Jonah Goldberg explains why we should fear that Barack Obama will emulate Franklin Roosevelt:
there can be a chasm between being right and merely appearing to be right. Why anyone stakes greater value on the appearance than reality is a mystery to me.
But as Obama clearly recognizes, that was a big part of the FDR magic. FDR came into office promising “bold, persistent experimentation” — and delivered. Raymond Moley, an early member of FDR’s “brain trust,” saw the New Deal for what it was. “To look upon these programs as the result of a unified plan was to believe that the accumulation of stuffed snakes, baseball pictures, school flags, old tennis shoes, carpenter’s tools, geometry books and chemistry sets in a boy’s bedroom could have been put there by an interior decorator,” Moley wrote later.
Yet Americans thought it was all part of a plan, even though experimentation and planning are in fact near opposites. Why? Because FDR always projected such confidence, even as he made things worse. But this isn’t another column about how FDR prolonged the Depression. Been there, done that. I’d rather be forward-looking.
In fact, I want to be experimental, too. So here’s my idea: Just stop.
Stop talking about bailouts and stimuli. Stop pondering ever more drastic action. Give it a rest. Let it be.
One of the main reasons there’s all of this “money on the sidelines” out there among private investors is that Wall Street doesn’t know what the government will do next. Will it bail out the auto industry? The insurance companies? Which taxes will go up? How far will interest rates go down? How long will the federal government own stakes in the banks? Will more stimulus checks go out? If so, how big will the deficit get?
Don’t just do something–stand there!
One of his readers says that this also explains the current market volatility:
Free market economics involves the application of immutable laws, and it’s those laws that allow us to forecast the effect of current events on various companies and the stocks and bonds they’ve issued. But investors will only play the game if they believe the rules aren’t going to change in the middle. When government begins ‘experimenting’, it makes it harder for investors to generate a long term forecast. This drives long term investors away from the market, or converts them into short term traders. The result is a massive increase in volatility as investors shorten their investment outlook because they can’t predict what’s going to happen far enough into the future.
Volatility is an indication of instability. It’s not a sign of a healthy economy but of an economy which has lost its way. High volatility isn’t what you expect from the worlds largest market, but from the emerging economy of a third world country. As you can see from the attached chart, when Roosevelt began his ‘bold persistent experimentation’ it drove away long term investors and that caused volatility to dramatically increase. It will almost certainly have the same effect when Obama does it.
Since he’s so determined not to learn from the mistakes of the past, I would expect him to repeat them. I’m betting that his poking and prodding will add to unemployment, reduce economic growth, and wreak havoc with the federal deficit. There is little doubt that he’s the wrong man at the wrong time. I’m just hoping that he is as devoid of principles as the Clintons, and that he finds a way to break his campaign promises or we’re in for a long painful recession, and maybe worse.
We can only hope, since we lost an opportunity to do any more than that a couple weeks ago.
Well, don’t just hope and nothing else. I think if enough constituents scream loudly enough about the worst things the Obama administration tries to do, congress will listen at least sometimes. Probably not nearly as much as I would like, but any impediment to the march to serfdom would be good.
Many months ago you expressed confidence that Obama was unelectable, and I expressed concern that he would be elected anyway. I happened to be right then. I believe I’m also right to say we can still do more than just hope. It doesn’t ALL have to go down the tubes–we should do what we can.
I didn’t mean to imply that we shouldn’t fight the “change.” I just meant that, as far as a President Obama changing his mind about wanting to be FDR 2.0, we can only hope that he will do so.
When government begins ‘experimenting’, it makes it harder for investors to generate a long term forecast. This drives long term investors away from the market, or converts them into short term traders.
This person would make a better Treasury Secretary than Paulson. This is why I pulled my money out, several months before the bailout, and am not in a hurry to get back in. I don’t have the desire to do short term trades, and I can’t work the mojo to figure out what the government will and won’t do and what affect the consequences will have (both intended and unintended). So I’m out, and obviously I’m not alone.
What understanding I do have of all this is that I’m probably out until 2 quarters after the government finally stops this bailout foolishness, regardless if they put in or not. Once they stop, it will take a quarter for the affects to start being realized, and then another quarter for them to get reported out formally. So, I see a depression lasting at least 6 months plus how ever long Congress considers tinkering by just throwing cash at the situation.
I’m with Leland, and for that matter with Goldberg and his readers. I’m in a position to hire someone — but I’m not gonna. Not sure what’s up with business taxes, or even my own taxes. So we’ll just wait and see. Same with the investment money, although there’s no doubt this is a good time to buy stocks for the long term.
This is part of where Obama’s sphinxlike Gen Y slacker-cool fucking disconnected demeanor, and the soothing baby-talk babble of meaningless rhetoric, plus the constitutional law professor wish to explore every one of the 1,500 sides to the issue are a real disadvantage. The people who can push the gas pedal on the economy, those with capital to spend, jobs to give out, entrepreneurial ideas to go borrow money on and start up companies to implement, are probably all just holding their wire, waiting to see what The One and his legions are going to do, and, you know, I think he’s just got so used to not telling us in the campaign that he’s not about to start now.
Fortunately, God has a sense of humor, and the ones most damaged by all this short-term pain are demographically nearly identical with Obama’s hardcore voters. Good job, men! Way to aim for the blackguard capitalist oppressors and manage to shoot only yourself instead.
> FDR came into office promising “bold, persistent experimentation” — and delivered.
Hmm. Experimentation seems to acquire a different meaning when govt is involved.
When I experiment, I try something. If it doesn’t work, I give up what failed and try something else.
When does govt give up?
My canonical example is gun control laws. They’re often pushed with “let’s try an experiment”. But, when a gun control law fails, the folks who pushed it insist on keeping it.