Posts Tagged ‘Economics’
[NOTE: This post was originally made on March 23, 2009. But with the recent discussion of Paul Ryan's long-standing commitment to Rand's thought--which he now appears to be trying to deny in spite of evidence to the contrary--I thought this post worth a rebroadcast. On Ryan's commitment to Rand, see the article in The Atlantic Wire, “Audio Surfaces of Paul Ryan’s Effusive Love of Ayn Rand.”]
In times such as these, our times, when unregulated capitalism has once again proven that it can bring down the house, literally, it’s worth reminding ourselves about the voices that have spoken so eloquently in favor of selfishness over the years. (Not Adam Smith, by the way; he thought that sympathy was a basic feature of human nature.) Here is Colbert discussing one of the leading lights of selfishness, Ayn Rand.
The Word – Rand Illusion | March 11th | ColbertNation.com
On Capitalism Run Amok, readers might want to check out Sullivan’s site today, March 23rd, “Are The Jacobins At The Gates?” Let’s just say, a bit over the top, but worth a look. (Btw, Sullivan thinks of himself as a conservative.)
P.S. Interesting fact: Stephen Colbert was a philosophy major at Hampden-Sydney College. Training in philosophy has its uses.
Normally I wouldn’t bother to quote statements by college friends of politicians. But I was struck by what a friend of Paul Ryan said. As reported in the NY Times today,
“Paul was always a politician,” said Scott Friedman, a former fraternity brother who was a year behind Mr. Ryan. “He was friendly with everybody. He was into debating the issues, and he was into talking about policy and economics.”
Conversations centered less on girls and football and more on the policy issues of the day. “I always knew that he was a conservative Republican, and I knew that he wanted to be a congressman from his college days,” Mr. Friedman said. “Typically, the discussions with him were around adultlike stuff. He would talk about trickle-down economics and why that would be a better approach to running the country’s economy.” (Emphasis added.)
The last sentence is worthy of emphasis because of how early Ryan’s views were formed and how little they seem to have changed. Whether he actually used the phrase “trickle-down economics” in discussing his views is really besides the point. His friend got it right. This is what Ryan believed and does believe. Just read his words. And unlike Obama he hasn’t become more moderate or more pragmatic with age. With regard to the economy he just digs his heals in deeper in the sterile soil of Ayn Rand and her fellow radical rightists. (Although his views on many social issues, e.g., birth control, are decidedly non-libertarian.)
Ryan clearly believes that he is on a mission. This latter can have its upsides. Passion can be a virtue, etc. But there is a point at which passion turns into ideological fanaticism and then only one’s ideas can save the world or a country. It appears that Ryan has made this turn. For example, we can point to one of Ryan’s most recent interviews. The exchange below is from the 60 Minutes interview which aired yesterday, Romney and Ryan’s first joint interview.
Bob Schieffer: Congressman, this is going to change your whole life. What did your family think about it?
Paul Ryan: Well, we’ve dedicated much of our lives to saving this country, to public service.
Ryan, at 42 years old, has dedicated much of his life not to serving the country or assisting the country through public service, but to saving it. That’s chutzpa from a 42 year old congressman. I don’t believe that even Lincoln, who could have claimed to be saving his country, would actually have ever uttered these words. Missionaries have their place but not in the White House.
If you want to know why Obama couldn’t get the House Republicans to compromise with him, you don’t have to look much further than to Paul’s passion for saving us and his belief in the miracle of the trickle-down. None of this is to say that Ryan the politician wouldn’t vote for policies that run against his libertarian economic principles if expedient. He certainly voted for measures that markedly increased the debt during the Bush years. This doesn’t make him less ideological. Paul needs to survive and thrive to fight for his principles, and this means sidestepping them if necessary in order to hold his place in the sun. This is very different from the mindset that is actually willing to compromise and debate in good faith.
Yes, as it turns out, the deal that Obama cut with the Republicans is not as bad as it could have been. They could have gotten away with the kitchen sink, that is, cuts in medicaid and social security without any tax increases for the wealthy. But instead the Republicans will be getting cuts that won’t really hit the economy until 2013, and medicaid and social security are safe from arbitrary cuts, for now. Perhaps we should be thankful, especially given the state of the economy.
