Martin Wolf on Obama
Martin Wolf is probably the most respected columnist with the Financial Times, which is the newspaper of choice for economists and policy people all over the world. Unlike the Wall Street Journal, it is lodged firmly in the reality-based community. Here is Wolf on Obama’s dilemma:
“An ambulance stops by the roadside to help a man suffering from a heart attack. After desperate measures, the patient survives. Brought into hospital, he then makes a protracted and partial recovery. Then, two years later, far from feeling grateful, he sues the paramedics and doctors. If it were not for their interference, he insists, he would be as good as new. As for the heart attack, it was a minor event. He would have been far better off if he had been left alone.
That is the situation in which Dr Barack Obama finds himself. A large part of the American public has long since forgotten the gravity of the financial heart attack that hit the US in the autumn of 2008. The Republicans have convinced many voters that the intervention by the Democrats, not the catastrophe George W.Bush bequeathed, explains the malaise. It is a propaganda coup.”
Wolf is right, of course, and reflects the bewilderment around the globe at the rise of the tea party with its bizzaro-alternative version of history. Wolf’s bottom line:
“Does President Obama deserve blame for this outcome? No and yes. No, because his treatment was right, in principle; yes, because it was too cautious, in practice.”
Like everybody else, he notes that the stability-restoring measures included the TARP, financial guarantees and “stress tests” on banking institutions, the fiscal stimulus, and the Fed’s actions. But while they brought about a recovery in output, this has not fed through yet to employment, and therein lies the dilemma. Wolf concludes that the response was not enough:
“The truth is not that policy was foolhardy and failed, but that it was too timid and so could not succeed…The president’s willingness to ask for too little was, it turns out, a huge strategic error….A lost decade seems quite likely. That would be a calamity for the US – and the world.”
Of course, the return of Republicans to power would only magnify this calamity.
In fact, the return of Republicans to power is what will re-elect this feckless, tergiversating President–unless the Republicans had the shrewdness to nominate a moderate who’d have the courage to be a statesman, rather than a Tea Partier. I don’t see them doing it, and because Obama thus becomes re-electable, NOTHING gets done until 2016–which means that the United States sinks into ineluctable decline. Obama is America’s roi faineant.
I’m very fearful that the calamity is about to be magnified on 11/2. Keep trying though Minion. I think what you are doing is great!
The firestarters, ie Republicans, are now posing as firefighters. The sad thing is that it’s working. I’m dreading the elections, all these troglodytes the Tea Party has running are creeping me out. To think that such absolute dimwits could decide serious matters is truly frightening. If one thought the GOP had reached its low point with Bush – and how could one think otherwise? – one is unpleasantly surprised this year. They managed to go lower still.
Of course, Obama hasn’t been particularly inspiring or determined. With Democratic a majority in both houses and Obama could have done more. His handling of Big Finance has been kid-gloved, against some of his advisors’ suggested plans.
Jimmy Carter claims that Obama will have fewer problems in the next two years because the Republicans, strong in Congress, will have to take responsibility for governance and won’t be able to keep up their merely negative stance.
Perhaps I have an overly dark sense of humor, but what strikes me as amusing about all this is that the people who are now wandering about in stunned bemusement saying, “Don’t you plebs realize we saved your lives?” tend to trot out exactly the same lines of argument that overly cocooned conservatives did in ’04, ’06 and ’08, “Don’t you have any gratitude for the fact Bush saved America after 9-11?”
And they are also usually the same people who in mid November ’08 were announcing that the GOP had become a strictly regional rump party which would quickly dwindle away and cease to be a national force due to its irrelevance and failure.
I think the true reality-based community might take a more jaded view of both of these self-serving narratives.
Oh my. The Democrats controlled both houses of congress during Bush’s second term,with Obama in the Senate. Congress controls the budget. For the past two years the Democrats have controlled everything. The Republicans have been sitting on the sidelines powerless. And yet everything remains the fault of George Bush. This is economic analysis?
Joe – I think that’s what voters expect. I’m more pessimistic and “conservative” about the possibility of GOP redemption. It has walked too far down the dark road to be able turn back at this point.
Jim: let’s break it down. There were 3 major items where Bush broke the bank – war, massive tax cuts, and medicare part D. You can blame the Democrats for not fighting strongly enough against these policies, but you cannot blame them for being the instigator.
