I recently argued that the Obama administration is going to do everything it can to block an economic recovery and keep Americans in a state of economic insecurity. (Democrats do better when the public is in fear of their jobs, while Republicans do well when the public falls for the “national security” line.)
During the New Deal, FDR and the Democrats benefited by claiming that the USA had a “mature economy” that no longer could grow like it once did. The question is this: What will be the roadmap used by this administration to blocking recovery? It cannot be seen as outright bungling by policymakers, i.e. bailing out the black holes known as AIG and GM (and soon-to-be GE). Those firms are useful in that they provide a vehicle for destroying resources, but that still is not good enough to keep Obama on top.
It is obvious to me that the Democrats will use (1) environmental regulations to fuel the “sky is falling” fears, and that means that producers will have to devote trillions of dollars of new capital for anti-pollution devices, clearly destroying hopes of new growth; and by claiming (2) that our “economic model” is “unsustainable” (which is true if the “economic model” is based on the Fed feeding the machine, but that is not what the Democrats are saying).
Today, Thomas Friedman in his New York Times column has provided that roadmap the Democrats and Obama will be needing. He writes:
Let’s today step out of the normal boundaries of analysis of our economic crisis and ask a radical question: What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: “No more.”
We have created a system for growth that depended on our building more and more stores to sell more and more stuff made in more and more factories in China, powered by more and more coal that would cause more and more climate change but earn China more and more dollars to buy more and more U.S. T-bills so America would have more and more money to build more and more stores and sell more and more stuff that would employ more and more Chinese …
We can’t do this anymore.
“We created a way of raising standards of living that we can’t possibly pass on to our children,” said Joe Romm, a physicist and climate expert who writes the indispensable blog climateprogress.org. We have been getting rich by depleting all our natural stocks — water, hydrocarbons, forests, rivers, fish and arable land — and not by generating renewable flows.
“You can get this burst of wealth that we have created from this rapacious behavior,” added Romm. “But it has to collapse, unless adults stand up and say, ‘This is a Ponzi scheme. We have not generated real wealth, and we are destroying a livable climate …’ Real wealth is something you can pass on in a way that others can enjoy.”
We have to understand that he is NOT speaking of unsustainability in the way that we have spoken, of malinvestments and the like. No, he is saying that a market economy is unsustainable. Now, when the market is combined with bad government policies (Do I repeat myself?) like water policies in the West and similar policies that clearly waste scarce resources.
No, this is fundamentally different. Once the public is convinced that we have to live with high unemployment and economic insecurity, Obama and his people can govern forever. There is no way that the policies that Obama and Congress are trotting out can result in anything but double-digit unemployment and near-zero economic growth. I repeat, there is no way for those policies to have any different effects.
Furthermore, by having the press serve as cheerleaders, and by preying on the minds of voters by telling them that we are in a “new era of social, economic, and environmental responsibility,” the game is over. I believe we need to frame our arguments in that vein.