Barack Obama The Economic Fascist

The Obama Economy

As the Dow keeps dropping, the President is running out of people to blame.

Three weeks before Barack Obama took office, the Dow Jones Industrial Average closed at 9034 on January 2, its highest level since the autumn panic. Yesterday the Dow fell another 4.24% to 6763, for an overall decline of 25% in two months and to its lowest level since 1997. The dismaying message here is that President Obama's policies have become part of the economy's problem.

Americans have welcomed the Obama era in the same spirit of hope the President campaigned on. But after three years in office, it's become clear that Mr. Obama's policies are slowing, if not stopping, what would otherwise be the normal process of economic recovery. From punishing business to squandering scarce national public resources, Team Obama is creating more uncertainty and less confidence -- and thus a longer period of recession or subpar growth.

The Democrats who now run Washington don't want to hear this, because they benefit from blaming all bad economic news on President Bush. And Mr. Obama has inherited an unusual recession deepened by credit problems, both of which will take time to climb out of. But it's also true that the economy has fallen far enough, and long enough, that much of the excess that led to recession is being worked off. Already 15 months old, the current recession will soon match the average length -- and average job loss -- of the last three postwar downturns. What goes down will come up -- unless destructive policies interfere with the sources of potential recovery.

And those sources have been forming for some time. The prices of oil and other commodities have fallen by two-thirds since their 2008 summer peak, which has the effect of a major tax cut. The world is awash in liquidity, thanks to monetary ease by the Federal Reserve and other central banks. Monetary policy operates with a lag, but last year's easing will eventually stir economic activity.

Housing prices have fallen 27% from their Case-Shiller peak, or some two-thirds of the way back to their historical trend. While still high, credit spreads are far from their peaks during the panic, and corporate borrowers are again able to tap the credit markets. As equities were signaling with their late 2008 rally and January top, growth should under normal circumstances begin to appear in the second half of this year.

So what has happened in the last two months? The economy has received no great new outside shock. Exchange rates and other prices have been stable, and there are no security crises of note. The reality of a sharp recession has been known and built into stock prices since last year's fourth quarter.

What is new is the unveiling of Mr. Obama's agenda and his approach to governance. Every new President has a finite stock of capital -- financial and political -- to deploy, and amid recession Mr. Obama has more than most. But one negative revelation has been the way he has chosen to spend his scarce resources on income transfers rather than growth promotion. Most of his "stimulus" spending was devoted to social programs, rather than public works, and nearly all of the tax cuts were devoted to income maintenance rather than to improving incentives to work or invest.

His Treasury has been making a similar mistake with its financial bailout plans. The banking system needs to work through its losses, and one necessary use of public capital is to assist in burning down those bad assets as fast as possible. Yet most of Team Obama's ministrations so far have gone toward triage and life support, rather than repair and recovery.

AIG yesterday received its fourth "rescue," including $70 billion in Troubled Asset Relief Program cash, without any clear business direction. (See here.) Citigroup's restructuring last week added not a dollar of new capital, and also no clear direction. Perhaps the imminent Treasury "stress tests" will clear the decks, but until they do the banks are all living in fear of becoming the next AIG. All of this squanders public money that could better go toward burning down bank debt.

The market has notably plunged since Mr. Obama introduced his budget last week, and that should be no surprise. The document was a declaration of hostility toward capitalists across the economy. Health-care stocks have dived on fears of new government mandates and price controls. Private lenders to students have been told they're no longer wanted. Anyone who uses carbon energy has been warned to expect a huge tax increase from cap and trade. And every risk-taker and investor now knows that another tax increase will slam the economy in 2011, unless Mr. Obama lets Speaker Nancy Pelosi impose one even earlier.

Meanwhile, Congress demands more bank lending even as it assails lenders and threatens to let judges rewrite mortgage contracts. The powers in Congress -- unrebuked by Mr. Obama -- are ridiculing and punishing the very capitalists who are essential to a sustainable recovery. The result has been a capital strike, and the return of the fear from last year that we could face a far deeper downturn. This is no way to nurture a wounded economy back to health.

Listening to Mr. Obama and his chief of staff, Rahm Emanuel, on the weekend, we couldn't help but wonder if they appreciate any of this. They seem preoccupied with going to the barricades against Republicans who wield little power, or picking a fight with Rush Limbaugh, as if this is the kind of economic leadership Americans want.

Perhaps they're reading the polls and figure they have two or three years before voters stop blaming Republicans and Mr. Bush for the economy. Even if that's right in the long run, in the meantime their assault on business and investors is delaying a recovery and ensuring that the expansion will be weaker than it should be when it finally does arrive.

Fascialism: The New American System

by Thomas J. DiLorenzo

"If classical liberalism spells individualism, fascism spells government."

~ Benito Mussolini, Fascism: Doctrines and Institutions, p. 10

Obama promises the worst of all economic worlds: A vast expansion of the welfare state form of socialism, as defined by Hayek, along with a heavy dose of old-fashioned, early twentieth-century, Stalinist socialism with the nationalization of banks, automobile companies, the health care industries, and whatever else he can get away with. The Mussolini-like cult of personality that has developed around him will facilitate this disastrous path to national economic suicide.

The two worst scourges of humanity in the twentieth century were socialism and fascism. Together, they wrecked much of the world economy because of their shared "fatal conceit" (F.A. Hayek’s term) that government central planners were superior to private property and free markets. Fascist and socialist governments (not that there’s much difference between them) murdered over 100 million of their own citizens, as the sociologist R.J. Rummel has documented (See his book, Death by Government), and instigated wars that caused the deaths of millions more.