A very cute analogy, Darwin, but the more approrpiate one is the tendency for the GOP to believe that global warming is a conspiracy – it flies in the face of reason. Economics is highly inexact, and marked by great uncertainty over the impact of policies, but this isn’t rocket science: the overwelming consensus is that the combination of monetary, fiscal, and financial sector policies staved off a second Great Depression and brought about an early recovery.
But the sickness embedded deeply in the American psyshe can’t accept this. The know-nothings have created a parallel universe where it was the government, not private sector bankers that triggered the recession, and the economic measures made things worse, not better. This is farcical. It flies directly in the face of a true “conservatism” that puts reasoned prudence over emotive populism and respects the voices of authority over the Fox News mob.
The US was not the only country hit hard by the crisis. Some where hit even harder, because they made the same mistakes but proved too small in the global economy to be able to cushion the collapse. Think about Ireland. A far deeper recession than the US. Higher unemployment. Deeper housing bubble collapses. Rogue banks run amuck.
The Irish people are angry today, but they have not tipped over into tea party-style madness. They remain rooted in the real world. What is wrong with America?
What is wrong with America is found in the individual psyche that lusts for power, perceives enemies who are potential threats to that power and abuses freedom to keep that power.
“Corporate” Controlled Democrats are in a car going over a cliff at High Speed……
“Corporate” Controlled Republicans are in a car going over a cliff at Low Speed……
It does not matter both are going over the same cliff, the results are the same…….
Total Tax burden that pays for local, Federal, & state government should never exceeed 10% GDP and anthing else needed should be made up by individual charity. Anything else is theft and we know what the 10 commandments say about that.
I suspect that Wolf’s bewilderment over the rise of the Tea Party is rooted (at least in part) in the difficulty many Europeans have understanding American conservative parties. There are fundamental differences between the political groups in America and Europe that fall under the label “conservative.” It is almost impossible to imagine Angela Merkel, for example, railing against “big government”: the “conservative” Christian Democrats are statist in their approach to many issues. For a very thoughtful analysis of this divide, I strongly recommend the book “The Right Nation: Conservative Power in America” by Micklethwait and Wooldridge, two journalists for the Economist.
@Gregory: where does the figure “10% of GDP” come from? What is it based on? Are there exceptions? Why is 9.9% of GDP okay, but 10.1% “theft”?
David, I’ve been meaning to read that book for ages. Does it really bring new insights?
@MM
I found the book really insightful. My work takes me to Europe (Spain and Italy) every year, and there were many times I was asked to explain something about conservatives in America that my colleagues simply could not understand. For example, my Spanish colleagues were very confused by the fact that G. W. Bush would frequently close speeches by saying “God bless America” or some variation. They explained to me that NO politician in Spain would ever say that, except possibly for far-right members of the Falangist (pro-Franco) party. And, of course, every conservative party in western Europe believes that the state must take an active role in providing health care, either through national health services or a combination of public and private insurance.
These and other questions got me thinking about why “conservative” did not mean the same thing in Europe as it does here. This book provided many helpful examples and gives a useful framework for thinking about the differences. It seems to be written to provide a guide for a European to understand conservatism in America, and this “outside looking in” perspective is enlightening. My biggest criticism of the book is that the authors downplay the tenacity of racism in the American conservative movement. It is now about 5-6 years old, but I think it is still timely.
I wonder where the Obama propaganda machine has been over the past two years. The biggest propaganda failure of all: Not making Americans aware of how much Obama has cut their taxes–a close second to the failure of broadcasting the benefits of the stimulus measures. In the Oct. 28 issue of Rolling Stone, Tim Dickinson makes “The Case for Obama” which the dems should have been making all along.
It is almost impossible to imagine Angela Merkel, for example, railing against “big government”: the “conservative” Christian Democrats are statist in their approach to many issues.…
…every conservative party in western Europe believes that the state must take an active role in providing health care, either through national health services or a combination of public and private insurance. These and other questions got me thinking about why “conservative” did not mean the same thing in Europe as it does here.
The possible exception being the British Conservative Party.
But in historically Catholic countries, the blame can be placed at the feet of the Catholic Church. Catholic Social Teaching and Catholic Action created a third way between the Left and the Right. And with the Right being discredited after the triumph over fascism in 1945, social Catholicism filled the vacuum.
