A Lesson from James Madison About Obamanomics

A Lesson from James Madison About Obamanomics
Austin Hill
Sunday, January 24, 2010

Breaking news: Barack Obama is human.

He is not a “messiah,” he is not omniscient, and he is not capable, all on his own, of “fixing everything” that is wrong with America.

Here’s another bit of “news” that is beginning to “break:” The President’s repeated attempts to fix everything can actually make matters worse instead of better. And given the results of a poll released last week by Bloomberg news service – according to them 77% of American investors view the President as “anti-business”- it seems that this painful reality of “presidential fixes” is hitting-home.

For those who are surprised by Obama’s heavy-handed, big-government, “anti-business” policy proposals, I respectfully ask “why?” Were you watching and listening carefully during the last presidential election cycle? Or were you, perhaps, just caught-up in the “style” of the Obama experience, and ignoring the “substance” of his rhetoric?

In case you missed it, let me assure you – what we know today as “Obamanomics” is quite consistent with the themes and ideas upon which Senator Obama campaigned for the presidency. The difference, perhaps, is that it apparently “sounded so good” (at least to some people) as campaign rhetoric, but as policy it “hurts so bad.”

Take, for example, the President’s proposed “crackdown” on the banking industry from last week. Lending institutions aren’t lending enough as it is, not even to people with good credit, and threatening banks with more penalties and regulations will likely make this situation worse (notice how the stock market tumbled after Obama’s remarks).

Yet as a presidential candidate, Barack Obama was quite candid about his desire to control banks, so much so that he he once proposed taxing capital. I don’t mean taxing “capital gains,” or interest income. I mean that the man who is now our President campaigned, in part, on a pledge to tax money that is simply sitting in banks.

Our President also campaigned during the 2008 oil price spike on a promise to tax the so-called “windfall profits” of petroleum companies (as though more taxes would have driven prices down); he praised China during the 2008 Olympics for their willingness to “invest” in “infrastructure” (never before in my lifetime had a President openly praised a Communist government); and he frequently lectured about his desire to bring America to “economic justice,” never really explaining what that would entail, yet being clear that the American economic system is inherently “unjust.”

So rest assured – the President’s control over banks, General Motors, Chrysler, and the salaries that executives are “allowed” to earn, are all quite consistent with the vision that the candidate proposed.

But for those who still embrace this “big government” vision, yet are shocked that Barack Obama has allowed corruption to creep-in, I have different questions: why are you so fatally trusting of politicians? And why did you assume that Barack Obama would be corruption-free?

Writing at the Huffington Post last weekend, noted liberal columnist Robert Kuttner expressed frustration that Obama had cut deals with insurance and healthcare companies, in order to move his healthcare proposals forward. Kuttner also lamented that Senator Ben Nelson (D-Nebraska) was fighting-off such a huge backlash in his home state over his support of Obamacare that he was running TV ads claiming that Obamacare is not a government run program. “That's one hell of a slogan” Kuttner noted, “for a party that relies on democratically elected government to offset the insecurity, inequality and insanity generated by private commercial forces. If not-run-by-government is the Democrats' credo, why bother?”

Kuttner, like many liberals, is frustrated that Obamacare represents government that isn’t “big enough.” But notice the assumptions with which he is operating: business owners (“commercial forces”) are assumed to be necessarily greedy, self-interested, and destructive, but politicians are thought to be benevolent beings that only bring us the “security,” “equality,” and “sanity” that we need.

Kuttner’s feelings are what they are. But historical facts tell us that market competition tames the bad behavior of business owners (and the healthcare industry can and should be a lot more competitive), while simplisticly handing-over increasing control of economic resources to politicians enables politicians to be corrupt.

Our nation’s fourth President James Madison, writing in “The Federalist Papers” (“Federalist 51” to be precise), said it this way: “If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government……”

Today, our forty-fourth President Barack Obama is making-good on his pledges to control as much of our economy as he possibly can. Will America change course and embrace the wisdom of James Madison, and of history?

Or must we do things Obama’s way?