But I don’t feel thankful. I feel like the American people got rolled. The Tea Party activists set the agenda and then engaged in blackmail. Cut now or else…and of course no increase in taxes on the wealthy. Yet without a revenue increase there isn’t a way to bring down the debt that won’t also bring down (almost all of) the American people. But most thoughtful Americans know that we can’t get out of this economic morass through some magic bullet on the reduction side. Most Americans wanted a deal that included budget cuts and revenue increases.
So what happened? Obama and Co. made a set of calculations: Better to give in now and (perhaps) fight another day when there isn’t a sword of Damocles hanging over the country. They assumed that the political costs could be contained. Independents will blame Congress more than the president. And upset Democrats will eventually fall in line. After all, where can they go in 2012? (As I write the House just voted to pass the “compromise” bill on the debt ceiling. Most Republicans voted for it. The Democrats split.) Last but not least, The White House welcomed not having to deal with a new economic crisis.
It all sounds so reasonable and politically expedient. But they may have miscalculated. Take me for instance. I have been a strong supporter of the president. I have viewed his deep (philosophical) pragmatism as a virtue. I never assumed that he was an old-fashioned liberal. I thought he had mildly progressive leanings but was quite capable of centrist or even center right positions. Given our time and place in American history, this was about as much as one could expect out of a Democratic Party nominee. I also liked that fact that he sought to play long ball. That he seemingly wasn’t looking for superficial or quick balms. And that he had the intelligence to play long ball.
But you can’t play long ball (in politics) unless you can move the ball. Or better still, unless you can convince your teammates and the fans that you can do so. What we have seen in this latest round is Obama drawing a line in the sand and then hopping over it when it looked like he might actually have to fight a serious battle. And it was a very important battle. The extortion that took place was not solely about getting the government to spend less. It was about setting an agenda. It was about how Americans understand who and what are responsible for the rut we are in, and who is responsible for helping to dig us out.
Corporations are sitting on mountains of cash. And as the chart above shows, the rich continue to do exceptionally well. Income and wealth disparities are becoming chasms. Yes, we have had fine words from the White House about this. But words are no substitute for actions, unless the words themselves are actions. Obama should have called the Republicans’ bluff. He should have said, ‘you want a default, go ahead and don’t compromise. Go ahead and insist on no new revenues from the wealthy. You will answer to the American people. You will even have to answer to Wall Street when the Market sinks or crashes. And you know what, you will have to answer to me.’ (He could have let them believe early on that he just might invoke the 14th Amendment if he got angry enough. Instead he gave this bargaining chip away.)
Obama should have come into office declaring a national state of emergency. He should have not promised to lower the unemployment rate with “traditional” measures. He should have emphasized that unemployment was actually much higher than the “official” figures, closer to 16%-20%. He should have used the fierce urgency of now to enact emergency measures. He should have done this when he was riding high.
Yes, I know. This is all history now. It’s water under the bridge. It’s Monday morning quarterbacking. Yet it is still relevant. If Obama doesn’t draw a tighter connection between what he he says and what he does, he may win reelection but his presidency will never be known for great things. He will be the president who helped us muddle through our declining place in the world, instead of the one who assisted us in confronting the economic and political realities of the 21st century.
One doesn’t need a Ph.D. in economics to know certain facts about the current state of America’s economy:
1) Unemployment continues to be a serious problem not only for the unemployed but for the economy as a whole.
2) Consumers are skittish about spending money, so they can’t help drive an economic recovery.
3) In response to fears about unemployment and the economy, consumers are paying off debt.
4) Reducing debt may be a a good thing for individuals and for the economy in the long-term, but when too many people do it all at once it leads to less goods and services being bought, which reinforces and helps sustain a recession or a weak recovery.
5) Many of the largest corporations in America are sitting on huge sums of cash. Among the reasons for not investing it and hiring new employees: aversion to risk, preoccupation with the current bottom line, and hefty profits through making current employees more productive, that is, making them work longer and harder.