It’s all the Pope’s fault.
While it was the former President who began the bailout mess–which, you may recall, was met with condemnation from most of the public–it’s the current President (elected running on Change) who continued the policies extended them. The American people are being consistent.
MM,
Any balanced view would show that both private and public forces shared complicity in “triggering” the recession. Nor is the dispute between the parties on economic policy as stark as you suggest. Given the actual policy stances of the parties, it’s hard to make the case that the ebony would have ended up much worse if the GOP still dominated. For instance, TARP was put through under Bush, and it’s really pretty hard to claim at this point that the stimulus bill had much effect — given that the recovery (or perhaps more accurately, the stal in the drop) mostly happened before it was spent.
Kurt,
There are lots of other corellations you could point to than Catholicism which would fit better. After all, the northern social democracies are heavily Protestant — more so than the US.
Kurt,
There are lots of other corellations you could point to than Catholicism which would fit better. After all, the northern social democracies are heavily Protestant
DC,
I think you miss the point.
In Protestant European countries, the Social Democratic and Labour parties have been successful in their economic program over the center-right opposition — secular classic liberal parties such as the Tories, the Swedish Moderate Party, the Norwegian Conservative Party, the National Coalition Party in Finland, etc.
In Catholic countries, the dominant center-right parties were founded under Catholic influence and were responsible for most of the social insurance programs implemented. They are accepting of the social market and not classical liberal parties — the Christian Democrats and Social Christians in Germany, the Peoples Party in Austria, the Swiss Democratic Party, etc.
The classic liberal parties in these countries — a lesser element of the center-right — tend to be strongly anti-clerical and supported by Freemasonry such as the Republican Party and the Liberal Party in postwar Italy.
The point is that Catholic influence over the center-right moves it to support for social insurance and the social market, while the secular center right tends towards classical liberalism.
“Oh my. The Democrats controlled both houses of congress during Bush’s second term,with Obama in the Senate. Congress controls the budget. For the past two years the Democrats have controlled everything. The Republicans have been sitting on the sidelines powerless. And yet everything remains the fault of George Bush. This is economic analysis?”
Certainly you meant to say “the second hjalf of Bush’s second term,” right? Conservatives don’t REALLY rewrite the past like liberals accuse of doing, do they?
Kurt, thanks for the history lesson, and the reminder (which Catholic Republicans need to hear over and over again) about where the Church as the bearer of the Gospel stands on social issues.
The thing to realize is that for people outside of Washington and Wall Street, there has been little to no recovery. We are still on the side of the road in full cardiac arrest. I am in a state in a protracted condition of double digit unemployment. For us, the economic crisis is a disaster that continues to unfold, not an event in the past.
I know that according to technical measures the recession is over. But the human beings who vote in elections don’t base their decisions on statistics, but on the suffering of themselves and their families and neighbors. Because our government is run mostly by wealthy people (like President Obama) who have recovered quite nicely, there is quite a disconnect going on. And it’s not suddenly going to go away after the Republicans get back in, either. Since the GOP has the same problem of being run mostly by the wealthy.
PS, although it’s off topic, I can’t resist noting that it was on this blog two years ago that I read that the GOP was “finished” in the wake of Obama’s sea-change victory. Not quite, eh? Although to be fair I heard the same about the Democrats after 2004. Can it be accepted once and for all that the Americans are a pragmatic people, not baptized Republicans or Democrats, and change their mood in cycles?
Any balanced view would show that both private and public forces shared complicity in “triggering” the recession.
If I may interject? That is one of those statements that, in some sense is true, but in another it is deeply misleading.
The bankers caused the crisis; the government only “caused” it in the sense that deregulation meant that government failed in its responsibility to prevent it.
The New Deal reforms put in place in the wake of the last profound crisis of American capitalism (i.e., the Great Depression) were dismantled enough that, predictably, capitalism began digging its own grave in earnest, and now here we are.
Magdalena, The American electorate is not so much pragmatic as ill-informed and less than thoughful, shall we say, in their readiness to throw the bums out. For eample, most economists agree that the stimulus was very effective as far as it went, and they call for more of the same, but a lot of voters see that it didn’t completely solve our economic problems, so they are prone to think it was a big waste of money, period, and Obama a spendthrift leading us to perdition.