What Went Wrong?
from The Audacity of Help: Obama's Economic Plan and the Remaking of America by John Wasik
Barack Obama was elected president during the worst financial crisis since the Great Depression. Not since FDR has the Oval Office been given such a clear mandate to fix an ailing economy. The Audacity of Help astutely explores how Obama's campaign promises compare with what Congress ultimately passed, describing the initiatives the President has been able to achieve as well as those yet to be realized.
Like FDR, Obama proposed a lofty agenda that will concentrate on creating employment and eventually economic security for working Americans. As a president who has a deep sense of history -- it's evident in his speeches, writing, and policy proposals -- Obama stated in his Audacity of Hope that "today, the social compact that FDR helped construct is beginning to crumble." Obama was distressed that job, retirement, and health security had been dismantled because the painful excesses of free-market policies wouldn't protect the country in a global economy. European, Japanese, and Canadian workers don't have to worry about their pensions or health care. In a global marketplace, Americans simply can't compete with countries that have a better social safety net.
"If the guiding philosophy behind the traditional system of social insurance could be described as 'We're all in it together,'" he continues in Audacity, "the philosophy behind the Ownership Society seems to be 'You're on your own.'"
What had been sold as a panacea during the 1990s and the first decade of the twenty-first century, the market economy, blew up with the triple explosions of the dot-com, housing, and credit bubbles. Wall Street and bankers sold the myth that stocks and homes were guaranteed ways to wealth. Over the past thirty years, they convinced employers to dump hundreds of thousands of guaranteed, defined-benefit retirement plans for 401(k)-like plans, which subjected employees to unchecked market risk.
Homeowners wanting to participate in the American Dream by building home equity succumbed to the promise that adjustable-rate mortgages -- which actually subjected them to the perils of credit markets -- would create solid nest eggs. Entrepreneurs and, increasingly, corporate employees were hawked the idea of fending for themselves for health insurance, where they were effectively punished in the form of unaffordable rates for any preexisting conditions. Such was the big lie of the ownership society. It was the obverse of the New Deal philosophy. It was a raw deal.
Coupled with the myth that ordinary consumers could somehow make rational, informed decisions in an unpoliced market economy was the Nero-like fallacy during the Bush years that nothing was wrong with our energy infrastructure or climate. The surge in oil (to $147 a barrel) and gasoline ($4-plus per gallon) prices in the middle of 2008 showed how utterly senseless this policy had been. The popularity of former Vice President Al Gore's An Inconvenient Truth, which won him both an Academy Award (for the movie version of his book) and a Nobel Prize for Peace, illuminated the folly of the Bush regime's anti-environment policies. Hurricanes, cyclones, and precipitation cycles have become more intense. Drought and forest and wildfires ravage densely populated regions, causing famine, dislocation, and war.
The Bush administration's criminal inattention to the victims of Hurricane Katrina in 2005 was emblematic of his disconnect from human reality (New Orleans is still a shell of its former self). It was pathological neglect like this that spurred much of the Obama Green Deal. Obama links a need for a new social compact with employment, education, and environmental concerns.
If most of his programs survive the contentious legislative process, Obama will have succeeded in reviving social capitalism, a blend of humanistic service, pragmatic government supervision, and some free-market principles. Better yet, if his initiatives excel in launching private-sector investments -- and broad-based employment from inner cities to Silicon Valley -- in clean energy, infrastructure, broad-band expansion, and exportable technologies, he may even be seen as a social or compassionate capitalist.
The Green Deal is the spiritual heir of the New Deal, only much more focused on creating an economy specifically rebuilt for the twenty-first century. After all, FDR never believed capitalism was dead, he only sought to build new institutions and preserve old ones that failed because of an over reliance on unfettered market forces. Although a stern critic of market forces, Obama is attempting to frame humanistic economics in a different light: government can work to create a stronger private sector while creating jobs, educating everyone, rebuilding our infrastructure, addressing climate change, and helping the poor.
The above is an excerpt from the book The Audacity of Help: Obama's Economic Plan and the Remaking of America by John F. Wasik. The above excerpt is a digitally scanned reproduction of text from print. Although this excerpt has been proofread, occasional errors may appear due to the scanning process. Please refer to the finished book for accuracy.
Copyright © 2009 John F. Wasik, author of The Audacity of Help: Obama's Economic Plan and the Remaking of America