Did President Obama Misspeak on Economy?

President Obama Speaking to management and workers

 Popular Democracy in the Age of Cable TV and Internet

           In an attempt to explain the nature of the unemployment crisis in the US, President Obama said that in comparison to the public sector, the private sector is “doing fine.”  What he was referring to is the fact that his policies to rescue our economy from the worse downturn since the Great Depression has created over 4 million private sector jobs, while at the same time the public sector has experienced massive job losses due to cutbacks in spending by the Republican governors and legislatures who have taken control in many states.

If we consider the fact that the economy was in a free fall, losing 700,000 jobs a month and the world banking system was in danger of total collapse when he took office, Barack’s performance managing the economy, especially with the hostile obstructionists Republicans in Congress –  has been outstanding by any objective measure.

Despite an endless stream of ideologically propelled drivel – as opposed to fact driven commentary – there was no viable alternative to the stimulus provided by TARP and the Economic Recovery Act.  Those who argue otherwise are either ignoramus or charlatans.  For instance a total banking collapse would have resulted in the collapse of the Credit Default Swap market; which was estimated to be around 66 trillion dollars.

This is far too big for the US government to guarantee.  At the time things began to fall apart most Americans – this writer included – had never heard of a credit default swap.  And only a small cabal of financial experts understood what a derivative was. That’s why Barack appointed Timothy Geitner, the former President of the Federal Reserve Bank of New York, as Secretary of the Treasury – a decision that was vociferously criticized by ideologues on the left and right.

Yet it was these mysterious financial instruments – some designed by theoretical mathematicians paid to devise new ways to make money from investments – that wrecked the economy and wiped out billions of dollars in savings and investments of middle class Americans, while forcing thousands of firms into bankruptcy or near bankruptcy resulting in mass layoffs. Had the federal government not intervened it would have resulted in an economic catastrophe of such magnitude that the government could not bail us out.  The consequences would make the 1930’s look like the good old days.

Hence these banks were literally “too big to fail” and yet the Republicans are blocking the regulatory regime passed by the Democrats in Congress, and signed into law by President Obama, which would prevent a meltdown like that from happening again.  This means that it could happen again!

But in spite of all the anger and invective leveled against the reckless financial speculators, who were given free rein to do crazy things by Republican deregulation of financial markets, the American people put the Republicans back in charge of the House of Representatives only two years after their policies led the nation’s economy over a cliff.

Ironically, the very policies that are denounced by ideologues on the right and the left – confusing many Americans in the process – prevented a total catastrophe and set the economy on the road to recovery.  The bank “bailout,” or TARP, which was initiated by Bush but continued by Obama, the Economic Recovery Act and the Auto-Industry bailout were essential elements in salvaging the economy.

Ironically, the response to these policies exposes the “antagonistic cooperation” that increasingly occurs between ideologues at opposite poles of the political spectrum.  Although they hate these measures for different reasons – Righty’s hate any government intervention because it violates their “free market” theology; Lefties hate it because it props up the capitalist “criminals”.  As I have pointed out ad nauesum: This is a distinction without a real difference!

The problem confronting the working class and imperils the Obama presidency is the persistent high rates of unemployment.   It provides rhetorical weapons that his opponents in the Grand Obstructionist Party can use to attack him.  But everybody with any understanding of the problem knows the present unemployment crisis is structural, which means those jobs have disappeared for good.

During the Great Depression of the 1930’s Professor John Maynard Keynes, the brilliant British economist whose policy recommendations led the world out of the economic disaster, identified a different kind of unemployment from what he was observing then. Keynes called this “technological unemployment, “and he was referring to workers who had been rendered obsolete by the advance of technology.

And Keyenes wasn’t the only one who saw this coming; so did a brilliant black assembly line worker in a Ford automobile plant in Detroit, James Boggs.  In a prophetic book titled “The American Revolution: Pages from a Negro Worker’s Notebook,” published in 1961, Boggs predicted the coming “Cybernation” of the American economy.

From his position on the factory floor, this working class intellectual could see that the advance of computerization and robotization would eliminate millions of industrial jobs, because the machines could perform the same work more efficiently i.e. faster and cheaper.  And neither of them envisioned Globalization, which also serves the business and corporate class but not American workers.

That’s why long after economist announced the end of the recession five million workers who were gainfully employed before the crash remain unemployed; while corporate profits and the stock market have gone through the roof!  This is what the president was referring to: And he was right!

That’s why he is advocating government intervention to help the working class, and Romney is advocating further tax cuts for the plutocrats and no regulation of the corporate and financial sectors – whom he calls’ “the jobs creators.”  This is the Bush formula that wrecked the economy.  Former President Clinton, one of the most successful managers of the American economy in history, has called Mitt’s economic formula “the Bush plan on steroids!”

In spite of the obvious truth of both Presidents Obama and Clinton’s observations on the state of the US economy and the fallacies in Republican economic prescriptions to cure the lingering maladies that are causing the average American so much pain, a dangerous combination of the rightwing electronic tower of babble such as FOX News, talk radio, and the blogosphere, plus an ignorant electorate, has conspired to hopelessly confuse political reality and millions of voters can’t tell fact from fiction.

All of this raises serious questions as to whether our participatory democracy is part of the problem, rather than a viable path to solving the protracted crisis of American capitalism.

Barack on the factory floor at Boeing

Touting American Manufacturing Excellence


Playthell G. Benjamin

Harlem New York

June 12, 2012

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