Dan

Calabrese

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September 22, 2008

Obama’s Economic Ignorance . . . and Amazing Luck

Barack Obama has built his political career on strokes of luck. He got elected to the U.S. Senate because of an opponent’s sex scandal. He won the Democratic presidential nomination because it turned out inevitability isn’t a strategy.

Now, the man who can barely conceal his disdain for free-market capitalism is looking for campaign momentum just as Wall Street is experiencing some of its darkest days. And if Obama surfs Wall Street’s crashing waves all the way to the White House, it may be the most notorious example ever of an election turning on an issue the voters don’t understand in the slightest.

Choosing Obama to quell a financial crisis would be an act of extreme irrationality. Obama knows about as much about economics as I know about plumbing, and that ain’t much. During the primaries, he kept telling left-wing audiences that his plan would “reward work instead of rewarding wealth” – a testament to a man’s economic illiteracy if ever there was one. The idea that “work” and “wealth” are somehow at odds with each other is so logically vacuous, you have to wonder if the man knows anything about the economy at all.

But this is consistent with Obama’s public statements about why we are supposed to elect him. During his self-promotional video at the Democratic National Convention, the producers fawned over their guy for his decision to eschew a lucrative career in favor of pubic service. Because involvement in the wealth-creating sector of the economy is bad, you see. Michelle Obama tells young people to reject corporate America and become nurses or employees of nonprofits. (Does Michelle know that nonprofits get most of their funding from foundations established by people who made millions in private industry? You bet she does.)

In a campaign ad following the recent Wall Street tumult, Obama promises to take tax breaks away from “oil companies,” and “corporations who outsource our jobs.” He also promises even more regulation of the financial markets, on the absurd premise that if there had only been a little more regulation, the CEOs and boards of these collapsing behemoths wouldn’t have made such knuckleheaded decisions with their capital.

The substance of Obama’s statement is absurd, but it’s almost beside the point. The underlying message is, “See? See what happens when you allow unfettered free-market capitalism? See what these robber barons do? And you know they are friends with George Bush and John McCain, right? It’s time for the government to step in! Capitalism is killing America!”

Those who are not wise to the ways of financial markets – and that’s most of us – simply see what’s going on and it doesn’t feel right. So it seems to make sense to vote for the guy who doesn’t like these people very much, because he was telling us all along that the system was broken.

But the system is working. The federally guaranteed loans and lines of credit will protect the public from an even greater tightening of credit. The CEOs and boards who made the decisions that led to these problems will be replaced. Lehmann Brothers went under because it deserved to go under. Merrill Lynch shareholders took pennies on the dollar for their shares, which they surely didn’t like, but that’s what happens when you don’t conduct business like you should. Additional regulation isn’t what’s missing. Sound banking practices are what’s missing.

In fairness, I don’t think John McCain understands what’s happening either. He’s railing against “bailouts” and talking about firing the chairman of the Securities and Exchange Commission – without seeming to recognize how credit and markets would have been further destabilized had the government not taken action.

The difference, though, is in the nature of the two candidates’ respective conditions of economic ignorance. McCain shares the same cluelessness as most Americans about financial markets. That’s not a good thing, but it’s not the result of out-and-out hostility toward wealth and markets. Given some better guidance, McCain will probably dispense with his populist nonsense and get behind sensible policies.

Obama, on the other hand, follows instincts that presume malfeasance whenever an individual or a company has accumulated wealth. He has no idea that their wealth pays the wages of the vaunted workers whose interests he purports to protect. He has no idea that in capitalism, giants sometimes fall, and while the result can be messy, it doesn’t mean the system isn’t working. It’s simply the way the system works. It was never intended to guarantee happy outcomes for everyone.

America has rarely had a presidential candidate who understood or respected economics less than Obama does. It is hard to imagine a person less qualified to deal with a crisis in the financial markets. So a vote for Obama in light of Wall Street’s struggles may be the most ill-advised reason America ever chose a particular president, but we’ve had ill-advised election outcomes before.

Just like in markets: You make a bad decision, you live with the consequences.

© 2008 North Star Writers Group. May not be republished without permission.

This is Column # DC208. Request permission to publish here.