Obama: "All the Wrong Moves"

NOTE: Tomorrow (Tuesday) I'll switch gears for a day and write "In Praise of Rush Limbaugh." speaking about his Saturday remarks at CPAC (and the fall-out). Then, I'll go back to explaining why Obama's horrible economic and social policies are driving the nation into a Depression.

In dealing with the current severe recession, Barack Obama is making "all the wrong moves." He is taking steps that will turn today's recession into tomorrow's Depression. At a certain point, he will not be able to blame his mistakes on George W. Bush.

I'll be writing all this week (on this blog and my other one) about what has gone wrong with our economy -- and why Obama's spending spree won't cure what ails us.

Amity Shlaes' book about the Depression (The Forgotten Man: A New History of the Great Depression) talks a great deal about the real strengths -- and the real weaknesses -- of Presidents Herbert Hoover and Franklin Delano Roosevelt.

The big question she faces is: Why on earth did the Depression last so long (from 1929-1940)? The answer is that, first Hoover, and then Roosevelt, pursued policies that made a sustained recovery impossible. Roosevelt cultivated groups, such as consumers, who had many votes and scapegoated producers, who had few votes. He looked at voters not as individuals but rather as members of groups, a Democratic tendency that continues to the present day.

Regarding Franklin Roosevelt, Shlaes reminds us that very rich man gained his wealth from inheritance. He was not in any sense a self-made man. Frankly, he knew less about business than most people who put in a stint at 7/11 or Burger King. Hoover wasn't much better, believing that a balanced budget would cure all economic woes.

Why is what Amity Shlaes says important? BECAUSE OBAMA IS MAKING THE SAME MISTAKES THAT PROLONGED THE DEPRESSION. Shlaes says:

". . . The biggest problem was the intervention, the lack of faith in the marketplace. Government management of the late 1920s and 1930s hurt the economy. Both Hoover and Roosevelt misstepped in a number of ways. Hoover ordered wages up when they wanted to go down [because of deflation, which is what we have now]. He allowed a disastrous tariff, Smoot-Hawley [think: "buy American"], to become law when he should have had the sense to block. He raised taxes when neither citizens individually nor the economy as a whole could afford the change. After 1932, [many nations, including Japan, Sweden, Greece, Denmark, and others] began seeing industrial production levels rise again -- but not the United States.

"Roosevelt's errors . . . were equally devastating. He created regulatory, aid, and relief agencies based on the premise that recovery could only be achieved through large, military-style efforts . . . [Some] new institutions, such as the National Recovery Administration [NRA], did damage. The NRA . . . [over-relied on] price-setting. NRA rules were so stringent they perversely hurt business. They frightened away capital, and they discouraged business from hiring workers. Another problem was that the laws . . . were so broad that no one knew how they would be interpreted. The resulting hesitation in itself arrested growth.

"Where the private sector could help to bring the economy back -- in the area of [electric] utilities, for example -- Roosevelt and his New Dealers often suppressed it . . . . [As a result of Roosevelt's intimidation tactics] business decided to wait Roosevelt out, hold onto their cash, and invest it in future years. Yet Roosevelt retaliated by introducing a tax -- the undistributed profits tax -- to press the money out of them.

"Such forays prevented recovery and took the country into the depression within the Depression of 1937 and 1938 . . . . The high [union] wages [for some] made possible by New Deal legislation helped those workers who earned them. But the inflexibility of those wages also prevented companies from hiring additional workers. Hence the persistent shortage of jobs in the latter part of the 1930s . . . . Fear froze the economy, but that uncertainty itself might have a cost was something the young experimenters [of the New Deal] simply did not consider.

"Roosevelt's move[s overall were] so profound that they changed the English language. Before the 1930s, the world 'liberal' stood for the individual; afterward, the phrase increasingly stood for groups."

Tomorrow on my blogs, I'll talk about how Obama has turned out to be someone who doesn't know or understand economic history and thus seems hell-bent on repeating it. Like Hoover and FDR, he doesn't understand business -- how could he? -- and so he's advancing policies, especially in taxes, that make it impossible for private enterprise, especially small businesses, to create a sufficient number of jobs. That's not his intention, of course, but neither was it the intention of Hoover and Roosevelt.