Enter the Bank of America. You know, the corporation that American taxpayers shelled out 45 billion dollars to rescue. Its past and current behavior exemplifies the failings of many giant corporations to do the right thing in national crises. Make no mistake about it, the way that the Bank of America mistreats its customers is bound to reinforce exactly the types of behavior that will maintain the economy in its present anemic state.
Let’s take the story back a few years. It seems that for several years the Bank of America has been arbitrarily raising interest rates on its credit card customers. Here is an excerpt from an article on MSN from BusinessWeek, February 2008.
Credit card issuers have drawn fire for jacking up interest rates on cardholders who aren’t behind on payments but whose credit scores have fallen for other reasons. Now, some consumers complain, Bank of America is increasing rates based on no apparent deterioration in their credit scores at all. The major credit card lender in mid-January sent letters notifying some responsible cardholders that it would more than double their rates to as high as 28%, without giving explanations for the increases, according to copies of five letters obtained by BusinessWeek. Fine print at the end of the letter — headed “Important Amendment to Your Credit Card Agreement” –- advised calling an 800-number for the reason, but consumers who called say they were unable to get a clear answer. “No one could give me an explanation,” says Eric Fresch, a Huron, Ohio, engineer who is on time with his Bank of America card payments and knows of no decline in the status of his overall credit….But Bank of America appears to be taking an even more aggressive stance because, beyond credit scores, it is using internal criteria that aren’t available to consumers. That makes the reasons for the rate increases even more opaque….Analysts also say they are surprised by the magnitude of the rate increases Bank of America is imposing on affected cardholders.
You can find stories all over the web about Bank of America’s bad behavior regarding its credit card customers. Recently it appears that BofA has accelerated the use of one of its strategies: arbitrarily reducing the credit limit of customers who have very good credit histories, pay on time, and pay more than the minimum. The deal goes like this: You borrow an amount from BofA at a good interest rate. After a few months you get a call. You are told that your credit limit is being reduced to almost exactly what you owe. When you ask for an explanation, you are given transparently bogus reasons. And there is no appealing the reduction. This action is unfair to credit card customers because it can adversely affect credit scores. Consumers now appear to be maxed out on their cards when 24 hours earlier they had a nice cushion. A lawyer in California became so incensed about this practice and arbitrary increases in interest rates that he threatened to sue the BofA. The story can be found in the Huffington Post, January 2010. An excerpt:
“Banks have done really well figuring out ways to screw people without making themselves legally liable,” said Ira Rheingold, director of the National Association of Consumer Advocates. “I think [the limit reduction] is another example of Bank of America’s venality. Whether or not it’s a successful lawsuit, I don’t know. Whether I think it ought to be challenged — absolutely.”
But maybe Bank of America is just trying to do what is best for its shareholders. That’s often what you hear when companies are challenged about their executives’ pay or other practices. Yet BofA doesn’t seem too keen on giving its shareholders a say in the pay of its executives. For example, a Los Angeles Times headline on February 23, 2010 announced:
Bank of America resisting shareholders on executive pay. . . The bank is working to keep investor proposals on executive compensation off the ballot.
The machinations of BofA are sad stuff. The resulting likely behavior from customers with reduced credit lines: pay off debt more quickly and spend less money in the marketplace. Of course this will only help to extend the anemic recovery. The fact is that the actions of leading banks and corporations have often not been good for the economy. They rant and rave about taxes and the federal government, but it’s a shell game. (Banks and their supporters will tell you that the reason they are not loaning is because of federal regulations. BofA is currently sitting on 172 billion in cash.) The intense preoccupation of corporations with the bottom line (and the well-being of their executives) has left millions of Americans un- or underemployed. The way that credit has been handled, for example, has increased the fear that we will never come out of this downturn, which will only help to prolong it.
Socialism is no threat. Corporations only looking to the bottom line, which in times such as these is downright unpatriotic, are a threat. It’s time for companies that have done so well in America to stand up and sacrifice for America. We are not asking you to become charities, although you were willing to take our charity when you needed it. We are asking you to spend some money, damn it, and put people back to work, even if it’s not the absolutely best thing for your corporation’s current bottom line….and stop harassing responsible citizens while you do it.
