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Monday, December 08, 2008


Below in the comments some had me laughing and wincing about the BDS and ODS.

I didn't vote for Obama because I couldn't parse his policies in a way that made sense, and he has so little record that as far as I was concerned, that was how I had to make my decision. But I am ROOTING for him. I think most people are. Tom Carter's stance seems pretty typical. Of course, he didn't vote for Obama either. Ann Althouse did, and since has appeared to my puzzled eyes to be picking at him. I do take her point about the lightbulbs, but until a policy is quantified you can't tell what impact it will have.

One thing Obama has going for him is that so many people are already declaring him a failure. Come on, a president can't be a failure without having had at least a term to do something, and reasonable people across the spectrum are going to react against all these pundits declaring a president a failure before he even takes office.

So yes, I do think ODS is already forming. But I also believe that BDS has created an environment which will tend to spawn ODS.

Presidents really don't have that much to do with the economy. Constitutionally, their scope for action independent of Congress is extremely limited. For we citizens, that means presidential utility in such matters is largely to focus public opinion on Congress when Congress is failing to act, or acting inappropriately (such as looking after their own butts or catering to special interests), rather than taking care of the broader public interest.

Therefore, blaming presidents for things that they do not control is incredibly foolish. People (and especially the press) loved playing the Bush blame game, but after eight years of it I'm afraid it's a bad habit that's ingrained in people's minds and hearts.

Presidents don't control GDP. They don't independently control bank regulation, lending policies, spending policies, or any of that jazz. They can suggest fiscal responsibility, but Congress passes the budget. They can suggest policies but they can't make them legal or give themselves authority to act. The way our government is structured, presidents almost never have much control over the economy. To the extent they exert much influence, it is almost always by exerting pressure on Congress.

Therefore, I would hope that even deeply frustrated conservatives and the leftmost wing of the liberals that are already crying foul would back off and give Obama at least a chance to fail or succeed on his own. If anyone disagrees with a component of one of his policies (once we know them), by all means contact your Congressional representatives and give them an earful on the topic. But don't blame the president for what his not his fault, because the result of doing so is that he will become unable to act when he could make a difference.

Bush did not oppose Congress when he should have, and that hurt the country. Obama will be forced to either ride along on a disastrous stampede, or ride herd on Congress. Citizens of all political leanings should try to carve out a space for him to be effective at riding herd on Congress.

One thing has worried me about Obama's appointments: far too many of the financial appointments seem to me to be Clinton-ish. The truth is that the economic theories of the Clinton administration are a huge component of our current economic problems. Banking deregulation and conglomeration have been US disasters! Over two consecutive presidencies, a bipartisan consensus existed that throwing open the doors and letting the hogs run wild would produce prosperity, and that we did not need any of that dated Depression-era stuff. Well, it turns out that we did, and reestablishing control over Wall Street's excessive risk-taking is a pressing, urgent priority.

Democrats have been quick to claim that the boom under Clinton was Democratic creation. It was a bipartisan creation, and the problem is that the components that led to the boom also led to the bust! Failure to deal with that reality leaves our next president out in the cold with the door barred.

When loans are failing all over the place, the solution is not to write more bad loans. I am waiting to see what the best and the brightest will come up with, but I am already concerned. Too much theory and too little practical knowledge are rarely a successful recipe for economic policy.

What will help the economy:
1) Let energy prices crash. Don't meddle with any of it. The net stimulus over the next two years will probably be on the order of 350 billion plus. Just get out of the way and let that horse run! It costs the taxpayer nothing and it helps the poorest households the most, and it suppresses inflation, and it puts real money back in consumers' pockets every month. WalMart is thanking its lucky stars right now.

2) Worry about lower income households. Increase WIC and food stamp allotments to redress some of the loss incurred through the high inflation of basic needs over the last few years.

3) Let the auto companies go bankrupt, and extend government loans to them as part of the bankruptcy workout. The unions and the dealers should have to make their claims in bankruptcy court. Those judges are often very good, and they will inevitably do better than a Congress which is bent on vote-garnering. If you leave the interest-balancing to Congress, they'll create a worse bust.

4) Consider addressing energy conservation by offering credits to utilities to do outreach energy conservation. Allow the utilities to sell subsidized conservation units to low income consumers with low monthly billing add-ons, and to use average savings from these measures as offsets against renewable energy mandates. Wind is not very economically efficient, but energy conservation is extremely economically efficient. There are a number of low cost items which would help most households save energy and money. Two, for example, are power-plug ins that can be turned off at one or two places to stop vampire appliances from draining energy, and hot-water heater timing units that shut off heating during long periods when hot water is not used in households. But upgrading insulation, etc, can pay off handsomely.

5) Don't try some massive medical policy change. Setting up group pools for small businesses and older individuals who have not yet qualified for Medicare would pay off the most. To set up group pools for small businesses, all you need to do is allow trade associations and professional associations to offer group policies that are not subject to state mandates. This is a Bush-era suggestion, and it should have been done. The biggest single worry for small businesses is that one of their employees becomes ill, and presto! in a few months their medical insurance rates double. It happens all the time. (Obama is against this, but he's wrong. Large companies already have this ability. How is letting small businesses have the same option going to endanger the public?)

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