Why a Democrat President Hasn’t a Chance to Save the Nation

[Rajiv]

Why a Democrat President Hasn’t a Chance to Save the Nation by Jim Freeman

Joe Stiglitz is no dummy. He’s a member of the Columbia University faculty (although we can probably forgive him that) and 2001 Nobel Prize winner in economics. Add to that his expertise as Senior Vice President and Chief Economist of the World Bank, a healthy critic of globalization, wary of free market fundamentalists as well as the International Monetary Fund and his own World Bank. If Stiglitz were in the Mafia, Joe would be a made-man.

So it was with some interest that I read the Vanity Fair piece by Stiglitz; Reckoning--The Economic Consequences of Mr. Bush.

What is required is in some ways simple to describe: it amounts to ceasing our current behavior and doing exactly the opposite. It means not spending money that we don’t have, increasing taxes on the rich, reducing corporate welfare, strengthening the safety net for the less well off, and making greater investment in education, technology, and infrastructure.

Good luck, Joe.

When it comes to taxes, we should be trying to shift the burden away from things we view as good, such as labor and savings, to things we view as bad, such as pollution. With respect to the safety net, we need to remember that the more the government does to help workers improve their skills and get affordable health care the more we free up American businesses to compete in the global economy.


The American economy can take a lot of abuse, but no economy is invincible. Illustration by Edward Sorel.

And there I lay my case, that no Democrat (or Republican for that matter) can come into office on January 19th of 2008 and find the support—either within the country or the Congress—to do that which must be done. History has proven with depressing regularity, that what man conspires to avoid, economic reality will enforce.
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The entire article is worth due thought and consideration

[santafe2]

Re: Why a Democrat President Hasn’t a Chance to Save the Nation

I've heard many criticisms of the US and US citizens over the years but never have we been criticized for our inability to change. If anything, our decisions sometimes strike the outside world as off-handed. We, and the world, may not be wildly happy with changes we've seen with the current administration, but Americans can make changes, and make them quickly.

In the 20th Century we saw this with the FDR administration and we saw this again with the Reagan administration. Old directives were cast aside and a new direction was set. We're likely to see that FDR / Reagan level of change with this election and I think we handicap ourselves as citizens and investors if we attribute too many physical attributes like inertia and velocity to politics. A corresponding circumstance exists in business when companies are consolidated or taken over, (M&A). Even in a consolidation, there is a winning team and a losing team, and the winning team sets a sometimes radically different direction.

Powerful Republicans who have set the tone and direction of Congress for more than a generation are not seeking re-election. Trent Lott isn't even up for election, but he's leaving, getting out before he's reduced to taking orders from what will apparently be an overwhelming majority of Democrats.

This likely sea change in the two branches of US government will allow for a dialog that today, is obviously not taking place. If taxes are shifted to the higher income earners from the lower and middle income earners, these consumers will use this new income to buoy the economy. As most on this board know, new income in these income brackets, flow directly into the economy through increased consumption as opposed to "trickle down". If these same consumers are incented to save, they may well begin again to save, but that will take an as-yet unproved political will.

I'm much more hopeful for our economic future than is the author or the reporter. That being said, I do think we'll be challenged to make difficult decisions in areas of civil liberties. We're not changing the Judicial branch of our government and we're obviously headed in the wrong direction...but that's a discussion for another day.

[c1ue]

Re: Why a Democrat President Hasn’t a Chance to Save the Nation

Americans make changes to their clothes, to their music tastes, to any number of frivolous areas.

But Americans don't make changes to their lifestyles until TSHTF.

Even with gasoline at $3.50/gallon, I don't see panic (yet).

When any president, Democrat or Republican,

a) raises overall taxes in the teeth of a recession

b) reduces government intervention in markets - from housing (HUD), to farming (subsidies), to gasoline, and on and on to the big one: defense.

c) turns down special interest money

d) reins in the more egregious examples of capitalism gone wild: tort law, corporate gamesmanship, monopolies in a number of areas

e) declines to employ 'rob peter to pay paul' fiscal strategies

Then I'll agree with your statement about Americans being flexible.

[santafe2]

Re: Why a Democrat President Hasn’t a Chance to Save the Nation

Americans make changes to their clothes, to their music tastes, to any number of frivolous areas. But Americans don't make changes to their lifestyles until TSHTF.

C1ue, thanks for your ideas, you make some good points regarding government, but I think those points are true with all government and not a singular distinction of modern US leadership.

Given your statements, I don't think I was clear in my prior assertions. I was referring to the US public and not its imperfect policy making reflection, our government representatives. Also, my "change" reference can be better understood as day turning to night. I would never characterize the US government or its citizenry as flexible unless, as you mentioned, we're discussing music. In another discussion we should explore your assertion that music is "frivolous". After survival requirements, I find music to be an essential component of my existence.

