Obama is Taking Political Economy to the Past not to Socialism

Today’s unemployment report came as no surprise to most analysts. From the current rate of 9.4%, unemployment is expected to increase throughout 2009 with some analysts expecting unemployment to peak as far off as 2010. Given that unemployment is a lagging indicator, even if the economy starts a path to positive growth by the end of the year as Federal Reserve Chairman Ben S. Bernanke suspects, it means that millions of Americans will be hurting well into mid-term elections.

No doubt this may be bad news for the Democrats who wish to hold on to their majorities in the House and the Senate. Americans may not be able to reconcile 10% unemployment with positive growth in the gross domestic product. Americans may not understand why the media reports increases in productivity and hourly wages when 1,000 people are signing up for 100 jobs. It will take some clear communication via radio and YouTube to educate the public that better days are right around the corner.

With Mr. Obama as the Democratic Party’s spokesman, the party is guaranteed a clear voice, as long as Pelosi, Reid, and Frank keep their place and their silence in the background. I suspect they will. They will have to field their share of skepticism from an American public that still does not hold the Congress in high regard and it would be best to let a president with a 62% approval rating do the talking.

Whichever Republican voice shows up (Boehner, Cantor, Huckabee, Pence, Palin, Romney, Ryan, etc.) will want to play Dathan to Mr. Obama’s Moses. As Mr. Obama assures America that the rough road ahead will eventually get America out of the wilderness and into the Promised Land, the Republicans will point fingers at a plan that appears too socialist for Americans to tolerate.

Americans might have bought into the argument during the good times but unfortunately for the Republicans they have two things working against them. First, they have no voice which means they have no leader. Without a communicator like Ronald Reagan or a moderate with the intelligence to supply good policy like Jack Kemp, the Republicans, at least for now, are exercising an ineptitude that leaves them ineffective and looking weak. Second, Republicans, having unfortunately abandoned their expertise in fiscal responsibility and settling for irrelevant social conservatism, do not understand the basics of economic policy. If they understood this, rather than screaming weak claims of socialism, the Republicans would be better served making an argument that more Americans can get into; that Mr. Obama’s approach is too interventionist.

Americans do not understand socialism. They don’t know what it means. Mr. Obama, in all fairness, is not a socialist. He has not proposed that the American government take from private hands capital and other resources that are used as inputs for industry. Mr. Obama is wrongly focusing on one industry, the auto industry. He is tying his hopes on the notion that saving General Motors means saving the economy. On this point Mr. Obama is wrong. What Mr. Obama is doing is moving scarce resources toward an activity that promises, based on past performance, not much in return. At best, GM is a very expensive jobs program.

Looking at history, however, Mr. Obama is not doing anything past presidents have either done or considered. Past presidents have used fiscal policy and encouraged and asked for the use monetary policy during downturns. At times they reacted too slowly in acting against inflation. For example, President Johnson waited too long before raising taxes to stave off inflation. With an increasing money supply used to pay for the Vietnam War, stagflation eventually resulted. President Roosevelt provided the classic example of pump priming. Although not fond of deficit spending, Mr. Roosevelt spent on social welfare relief, public works, and agriculture support. What Mr. Obama is doing, for the most part, is pretty much the same.

In the end, what Americans may appreciate is not the accusations of socialism and the cries of Mr. Obama having too much on their plate. What they may appreciate is the energy that the Founding Fathers wished for the executive to use in his or her decision making. The Republicans may want to take that walk down memory lane and come up with a few original ideas, a single voice, and a single message.

About Alton Drew

Alton Drew brings a straight forward and insightful brand of political market intelligence. Alton Drew graduated from the Florida State University with a Bachelor of Science in economics and political science (1984); a Master of Public Administration (1993); and a Juris Doctor (1999). You can also follow Alton Drew on Twitter @altondrew.
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One Response to Obama is Taking Political Economy to the Past not to Socialism

  1. Foxwood says:

    I came to the realization of the meaning of taking state bailout money and got mad, then very depressed. Barry O is a much smarter man than I thought.
    http://animal-farm.us/change/we-are-all-socialists-now-part-ii-454

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