Oh, and just in case you might be worried about the well-being of the former Chairman of BofAm, Ken Lewis, here is what ABC news reported regarding his retirement pay in 2009.
Outgoing Bank of America CEO Ken Lewis’ nearly $64 million retirement pay puts him ahead of most, though not all, fellow major bank CEOs who have left their institutions during the financial tumult of the last two years.
Nostradamus meets the Grim Reaper
This is an actual headline from an article posted on Bloomberg (News) at 7:21 this evening, September 1st, 2010: Economy Avoids Recession Relapse as Data Can’t Get Much Worse
The first lines of the article explain:
The U.S. economy is so bad that the chance of avoiding a double dip back into recession may actually be pretty good. The sectors of the economy that traditionally drive it into recession are already so depressed it’s difficult to see them getting a lot worse, said Ethan Harris, head of developed markets economics research at BofA Merrill Lynch Global Research in New York. Inventories are near record lows in proportion to sales, residential construction is less than half the level of the housing boom and vehicle sales are more than 40 percent below five years ago.
This is not from a skit on Stewart of Colbert. This is from a leading publication on business on a day that the Stock Market rallied. (I wonder what they will be writing when it retreats, again.) So, let’s get this straight. We are not going to have another recession, the dreaded double-dip, because things are already too bad to have one. How then do we characterize our current economy? Oh, I could think of a few words, but so can you, dear reader.
Things can get worse. Here’s the ticket: The Republicans win the House this fall and things completely stall out as the GOP offers (once again) the panacea of tax breaks for the wealthy as the cure for our economic ills.
(Btw, the name of the person featured on this $10,000 bill is Salmon P. Chase. If you don’t believe me, click here. He was a Secretary of the Treasury and a Chief Justice of the Supreme Court. Coincidence. I think not.)
So, you think of yourself as an honest soul. You understand that stealing property or money is wrong. You wouldn’t do it. You wouldn’t want your kids or friends to do it. It’s unthinkable. But I have a proposition for you.
Here is a button. All you have to do is press it and $100,000 will be transferred from Goldman Sachs, BP–or any other giant corporation whose resources are larger than most countries–into your bank account. Nobody will ever know. It’s a magic button. Well, not really magic. Some geek has wired it in a fashion so that money can be transferred to your account without anyone being able to trace it–in the tradition of how derivatives were traded.
Just think of how much money Goldman Sachs and its executives made in the last few years as the Market tanked, while you probably lost money in your hard-earned retirement account. Not only did you recently lose money, but if you had invested $1,000 dollars eleven years ago in the Dow, that’s just about what it would be worth today, $1,000 (less if inflation is factored in). But you know, and I know, how much money these guys have made trading your money and my money. But that’s capitalism, you say. It’s the way the game is played.
But would you push the button? Would you be tempted to do it? Or perhaps a better question: how many of your fellow Americans do you think would be tempted? A lot, right? (Or an even better question, how many more would push it today than ten or twenty years ago?)
The recent Melt Down on Wall Street, and the ensuing profits made by big trading firms and banks, have been corrosive in ways that we may not fully understand for years. You’ve got Tea Baggers screaming about Washington, but the revelations about how Wall Street operates have buried themselves deep in our collective subconscious. Real damage has been done. Yes, we knew that there was big money out there and that big money corrupts. (Before the present Melt Down, there was Enron and assorted other travesties.) Yet “knowing” is one thing. Seeing it in front of your eyes day after day, year after year, undermines confidence that the system is anything close to fair. Yes, Obama has attempted to tame Wall Street with new regulations. They will do some good. Yet as long as we continue to see different rules of the game for a small strata of society, which is indeed what we have seen, our belief in the benefits of capitalism will be undermined by a gnawing sense that it is corrupting us, our children, our society. From a sanctified economic system, it will become what we have to put up with, sort of like the Roman emperors in Imperial Rome. It won’t go away anytime soon but we aren’t going to feel good about it.
There was a time in American business when many people believed that a handshake was as good as a contract, or so I am told. People kept their word. It now seems that handshakes still function in this manner for a small elite segment of corporate America that makes deals for unimaginable sums. The rest of us can’t depend on them when we deal with companies. (How about a handshake between you and your medical insurance company to guarantee your coverage? Any takers?) The middle class will need more and more contracts and lawyers to protect them in an economy in which money has gone wild. And they will have relatively less money to hire these lawyers.
