The Failure of Obamanomics

A few words come to mind:

Radical. Clueless. Partisan. Scary.



No Place for Entrepreneurship in Obama’s Economy

September 9, 2010
By Samuel R. Staley

President Obama did a great service to the public on Wednesday when he outlined his vision for economic policy before a friendly audience in Parma, Ohio (near Cleveland). He mixed populist rhetoric stoking the middle class with empty overtures to entrepreneurs and, in the process, demonstrated a complete lack of understanding about how market economies operate.
He started out with the inclusive rhetoric that sucked many moderates and Blue Dogs into his presidential campaign in 2008:

You know, in the fall of 2008, one of the last rallies of my presidential campaign was right here in the Cleveland area. (Applause.) It was a hopeful time, just two days before the election. And we knew that if we pulled it off, we’d finally have the chance to tackle some big and difficult challenges that had been facing this country for a very long time.

We also hoped for a chance to get beyond some of the old political divides — between Democrats and Republicans, red states and blue states — that had prevented us from making progress. Because although we are proud to be Democrats, we are prouder to be Americans — (applause) — and we believed then and we believe now that no single party has a monopoly on wisdom.

We have now learned, two years into his presidency, that the inclusiveness was really about evangelical conversion to progressive views on politics and the economy. Private businesses and entrepreneurs are fine as long as their investments, time, commitment and resources are directed toward social ends (as defined by progressive politicos). This becomes clear when Obama says:

But in the words of the first Republican President, Abraham Lincoln, I also believe that government should do for the people what they cannot do better for themselves. (Applause.) And that means making the long-term investments in this country’s future that individuals and corporations can’t make on their own: investments in education and clean energy, in basic research and technology and infrastructure. (Applause.)

So, government is responsible for directing the economy. John Kenneth Galbraith would be pleased, as a key implication of this view is that government must be elevated to a senior position in a rough partnership between the private sector and organized labor. It’s not much of a step, then, for the president to take this to the next level, making quite clear that private business should not be focused on creating value (through the pursuit of profits) but on pursuing non-economic objectives and redistributing wealth. He continues:

That means making sure corporations live up to their responsibilities to treat consumers fairly and play by the same rules as everyone else. (Applause.) Their responsibility is to look out for their workers, as well as their shareholders, and create jobs here at home.

And that means providing a hand-up for middle-class families — so that if they work hard and meet their responsibilities, they can afford to raise their children, and send them to college, see a doctor when they get sick, retire with dignity and respect. (Applause.)

Indeed, Obama believes fundamentally that the middle class owes its existence to the government, not to wealth-creating entrepreneurs or businesses. Without skipping a beat, the president fails to recognize (let alone acknowledge) the difference between a truly free market, where individuals decide how to invest their resources, and a government-directed one that sets collective priorities which require individuals to tow the line for specific policy objectives implicitly defined by the political class:

That’s what we Democrats believe in — a vibrant free market, but one that works for everybody. (Applause.) That’s our vision. That’s our vision for a stronger economy and a growing middle class. And that’s the difference between what we and Republicans in Congress are offering the American people right now.

Missing in most of the popular analysis of Obama’s economic policy perspective is the way his personal experience has fundamentally framed the way he looks at the world. He provided a convenient glimpse into this in Parma:

You see, Michelle and I are where we are today because even though our families didn’t have much, they worked tirelessly — without complaint — so that we might have a better life. My grandfather marched off to Europe in World War II, while my grandmother worked in factories on the home front. I had a single mom who put herself through school, and would wake before dawn to make sure I got a decent education. Michelle can still remember her father heading out to his job as a city worker long after multiple sclerosis had made it impossible for him to walk without crutches. He always got to work; he just had to get up a little earlier.

Yes, our families believed in the American values of self-reliance and individual responsibility, and they instilled those values in their children. But they also believed in a country that rewards responsibility; a country that rewards hard work; a country built on the promise of opportunity and upward mobility.

They believed in an America that gave my grandfather the chance to go to college because of the GI Bill; an America that gave my grandparents the chance to buy a home because of the Federal Housing Authority; an America that gave their children and grandchildren the chance to fulfill our dreams thanks to college loans and college scholarships.

It’s hard to ignore that all the “rewards” explicitly identified by Obama are directly tied to government programs, not entrepreneurial investment that creates new wealth. For Obama, economic policy — and the economy more generally — is about redistribution . . . and spending.
What’s also startling is the degree to which this president’s economic literacy reaches little further than the superficial (and incorrect) numbers the mandarins in the White House spit out uncritically from their econometric models. (For a more thorough critique of this process, see my article “Naive Statistics” in National Review, November 2, 2009.)

Entrepreneurship really doesn’t exist in the economic lingo (or policy) of this presidency. In Obama’s world, businesses and entrepreneurs are merely variables to be manipulated by the political class.

— Samuel R. Staley is Robert W. Galvin Fellow and director of Urban & Land Use Policy at the Reason Foundation.