Regarding the issue of flexibility, US citizens as a group are generally inflexible. Generational directions are set and we move that way, it seems without further discourse until those directions are proved to be no longer useful or in some cases, a complete failure. This unique cultural phenomenon is certainly our greatest asset and likely our greatest weakness.

But the US public is, in the end, pragmatic. After we've thrown ourselves against a block wall more times than most sane cultures would consider, we change direction and that change comes swiftly and without great fanfare. In that change we will not only deny and denounce our previous direction, we'll claim ownership and the moral high ground of the new direction. And, for a while, we'll lead the world and prove our worth.

There may come a time where the US system of government is less adaptive than other 1st world governments, but I'm not betting my future on that scenario.

[GRG55]

Re: Why a Democrat President Hasn’t a Chance to Save the Nation

C1ue, thanks for your ideas, you make some good points regarding government, but I think those points are true with all government and not a singular distinction of modern US leadership.

Given your statements, I don't think I was clear in my prior assertions. I was referring to the US public and not its imperfect policy making reflection, our government representatives. Also, my "change" reference can be better understood as day turning to night. I would never characterize the US government or its citizenry as flexible unless, as you mentioned, we're discussing music. In another discussion we should explore your assertion that music is "frivolous". After survival requirements, I find music to be an essential component of my existence.

Regarding the issue of flexibility, US citizens as a group are generally inflexible. Generational directions are set and we move that way, it seems without further discourse until those directions are proved to be no longer useful or in some cases, a complete failure. This unique cultural phenomenon is certainly our greatest asset and likely our greatest weakness.

But the US public is, in the end, pragmatic. After we've thrown ourselves against a block wall more times than most sane cultures would consider, we change direction and that change comes swiftly and without great fanfare. In that change we will not only deny and denounce our previous direction, we'll claim ownership and the moral high ground of the new direction. And, for a while, we'll lead the world and prove our worth.

There may come a time where the US system of government is less adaptive than other 1st world governments, but I'm not betting my future on that scenario.

“You can always count on Americans to do the right thing - after they've tried everything else.” --Winston Churchill--


As an outsider looking in, I really get the impression that Americans simply do not recognize how unique your institutions really are compared to the world at large.

Whenever I see the words "Democratic Republic of ..." the first thing that comes to mind is that it is unlikely to be either. Contrary to so many such underwhelming examples, the representative government political experiment that America has been conducting for 231 years seems to have worked rather well all things considered.

[santafe2]

Re: Why a Democrat President Hasn’t a Chance to Save the Nation

“You can always count on Americans to do the right thing - after they've tried everything else.” --Winston Churchill--

That is too true, thanks for sending it along, I had not seen it before.

[c1ue]

Re: Why a Democrat President Hasn’t a Chance to Save the Nation

But the US public is, in the end, pragmatic. After we've thrown ourselves against a block wall more times than most sane cultures would consider, we change direction and that change comes swiftly and without great fanfare.

Hmm, so that's why FDR waited through 2.5 administrations and the start of WWII to nationalize gold reserves and fiat inflate?

And that's why Smoot and Hawley were able to get their bill passed and thereby exacerbate an already bad situation?

And of course the American people were so far sighted that they booted Johnson in favor of Nixon, who wound up doing what Johnson would have had to do anyway - kill Bretton Woods?

And the American people are so pragmatic that the American government is now composed of 2 factions which are BOTH universally distrusted?

And as for American democracy - no other nation outside of Africa and the Middle East has had 2 families rule as top authority for 19 out of the last 23 years...and looking like another 4 on top of the 1 remaining.

Hell even Peron and multiple wives only had about 14 years, and were thrown out on their butts by angry mobs on several occassions.

I cleave more to the American sheeple theory: that Americans are the collective fastest sheep in the world at moving toward greener pastures.

The key benefit of the US government is that it is the easiest to implement peaceful regular nominal change - but it does not mean that the changes necessarily improve anything.

I still believe the US is where it is at due to being able to rebuild Europe after that region destroyed itself in 2 world wars, with Russia and China taking themselves out with agricultural collectivization.

As for other nation's not being better - actually the jury is still out.

I see far more responsible behavior at the top in many other nations than is seen here.

I don't think wildcat strikes are good, but they are necessary to balance labor vs. management.

I don't think CEOs should throw themselves under a train when they and their companies screw the pooch, but I equally don't think they should be paid 9 figures then go on to another CEO-manship.

I see more people in other countries debate even strangers on the fine points of domestic policy, than I see Americans who know who their own national Secretary of Labor is.

