February 29, 2008

The Economics Of Fear

The Economist takes a look at Obamanomics, and it sees William Jennings Bryan and class warfare. Instead of offering hope, Barack Obama offers the same fear- and envy-based tactics on which populism has always thrived. While Democrats have often used these tactics in primaries, the Economist worries that Obama might try to govern based on these promises:

FOR a man who has placed “hope” at the centre of his campaign, Barack Obama can sound pretty darned depressing. As the battle for the Democratic nomination reaches a climax in Texas and Ohio, the front-runner's speeches have begun to paint a world in which laid-off parents compete with their children for minimum-wage jobs while corporate fat-cats mis-sell dodgy mortgages and ship jobs off to Mexico. The man who claims to be a “post-partisan” centrist seems to be channelling the spirit of William Jennings Bryan, the original American populist, who thunderously demanded to know “Upon which side shall the Democratic Party fight—upon the side of ‘the idle holders of idle capital’ or upon the side of ‘the struggling masses’?”

There is no denying that for some middle-class Americans, the past few years have indeed been a struggle. What is missing from Mr Obama's speeches is any hint that this is not the whole story: that globalisation brings down prices and increases consumer choice; that unemployment is low by historical standards; that American companies are still the world's most dynamic and creative; and that Americans still, on the whole, live lives of astonishing affluence. ...

If he were elected president, backed by a Democratic Congress with enhanced majorities, Mr Obama might well feel obliged to deliver on some of his promises. At the very least, the prospects for freer trade would then be dim.

The sad thing is that one might reasonably have expected better from Mr Obama. He wants to improve America's international reputation yet campaigns against NAFTA. He trumpets “the audacity of hope” yet proposes more government intervention. He might have chosen to use his silver tongue to address America's problems in imaginative ways—for example, by making the case for reforming the distorting tax code. Instead, he wants to throw money at social problems and slap more taxes on the rich, and he is using his oratorical powers to prey on people's fears.

Many people have compared Obama to Ronald Reagan in his ability to promise "morning in America," but they have focused only on the most superficial part of the Reagan revolution. Reagan didn't cast himself as the agent of hope, but appealed to the hope within Americans that they could lift up the country, and not the other way around. He focused on the hope of the individual as the true agent of change, and not the despair of the collective that required government intervention.

The rhetoric has given us nothing really new. It has the same populist ring to it that we have heard since before collectivism got entirely discredited in the latter 20th century. It's simplistic calls to soak the rich and redistribute the wealth, to impose economic isolationism, and to prey on the fears of the working class by casting globalization as an unmitigated evil.

The Economist acknowledges that Democrats usually drop the populism when it comes to general elections. That was certainly true of Bill Clinton, who made the NAFTA deal that his wife routinely disparages on the stump now. It would most likely be true with Hillary, but Obama has no track record on which to gauge this. Given that the only basis for analysis is Obama's rhetoric, it's hard to judge him as anything other than the fear-mongering populist he has become on the campaign trail.

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