No doubt there are problems with the way government functions. But anyone who thinks that this is the major source of the declining confidence in how our society works really needs to look at Wall Street with suitable eyewear. The business of America is no longer doing business but being given the business.
……Cadillac (1960), Winchester, Virginia, June 2010…… Ubik, first hardcover.
In his novel Ubik, Philip K. Dick imagines a world in which corporations employ telepaths to undermine the interests of their competitors. In turn, the competition hires firms with anti-telepaths in order to defend themselves against their adversaries and protect their privacy. Dick is having a good time. The use of psychic powers by companies merely mimics the dirty tricks employed by current corporate spies. It’s still chess whether played in two or three dimensions. New frontiers, same games. (The best science fiction always makes the implicit present explicit.)
It seems that we face the world of Ubik today but on an even more personal level. The World Wide Web is a marvelous thing. But it doesn’t forget. If you say something you might regret or post an unflattering picture, it is caught by the Web and freeze dried. Employers, friends, strangers, those wishing you ill, or old-fashioned voyeurs will have you under their gaze with the click of a mouse for the foreseeable future. It’s hard living in a Facebook culture when we can’t always control how we appear. Different sorts of answers to this dilemma have been proposed. Some legal: prevent the firing of employees based on information that does not reveal illegal activity. Some technological: posts that automatically self-destruct after a number of months or years. Some positively Dickean: neutralize those who would do you harm by hiring a company to transform your presence on the Web. Here is how the latter strategy is explained in a current New York Times Magazine article by Jeffrey Rosen, “The Web Means the End of Forgetting.” (Catch the name of the company below, ReputationDefender. Dick might have called the company PsycheDefender.)
[W]ith the help of the kind of search-optimization technology that businesses use to raise their Google profiles, ReputationDefender can bombard the Web with positive or neutral information about its customers, either creating new Web pages or by multiplying links to existing ones to ensure they show up at the top of any Google search. (Services begin from $10 a month to $1,000 a year; for challenging cases, the price can rise into the tens of thousands.) By automatically raising the Google ranks of the positive links, ReputationDefender pushes the negative links to the back pages of a Google search, where they’re harder to find.
Perhaps this is akin to how the anti-telepaths worked in Dick’s novel. But Dick’s concerns were not just with corporate dirty tricks. The issues were deeper. If one is always being watched, tracked in some fashion, defined by the gaze of others who one does not control, how does one become a person? Being a person involves the possibility of changing the course of one’s life, of making choices to be (somewhat) different from how one has been. The Web presents a real danger. We can find ourselves permanently defined by past words and deeds, some from the long past. Americans have always been especially attuned to the idea that we could remake ourselves, change our lives, start all over again, perhaps by going West. But the Frontier option is no longer available, according to Rosen.
In the 20th century, however, the ideal of the self-made man came under siege. The end of the Western frontier led to worries that Americans could no longer seek a fresh start and leave their past behind, a kind of reinvention associated with the phrase “G.T.T.,” or “Gone to Texas.” But the dawning of the Internet age promised to resurrect the ideal of what the psychiatrist Robert Jay Lifton has called the “protean self.” If you couldn’t flee to Texas, you could always seek out a new chat room and create a new screen name. For some technology enthusiasts, the Web was supposed to be the second flowering of the open frontier, and the ability to segment our identities with an endless supply of pseudonyms, avatars and categories of friendship was supposed to let people present different sides of their personalities in different contexts. What seemed within our grasp was a power that only Proteus possessed: namely, perfect control over our shifting identities.
But the hope that we could carefully control how others view us in different contexts has proved to be another myth. As social-networking sites expanded, it was no longer quite so easy to have segmented identities: now that so many people use a single platform to post constant status updates and photos about their private and public activities, the idea of a home self, a work self, a family self and a high-school-friends self has become increasingly untenable. In fact, the attempt to maintain different selves often arouses suspicion. Moreover, far from giving us a new sense of control over the face we present to the world, the Internet is shackling us to everything that we have ever said, or that anyone has said about us, making the possibility of digital self-reinvention seem like an ideal from a distant era.
