Obanomics

Apparently, what I like to do at 10:30 pm on Wednesdays is peruse old magazines looking for lengthy policy-oriented articles from last summer. Here's a sweet find from the NY Times Magazine in August, a sort of profile of the economic aspect of Obama. This was before the financial crisis cast policy nuances into much deeper relief.

Summary: Obama is not a New Democrat. But he's not an Old Democrat either. Can the guy have it both ways? Yes! And not just because he's Obama and he gets it all. The world today, Obama's argument goes, is both ways. The 1990s battle between the two Bobs -- Reich and Rubin -- is no longer relevant. Each Bob, Obama says, was partly right. I love it when he synthesizes. Seriously. I do. That's the reason I liked him long before he ran. On economics, the Obama synthesis comes, according to the article, from his time at University of Chicago, physical and intellectual home of Milton Friedman. Inevitable Friedman osmosis, along with the usual liberal intellectualism that just runs rampant amongst learned people, provided Obama's foundational economic outlook.

So: Obama fundamentally trusts markets, but believes that they make grievous errors (I'll say!), and that those errors must at times be aggressively corrected. Is that a new idea? If so, then no wonder we're screwed. Obama's thought, thankfully, is more nuanced than that. In his words:

"...Reagan ushered in an era that reasserted the marketplace and freedom. He made people aware of the cost involved of government regulation or at least a command-and-control-style regulation regime. Bill Clinton to some extent continued that pattern, although he may have smoothed out the edges of it. And George Bush took Ronald Reagan's insight and ran it over a cliff. And so I think the simple way of telling the story is that when Bill Clinton said the era of big government is over, he wasn't arguing for an era of no government. So what we need to bring about is the end of the era of unresponsive and inefficient government and short-term thinking in government, so that the government is laying the groundwork, the framework, the foundation for the market to operate effectively and for every single individual to be able to be connected with that market and to succeed in that market."

See? Thesis. Antithesis. Synthesis. I guess maybe he is a Marxist. Or at least a dialectical materialist.

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Comments

[DrewRicketts]

For him to really make a strong economic statement, he has to follow through on the plan to create new industries and jobs. The United States was once a hub of production...Obama's urging with his "Green" rhetoric the shift into a new era of manufacturing that involves new fuels. Read more on Obama's Green Is The New Black - http://newsone.blackplanet.com/nation/ricketts-obamas-green-is-the-new-black/

[cmbsrip]

I know this will cause serious heartburn for "bleeding hearts", but is it safe to assume that Barrack will chase down the criminals at the heads of Fannie and Freddie and put them next to the Tyco, World-Com, and Enron Execs?? Or do they get a pass?

[hoopesaz]

As much as I like Obama, I cringe at the thought of eight straight years of new english words, all with "Oba..." as the prefix. Stop it already.

[earthandfire]

Why can't we talk in the way anyone can understand, instead of pretending as if we are comfortable with manipulative jargons of financial game no matter how it harms the whole human and the planetary landscape?
This crisis is real crisis: the Universe is crushing on us. No one is immune.
I think we have to acknowledge that the axiom of market theory is in serious doubt. The market theory is based on the gap between the having and the not-having, the rich and the poor. Without this gap, there is no dynamics of economy. This basic notion itself is very confusing for humanity standing point. Alan Greenspan once said: "for robust economy certain percentage of unemployment is necessary." Very confusing words. Only when you are cold-hearted enough capable of accepting the notion "only money makes people motivated to work and therefore improve the society" it would be understandable.
I want to think that good people are being trapped in the bad system. But, we are all bad enough that enjoying the system or pretending that we are enjoying.
I don't think it is not coincident that Obama's big idea of change (won the election) and this deep economic crisis happened simultaneously. The Universe has a plan. Collective mind of humanity has a plan. It is the time for experts, who have been jargonizing, to stop manipulating further.
Let's talk plainly!