Obama: Forgotten Men, Forgotten Women

Barack Obama shortly after delivering State of the Union Address

If they ever build a monument to political cynicism, the shining face on it should be that of Barack Hussein Obama. In Amity Shlaes brilliant historical study of the Depression era (The Forgotten Man: A New History of the Great Depression), she talks about the people who got left out of FDR's effort to rescue the American economy.

Who were the people who didn't get help? Basically, those in the middle class. The poor got help. The unions got help. Even the lawyers busily helping people sue one another got assistance. The government bureaucrats and political poohbahs made out well. Who got left out? The people who went to work everyday and struggled to feed their families. They didn't demand help. They didn't even ask for it. They were -- and are -- the Forgotten Americans.

[Note: One my other blog, I compare Sarah Palin to Hillary Clinton and Barack Obama. I noted that "Barack Obama being Commander-in-Chief is about the same as Madonna being Mother Superior at a nunnery."]

In the following William Sumner quote (in italics), assume that "A" is the President, "B" is another politically powerful individual (Pelosi?), and X is the person who would benefit from government bailouts.

"As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then proposed to get a law passed to remedy the evil and help X. Their law always proposes to determine what C shall do for X . . . What I want to do is to look up C. I want to show what manner of man [or woman in our time] he [or she] is. I call him the Forgotten Man. Perhaps the appellation is not strictly correct. He is the man who never is thought of . . . . He works, he votes, generally he prays -- but he always pays . . . . (William Graham Sumner, Yale University, 1883)

I have a friend in Illinois who is an emergency room physician. He went to school for many years in order to develop the skills he needs for his important profession. He works many hours of overtime in an area that has more than its share of emergencies. His wife also has a good job.

In the view of Obama and many other left-wing Democrats, my wife and his are Public Enemies Number 1? Why? Because their net income exceeds $250,000 annually. Obama and his allies ("B," which in this case means Pelosi, Reid, and their cohorts) want to increase their taxes sharply.
Oh, and Obama also wants to reduce the deduction for mortgage interest on their home. Since they do own equities, he also wants to increase their tax on capital gains.

My friend and his wife certainly qualify as "C" in Sumner's analysis. Obama has decreed that it is their duty (Joe Biden would call it their "patriotic duty") to bail out X. In their case, "X" would be the hospital employee (unionized, unlike my friend) armed wtih a mop-and-pail. Obama's (and our "B" category, Reid's and Pelosi's) view is that X needs the money more than A (the emergency room physician) and his wife (call her "A1").

Does the fact that there are a lot more Xs than Cs -- that is, a lot more voters -- have anything to do with Obama's policies? Silly question. It has everything to do with it.

My emergency room friend likes his job, but the hours (he mostly works through the night) can be crushing. He calculates that the increased federal tax rates, the increased capital gains tax, the reduced mortgage interest deduction, along with high state income taxes and hefty sales taxes in Illinois would be a problem. For every additional dollar he and wife earn, they'd get to keep perhaps 40 cents (if they're lucky).

Does he really want to spend a lot more time with sick, injured, and dying people for that additional 40 cents? Does he want, as a doctor in a high-risk area, to pay ever-skyroceting premiums for malpractice insurance? Should he ignore the fact that America has five-six times as many trial lawyers grasping for big settlements as any other industrialized nation?

The question is: how much does Barack Obama care about C, my friend? Alas, my friend is the one Sumner talks about as "the man who never is thought of . . ." He is a strong wage-earner and a vital component of civilized society. But he has only limited political power. As the pollsters can tell us, there are a lot more "mop-and-pail" people than there are first-rate emergency physicians.

My friend is the the Forgotten Man. His wife is the Forgotten woman. We generally forget about him also -- that is, until we unexpectedly end up in the emergency room. Then, we hope -- and pray -- he is working those additional hours. And when he saves our life -- or those of a friend or family member -- we don't begrudge him a nickel of his earnings.