One crucial point that the article does not address is that we appear to be shackling ourselves to a digital past at a time when real income for most Americans simply hasn’t been rising in line with the American Dream. We believed, and were led to believe, that economic progress would provide us with opportunities in which we could realize ourselves in new and different ways. The objects of our material desires, like the Cadillac pictured above, were objects that allowed our fantasies to play out. If I buy one of those, I can be like those who own them. If I buy this, and this, and this….I will be different. I will be free. Free of my past. Free of the past.
But now that the party appears to be over, the new technology of the Internet has stepped in. Give me an avatar and freedom will ring. Yet the Web may have as many bobby traps in store for us as the unfettered materialism of the go go economy myth. Unless of course we can call on a new company, ReputationCreators, that will give us whatever persona we would like. The catch…for a price that many of us won’t be able to pay.
Since the days of the Federalists and Anti-Federalists our Republic has always been, more or less, a house divided, and it will continue to be so for the foreseeable future. Even wars don’t typically unite us. To move the nation often requires an economic crisis, and then we argue about how to respond. What then is a politician to do if he or she believes that change is necessary, for example, in health care? Move too far to the right or left at any given time–unless there is a grave crisis, for example, the Depression–and your legislation is unlikely to make it through Congress or face repeal down the road. And even if it isn’t repealed, there is the risk that it will not generate enough support to move the legislation off the books and into the real world.
When Obama said that he offered change that we can believe in, most on the right and left took him to mean change that was so different, we could believe in it. The argument seemed to be about whether we wanted dramatic change. But this is not what someone with his temperament and political philosophy would emphasize. It wasn’t the dramatic nature of the change that we were being asked to believe in, but its staying power, its resiliency, its endurance.
Am I pleased with all of the moves that Obama has made. No. Do I think that he has gone back on his campaign pledge? Hardly. What he asked us, and is asking us, to believe in is legislation that will stick, in policies that will have staying power, ones that will take root over time and lead to other changes. But this is the route of the sell out, those on the left say. Of one who has given up on principles. No. It is a reasonable way of trying to get as much of the cake as possible given the nature of our political and economic system, which is not changing in a fundamental way any time soon. Of course those on the left may disagree about how much of the cake might be acquired. This, however, is a debate about the possible, which is just how Obama approaches these matters. In this regard, the slogan was always there for all to see. Come the next presidential election I don’t doubt that one of Obama’s major themes will be: I brought you change that was positive and sustainable. (If you think it is a weak message, I ask you to consider how many “mainstream” Republican politicians are furious about health care. I submit that one reason, and a big one, is that they know his plan can stick and it will be a game changer, and not a good one for them over time.)
In the New York Times on Sunday, January 24, 2010, Thomas Friedman writes in his piece, “More (Steve) Jobs, Jobs, Jobs, Jobs,” about programs that can be helpful in getting the economy moving. For example,
Obama should make the centerpiece of his presidency mobilizing a million new start-up companies that won’t just give us temporary highway jobs, but lasting good jobs that keep America on the cutting edge. The best way to counter the Tea Party movement, which is all about stopping things, is with an Innovation Movement, which is all about starting things.
Fine. Let’s support programs that can provide education and opportunity. But Friedman also gives the president some advice.
Well, here’s my free advice to Obama, post-Massachusetts. If you think that the right response is to unleash a populist backlash against bankers, you’re wrong. Please, please re-regulate the banks in a smart way. But remember: in the long run, Americans don’t rally to angry politicians. They do not bring out the best in us. We rally to inspirational, hopeful ones. They bring out the best in us. And right now we need to be at our best.
This is a bad piece of political advice. It pretends that one can decontextualize a politician’s responses and hides behind the phrase “in the long run” in order to do so. President Franklin Roosevelt sounded pretty angry when he spoke to the nation about the Japanese attack on Pearl Harbor—you remember, “a date which will live in infamy.” And then there was his cousin, Theodore. He got pretty angry at those old monopolies in order to help pass some progressive anti-trust laws. In general, can you imagine how the American people would react if an American president did not get angry at a perceived threat, domestic or foreign, to the well-being of the nation?