There are lots of good things about America, but the same can be said for any country.

[santafe2]

Re: Why a Democrat President Hasn’t a Chance to Save the Nation

Hmm, so that's why FDR waited through 2.5 administrations and the start of WWII to nationalize gold reserves and fiat inflate?

I think that happened in 1933 right after his administration took power. Your point supports my position although I have no idea what nationalizing gold reserves has to do with this thread.

And that's why Smoot and Hawley were able to get their bill passed and thereby exacerbate an already bad situation?

You make my point again, thank you. That is one of the reasons FDR was elected, to allow for a radical change in direction.

As for other nation's not being better - actually the jury is still out.

As a point of clarity, I would never say the US is "better". This is your word and of course, you're welcome to it.

I see far more responsible behavior at the top in many other nations than is seen here.

Sad but true, but I think you're stating the obvious here.

[c1ue]

Re: Why a Democrat President Hasn’t a Chance to Save the Nation

I think that happened in 1933 right after his administration took power. Your point supports my position although I have no idea what nationalizing gold reserves has to do with this thread.

True, but unemployment improved from 25% to a mere 14.6% in 1940, and didn't achieve full wartime employment until 1943.

So going off gold may have prevented something worse (?), but sure didn't fix anything for nearly 10 years.

Looks like deficit spend and pray to me.

You make my point again, thank you. That is one of the reasons FDR was elected, to allow for a radical change in direction.

FDR was elected by making vague promises of a 'New Deal'. His historic campaign changed an entire regime of power - so it is not clear if Smoot/Hawley were booted because of their bill or because they were part of the old power system.

http://en.wikipedia.org/wiki/Progressive_Era

Or more specifically:

The Democrats went from 37.7% of House seats in 1928 to 49.6% in 1930 and 71.9% in 1932, for a total gain of 34.2% in two elections.

Thus unless a lot of people changed parties, there was at least 34.2% turnover in House seats in 4 years due to the political realignment.

Hard to say that Hawley/Smoot were singled out.

[santafe2]

Re: Why a Democrat President Hasn’t a Chance to Save the Nation

The Democrats went from 37.7% of House seats in 1928 to 49.6% in 1930 and 71.9% in 1932, for a total gain of 34.2% in two elections.

Nice bit of research. That is close to 2004, 2006, so we'll have to wait for 2008 to see if we have such a large change in conjunction with a party switch in the executive branch. It looks like there will be an officially recognized recession before the 2008 election which will push us more in that direction.

History doesn't repeat itself, but it does rhyme - Mark Twain.

[c1ue]

Re: Why a Democrat President Hasn’t a Chance to Save the Nation

SantaFe,

Agreed - interesting times.

The difference this time though is that the ugliness hasn't even hit yet.

Also the Democratic tide should Hilary win is hardly a 'New Deal'.

It would be interesting to see how the next President spins current events given that things are officially still 'contained' - barring a major shift in the next 6 months.

I still cleave to the idea that major Fed machinations are coming up - it has the twin benefits of helping banker buddies and the party that put most of the Fed governors in place.

[santafe2]

Re: Why a Democrat President Hasn’t a Chance to Save the Nation

The difference this time though is that the ugliness hasn't even hit yet.

True, and most likely it will never get to that point, 25% unemployment and real US monetary deflation.

Also the Democratic tide should Hilary win is hardly a 'New Deal'.

I'd like to bet lunch on that one. Hillary is the Dick Cheney of the Dems. I would not under estimate what she would/could do if elected. I think you can look back to 1992 to see where we'll head and it looks like the "Newest Deal" to me.

It would be interesting to see how the next President spins current events given that things are officially still 'contained' - barring a major shift in the next 6 months.

Now that's interesting. What could happen to turn a tide that is clearly set. We're a year away and everything looks like Democrat roses. What about a war in Iran, or a "terrorist" attack in *you name the city*, *you name the device*. How about a really great new algorithm at Diebold that delivers Ohio and Florida? I don't think the checkmate has been accepted, this could be a trying year for US citizens while two very powerful forces vie for power in the most powerful nation in the world. These are to my mind, dangerous times.

[c1ue]

Re: Why a Democrat President Hasn’t a Chance to Save the Nation

[QUOTEsantafe2]I'd like to bet lunch on that one. Hillary is the Dick Cheney of the Dems. I would not under estimate what she would/could do if elected. I think you can look back to 1992 to see where we'll head and it looks like the "Newest Deal" to me.[/QUOTE]

I agree Hillary will try to Newest Deal, but I don't agree that she can get the money to do so.

The original New Deal involved a government which was a relatively small part of the economy with relatively small debt.

This time around the government is already a huge part of the economy and the debt as well is huge.