[noel08]

At last! A voice belting out from the wilderness!. Not the manipulative self soothing voices of the Sirens of "market theory". "The Laws of the Universe are objective and operate in the moment with a goal whether we 'understand' or not..." Can we finally talk plainly indeed? I am all ears. Made my day! I'm easy to please. Thanks earthandfire.

[jsarets]

Free markets work very well for allocating goods and services. However, they are insidiously toxic for allocating capital investment, natural resources, and wage labor. We can't continue to conflate these four very different kinds of markets and attempt to draw any rational conclusion as to which extent "free markets" are good or bad.

The great socialist experiments of the 20th century failed almost exclusively because of central planning and autocracy. Any comprehensive reform of American political economy would have to feature minimally-regulated commercial markets and participatory democracy, but it need not retain stock markets and corporations.

Google "market socialism" and "economic democracy".

[Jesster]

Hey jsarets, I'm not exactly sure what you said here - yet I feel confident that I probably agree. The rise (and colossel failure) of the Soviet Union tainted some decent ideas. Perhaps the most important and salient features of Marxism - namely the merits of DIALECTICAL thinking. We tend to think LINEARLY which makes it virtually impossible to "think outside of the box."

We need to be able to turn questions back on themselves and re-ask them again from a different perspective. Linear thinking tends to squash that ability, leaving us highly disadvantage when it comes to breaking free from past mistakes and miss-steps in part because we have no peripheral vision. We desperately need a respected method for questioning our own pre-esisting assumptions / presumptions.- it's impossible to learn from the past if we don't change the lenses through which we view and evaluate it.

As Robert Frost said:
"We dance around in a circle and suppose... The Secret sits in the middle and KNOWS...

[jerrypl]

We don't need anymore Milton Friedmans. Clinton may have been a less government theocrat, but he was a free-marketeer with no regulation. Obama cannot make a mistake with his economic plan. There is no room for wiggle. We are headed for a depression. Our trading partners are suffering and will no longer lend us money because they need it for their own problems. He must lead as a populist and realist.

http://eye-on-washington.blogspot.com

[Denmark2]

Wealth equals power, which in turn equals abuse and manipulation in any system, including a command and control Soviet type system. The failure of Freidmanomics is now evident. Unless we structurally reform the tax code and have a new Glass Steagall law we are doomed. With so many billionaires created by this class warfare moving wealth towards the top using derivatives (including war) we are planting the seeds of our destruction. Marxism vs Capitalism arguments become irrelevant with the overconsumption of resources by an increasing world population. I am studying the case of India where 50 odd billionaires have emerged out of nowhere under the "free market". The wealth distribution is even more warped and at some point the Govt. will have to redistribute just for political stability. The USA will have to do this soon, as it may be less painful now. Of course Friedmanites will cry foul, because they cant game the system anymore to make our markets a casino with the assurance that tax payers will socialize their lossses, something that is inevitable.

[joepdx]

"...the foundation for the market to operate effectively and for every single individual to be able to be connected with that market and to succeed in that market."

Every. Single. Individual? This is lunacy. It is the standard Capitalist rags-to-riches bait, except with a bizarre twist: we're know very well that Capitalism requires in a deeply structural sense on there being losers, though we're going to act and speak as if everyone could be a winner.

Obama's economic vision is as disgusting as John Rawl's theory of justice. To either, it is okay that people be in rags so long as they have the opportunity to gain riches, and so long as those riches support that process. In other words, they both naturalize suffering that is otherwise socially and historically contingent (i.e. changeable). Here's a moral news-flash: people shouldn't be in rags in the first place, ever. THAT is economic justice.

Calling Obama a dialectical materialist is a misnomer as much as calling him a Marxist. This guy believes in markets. I suggest reading Ajurn Appadurai's recent article in "The Immanent Frame" called "Welcome to the Faith-Based Economy." Capitalism is the deadliest superstition to plague the minds of men and women.