To say that Americans don’t rally in the long run to angry politicians is one of those innocuous truisms that mean little in the real political world, for everything depends on what one means by “the long run.” (As Keynes said, “in the long run we’ll all be dead.”) In the short run, and medium runs, the American people surely do rally to an angry president, as long as they can connect with the anger. They also rally to presidents who know when to get angry and when to be inspirational. (Presumably this would mean getting angry on and off, so it would sort of be in the long run.) Oh, yes, and then there are those presidential moments that combine anger and inspiration.
Since the statement about anger is so obviously off the mark and hackneyed, one might be inclined to look for some other motivation for Friedman tossing it out. Here’s my guess. Friedman is scared that if Obama goes too far in attacking the bankers a rift may develop between his administration and the wonderful world of capital. And then America may find itself falling behind foreign nations in the new flat world of economic competition that we face. According to Friedman, entrepreneurs, who at some point will require capital, are the movers and shakers in this world, and it will be a pretty scary place for those places and persons who aren’t on board in terms of the new world order.
But back home, in the meantime, Obama only gets to use the bully pulpit with one hand tied behind his back while he is trying to back Wall Street down. (Note Machiavelli here: it is better that the prince be loved and feared.) Friedman wants Obama to re-regulate the banks. In the real world of American politics just how is he supposed to accomplish this without some heavy duty support in Congress? And given the special interests standing in the way of reforms, you can kiss them good-bye if the American people don’t get sufficiently excited about the issue to get their representatives worried about reelection.
I have a piece of advice for Mr. Friedman and I hope that he won’t mind. It is in the spirit of his advice to the president: Don’t worry! Obama won’t forget about being loved over the long run.
UPDATE, January 27, 2010
For readers who may have felt that I was being a bit unfair to Friedman by claiming that he may have been motivated by fear, I suggest that you check out his column today, “Adult’s Only, Please.” Here is an excerpt. Catch the last line. (He does acknowledge that Obama might be justified in being a bit peeved by the way some on Wall Street have behaved, but hey, just let’s not make them too angry. And if you do, well, you are not being an adult, which of course Friedman is.)
Lately, we’ve seen an explosion of situational thinking. I support the broad proposals President Obama put forth last week to prevent banks from becoming too big to fail and to protect taxpayers from banks that get in trouble by speculating and then expect us to bail them out. But the way the president unveiled his proposals — “if those folks want a fight, it’s a fight I’m ready to have” — left me feeling as though he was looking for a way to bash the banks right after the Democrats’ loss in Massachusetts, in order to score a few cheap political points more than to initiate a serious national discussion about an incredibly complex issue.
President Obama is so much better when he takes a heated, knotty issue, like civil rights or banking reform, and talks to the country like adults. He is so much better at making us smarter than angrier. Going to war with the banks for a quick political sugar high after an electoral loss will just work against him and us. It will spook the banks into lending even less and slow the recovery even more.
I am a professor by trade. I like the idea of making people smarter (or perhaps I should say, better educated), especially over the long run. But I think we all know the danger of coming off like a professor discussing fire codes while the house is burning down.
A poll recently done for the New York Times and CBS News on the state of the American Dream has some interesting results. It appears that more Americans believe that they have achieved the American Dream today (44%) than they did four years ago (32%). The results may seem strange given the depth of the recession. However, it appears that for a substantial number of Americans the way in which the Dream is understood has undergone a revision. There is now less emphasis on financial security. The New York Times article excerpted below is worth a read, although the examples given in the article are open to alternative interpretations.
The Times and CBS News asked this same open-ended question four years ago and again last month: “What does the phrase ‘The American dream’ mean to you?”
Four years ago, 19 percent of those surveyed supplied answers that related to financial security and a steady job, and 20 percent gave answers that related to freedom and opportunity.
Now, fewer people are pegging their dream to material success and more are pegging it to abstract values. Those citing financial security dropped to 11 percent, and those citing freedom and opportunity expanded to 27 percent.
Delacroix’s Lady Liberty leading consumers and investors who say, enough is enough.