the lowly taxpayer pay for the education of the talent to be harvested by Microsoft or Intel? It should be the industry that pays for this! (how could these republicans miss this?)

[UnbiasView]

"Get rid of sports from schools except for physical education and have all corporations taxed for the purpose of funding colleges in this country"

Sports are the only thing that make schools money . . . not to mention they build up a school's reputation . Sticking with your Texas theme, in 2005, the athletic office pulled in $89.7 million ($38.7 million in profits from football alone, then the rest of the cash paid for women's sports and other junk).

BTW, GW doesn't own the Texas Rangers, Tom Hicks does . . . do you have a link to backup your claim on the public owning farm leagues because I have never heard of that.

Rangers AAA team is owned by Bob Funk and Scott Pruitt
Rangers AA team is owned by Mandalay Entertainment
Rangers A team is owned by DG Elmore

[Henry]

I concede your point in baseball. You miss the larger point I am trying to make. Sports is corrupt (in case you have not been watching) and really a large detriment to the goal of education. Get sports out of high schools and colleges. Let the Pros set up their own leagues, farm leagues. Why should taxpayers subsidize this for the pros? There is supposed to be no such thing as a free lunch.
Have you read about the GW sale of the rangers to Hicks? Hmmmm you might conclude tht it's all about fat boys with corruption as their means of production.

[Henry]

Here's the first link to the honorable george and his dealings as guv and owner of the rangers...It's a real hoot.
http://makethemaccountable.com/tax/SaleOfBaseballTeam.htm

[Henry]

One big glaring deficiency of the USA in the global trade debate is the handicap of American companies vis-a-vis their worldly competition. American companies GM, Ford, et al have to expense the health care of their work forces and their families, whereas the comptition, companies like Honda, Toyota, et al have -0- expense for health care. This gives these companies an unfair WTO sanctionable unfair trade practice. Except the problem for us is that we could clean this handicap to our business.... except we are too stupid. I guess a little intelligence might make us a little more comperitive.

[myrddin]

Let's face it this country is in a deep hole. All this deregulation started with the Reagan administration and has continued even through the Clinton years. As a result our manufacturing base has left for countries with cheaper labor. Our standard of living continues to decline. This mess isn't going to be cleaned up in a single term of the next president and God Help us if it's McCain. I just hope that if Obama gets elected he can start this country on the right path. It's going to take a generation to repair the damage done in the last 20 years.

[UnbiasView]

"Our standard of living continues to decline"

Really? How many people in other countries don't have a washer/dryer in their house along with a cell phone, computer, 3 flat screen TVs and the internet?

[Daly]

Standard of living is based not on flat screen, cell type things rather it is paid time off, health care, safety in the streets not that any one country of the EU or Canada have it perfect.

We end up bailing out companies that were trying to kill off the working class Chrysler for example - giant cars are not selling here so they are having a pity party and dumping workers but Asian countries China & India are wanting to but SUVs and have the $ to do so; but it is eaiser for car company lobbyist to cry and get some sort of deal that ends up costing us jobs.

Many countries bullet trains allowing greater distances our own sad amtrack is ignored. \
Airlines in American fligh the oldest planes which drink fuel like crazy - they do not focus on upgrading their fleet which would generate pain at the onset but in the long run a win win. We get jobs, perhaps more flights are available, newer safer planes; airlines get less fuel cost justification for paying a bit more $ to fly on a plane that it not as old are you are. EU airlines are not in trouble.

Unilaterally starting an unjust war is costing us our future.

[Daly]

we also have contaminated food supply, unsafe work conditions for the farmer workers; here in CA a young lady died because the farm company woould not supply drinking water in at a reasonable distance; How freaking much more could it cost these people to have a giant cooler with chilled bottle water driven out to the field workers? Our inspectors that check for these infractions is understaffed just like with the national inspectors people needing work but bush gov is under staffed and will not hire because of lobbyist are more valuable to them.

We let other countries dump unsafe toys here that no other like nation would accept.

2008 and we still have not resolved the issue with children and lead base paints.

McCain is advising folks to run to the Dr to check out discoloration on skin - many simply cannot do this so we overtax the emergency care system costing much more.

base wages are so low that it would take an additional $4k to get a family past the proverty threshold.

We allow predatory lending in every state side military town - it is why most of these towns have check cashing places, car dealers, and pawn shops... military does little to educate these young people next thing ya know they are in hock up to their eyeballs with some re-enlisting because they cannot afford to give it a go on the outside; they junp at the re-up bonus.

standard of living improvement now!

[LiarLiarIraqsOnFire]

Well said!

[appleknocker]

The question in my mind is: Who is Obama speaking FOR?

[repearwo]

A good question to ask is why a steak dinner in 1910 cost 25cents and today that same dinner cost at least $25.00. IF the answer is inflation you need to rethink. We would do fine with wages like the rest of the world if prices would fall as well.

If we did not value ourselves by the irrational idea that to succeed we need to make more next year than the last, natural downward pressures on wage and price/cost would heal many wounds.

We have economics wrong. We need to reconfigure realistic expectations of the economy.

[UnbiasView]

In 1910, Americans worked very hard and still had a hunger to succeed, we have now reached an entitlement stage in the USA where people expect to succeed no matter what they put into it.

[Daly]

So true;

"no pain no gain" turned into "lypo & nip-tuck"

credit card ads tell us we deserve to have it now;

no matter what (spilling hot coffee) is not our fault; everyone wants to file a claim and get rich quick.

We expect to get away with it because we see personalities get away with it, and like today pin head people with the power to reject applicants because of their political party nothing will happen.