[Javani]

Reading the tea leaves, like most Democrats, he is pro-Wall Street finance, bailouts, limited Fannie Mae oversight, certainly no return to Glass Steagall.

But he has signaled one clear market-oriented activity. It will be the start of his legislative agenda, he said so, no matter how many people want to believe he's going to address health care, trade, whatever first. He said "To start" he's going to institute cap and trade. cap and trade is the driver of the "comprehensive climate change" bill, the big money behind it. Comprehensive, because to pass it has to be hidden among projects talking about green things and dreams of solar panels and "5 million jobs" tending solar panels and windmills. Big businesses, if they see it as a fait accompli, will angle for credit allotments at or above current emissions. Heck, GM will shut down and sell off their credits, and turn a profit! Cap and trade does not encourage reforms, but deindustrialization. That' $25 Billion loan deal to fund alternative fuel vehicles, now today shot to hell, would have done more for energy independence and global "warming" than cap and trade would ever do. All cap and trade profits are the traders.

[canucklivinginUSA]

Again with that anti-capitalist stance BS, its getting annoying. You want to know why we are in such horse manure. Research the Asian financial crisis of the 1998 and you will see what was at the crux of the problem. Government intervention and manipulation of the exchange rate and inflation rates is at the root. Why don't you educate yourself instead of pouting off ridiculous anti-capitalist notions.

[RoloTomassi]

If anyone needs an education on these issues it's you, and I say that quite pointedly in reference to your absurd example of the Asian meltdown; to state that government intervention was the culprit shows that you are 1) a hardcore free market fundie, or 2) completely clueless on the subject.

[Overd0g]

Markets don't "commit errors", people do. Of course the government "commits errors" on a continuous basis. What's going on now isn't an "error", it's just the bill coming due for decades of high living.

[burndtdan]

the market is nothing but a collection of people

[Javani]

"the market is nothing but a collection of people"

According to the libertarian-Greenspan types, the people most powerful in the "market", management, are not part of the "market", and when they act in their best financial interest as far as the few laws allow, this is a "market distortion" or "greed."

It is a religion. I think I saw Greenspan have a crisis of belief at the congress meet a month or so ago. My god, how he was blubbering.

[Henry]

From the textbook standpoint, there is one significant thing about the "market" and that is that no individual player is large enough to affect or effect the price by his individual action.
This has been violated and it has been violated by hedgies and mutual fundies who have manipulated prices. It is also true for governments that manipulate the value of their currency. The textbook notion of the "market" is fine when you are a freshman in college, but in the real world, manipulation, speculation, and chicanery are the tools of the filthy rich. You and I are mostly observers or abusees. This is why the rules of the game need to be set and administered. OPEC, for example is a cartel that viiolates everything about the market. Yet OPEC friend, George Bush is doing his dead level best to get his buddies Saudi Arabia into the WTO!! Sounds insane, doesn't it?

[RoloTomassi]

What is coming due here is the absurdity of promoting the idea that markets, unregulated, would regulate themselves through the work of the "invisible hand' or the "forces of nature" or any other nonsensical free market fundie blather.

We killed the engineer, threw him off the train, and now we bitch about the fact that the train has run off the imaginary track.

[ElBruce]

If everybody in the market commits the same error at the same time, then you can fairly say the market committed the error. There's a certain herd mentality involved. If everybody but you is making money by buying credit default swaps, then you figure they're probably safe, right? If they weren't then somebody would be holding back, but they're not, so you get in too. That's exactly what nailed a lot of banks, as well as Fannie, Freddie, and AIG. It's one thing to believe that you know what you're doing, it's quite another to take action based on the belief that everybody around you knows what they're doing too. Holding a diversified portfolio of CDS's would have been fine if they didn't ALL devalue at the same time; the same is true for any other bubble/burst situation.

The errors the government committed in this regard were all related to either failing or refusing to enforce broad and loophole-free rules to prevent the market from engaging in behaviors that could lead to total failure across the board.

[edva]

"Dialectical materialist." LOL!