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Pay no attention to the people behind the curtain

Friday, November 05, 2010

Obama and the Economy -- Two Perspectives

By Keith R. Schmitz

One of the charges that the GOP made great hay over as they spooked a herd of voters and then stampeded them over the cliff was their cry that Hussein was engaging in Socialism, particularly in the cases of the bank and automaker bailouts.

The GOP has elections to win and hopefully they know better, but as usual perspective gets manhandled in favor of shrillness. Hell, why tamper with a strategy that works, especially with the under-engagement of a big enough chunk of voters. Two articles I'd like to throw out on the topic.

The question to be asked is, was what Obama did warranted? The teeth grinders scream that Obama ruined capitalism. Timothy Eagan on the New York Times blog The Opinionator argues that in fact The President saved it.

He goes illustrating how investments have gained value in the 18 months Obama has been in office. In the process, big institutions have been prevented from going over the waterfall, and as the not-too liberal The Economist put it, "an apology is due Obama." Of course quite the opposite just took place this week, perhaps to our peril.

Admittedly one of the major features of the recovery efforts, TARP, was launched under Bush. But it was largely administered by the new folks, and the great under-reported story about the Obama people is they are darned good at running things, despite GOP efforts in the Senate to approve the people to do the work.

The stimulus program was conducted with scant corruption. Compare that to the porkfest around the Iraq invasion and other instances of graft under the Bush era.

That leads to the other question of is government intervention the new normal? In a recent piece in strategy+business from the international consulting firm booz and company, the authors observe that thanks to poor regulation on the front end, governments have been forced to intervene into failing industries.

While this makes Tea Partiers' hair stand on end, the authors argue that government butting in is necessary. Admittedly sometimes the effort doesn't work well, but other times it does, certainly when considering the sure economic collapse that would have ensued with the financial bailouts.

Even Bush admits that in his new book. Closer to home, letting the automakers succumb to their own miss-management would have radiated fatal effects to the many support industries here in Wisconsin.

Again, there is evidence that the Obama administration did its job in leading these companies out of the wilderness as evidenced by the money returned to the US Treasury. It could be argued that the sweetheart deals favored by the Bush administration would not have resulted in as good of an outcome.

The authors in fact conclude that now governments not just in this country are assuming the role of stakeholders in affected companies, and that moving forward this kind of action is here to stay as a means of mitigating crisis situations.

The third question that remains, is with the onslaught of extremely doctrinaire right wingers into Congress in a so-called triumph of capitalism, would the new lack of flexibility ultimate kill it.

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