Incredibly, the two-party duopoly that has long ruled America has adopted both fascism and socialism as the defining characteristics of our economic system. Call it Fascialism. It is a recipe for national economic suicide.

Economic Fascism

Economic fascism as practiced by Italy and Germany in the 1920s and ’30s allowed private property and private enterprise to exist, but only if it was strictly controlled and regimented by the state so that it would serve "the public interest" and not private interests. The philosophy of German fascism was expressed in the slogan, “Gemeinnutz geht vor Eigennutz”, which means "the common good comes before the private good." "The Aryan," Hitler wrote in Mein Kampf, "willingly subordinates his own ego to the community and, if the hour demands, even sacrifices it." This sounds a lot like John McCain’s campaign theme of "Country First" (before self-interest), doesn’t it?

Of course, it is the government that decides what constitutes "the common good." Is there any doubt that government will now define what constitutes "the common good" in the banking and automobile industries – and in health care once it is fully nationalized?

The philosophy behind Italian fascism was virtually identical. "The fascist conception of life," Mussolini wrote in Fascism: Doctrines and Institutions, "stresses the importance of the State and accepts the individual only in so far as his interests coincide with the State."

It is remarkable how contemporary economic policy pronouncements are so often identical to those made by early twentieth-century European fascists. Mussolini complained in 1935, for example, that government intervention in the Italian economy was "too diverse, varied contrasting. There has been . . . intervention, case by case, as the need arises." His advisor, Fausto Pitigliani, explained that under fascism government regulation would achieve a certain "unity of aim" instead.

This is exactly how the powers that be in Washington, D.C. have diagnosed the current financial crisis: There’s been too little financial market regulation, they tell us, and it has been too, well, diverse and contrasting. Thus, they have recommended a Super Regulatory Authority that will supposedly regulate, regiment, and control all "systemic risk taking" in the entire economy. The only debate is whether an entirely new agency should be created to achieve this "unity of aim," or if the Fed – which caused the current economic crisis in the first place – should be given the responsibility.

Government-business "partnerships" were a hallmark of both Italian and German fascism. As Ayn Rand once noted, however, in such "partnerships" government is always the "senior partner. " Government-business "collaboration" was supposedly needed in fascist Italy, explained Fausto Pitigliani in his 1934 book, The Italian Corporatist State, because "the principle of private initiative could only be useful in the service of the national interest." It is this "service of the national interest" that is the intended work of the newly appointed "Car Czar" in the Obama administration (along with twenty or so other "czars" so far). It is inevitable that the end product will be the world’s worst cars, endless subsidies and bailouts, and mind-boggling debt piled onto the backs of the taxpayers. All to pay off a campaign debt to the United Autoworkers Union, which bears most of the responsibility for the destruction of General Motors and Chrysler in the first place.

The hallmark of the Obama administration’s economic policy thus far is a forced "partnerships" with dozens of large banks along with General Motors and Chrysler. It is threatening hundreds of other "partnerships" in the name of environmental regulation. And that’s just in the first five months. Mussolini would be envious.

Italian fascism created one gigantic bailout economy. Italian social critic Gaetano Salvemini wrote in his 1936 book, Under the Axe of Fascism, that "It is the state, i.e., the taxpayer, who has become responsible to private enterprise. In Fascist Italy the state pays for the blunders of private enterprise." "Profit remained to private initiative," Salvemini wrote, but "the government added the losses to the taxpayers’ burden. Profit is private and individual. Loss is public and social." Sound familiar?

Mussolini himself boasted in 1934 that "three quarters of the Italian economic system had been subsidized by government," Salvemini wrote. The Obama administration (with a jump start by the Bush administration) is on a path to exceed this level of plunder.

Socialism

In the preface to the 1976 edition of his famous book, The Road to Serfdom, F.A. Hayek wrote (p. xxiii) that when the book was first published in 1944, socialism meant "unambiguously the nationalization of the means of production and the central economic planning which made this necessary." But by the 1970s "socialism has come to mean chiefly the extensive redistribution of incomes through taxation and the institutions of the welfare state." Thus, ever since the 1930s the Democratic Party in America has been the party of socialism, with the Republican Party either providing little or no effective opposition or, as with the administration of President George W. Bush, serving as accomplices. The Bush administration vastly expanded the welfare state, while Obama intends to expand it much faster, especially if he succeeds in implementing health care socialism and imposing even more punitive levels of income taxation on the most productive citizens.

Dear President Obama

We are writing to tell you what millions of Americans—including many who supported your election—now believe. it is time for you to do your job—no more excuses, nor more blaming President Bush, no more confusing words with action. You won the election. Start doing your job. Since your performance in office to date makes it clear that you do not understand what that job entails, let us respectfully explain.

Presidents are supposed to be good stewards. This means they are to take good care of what has been entrusted to them by the American people. As the elected President of the United States and America’s steward, your job is to maintain our country’s position as leader of the free world and its future as an economic and military superpower. To do this, you are going to have to make some changes, and not those you vaguely promised during the presidential campaign. Mr. President, here are just a few of the changes Americans would like you to make:

•Stop apologizing for America. America owes no other nation an apology. Quite the contrary. Some of our harshest critics are the nations that owe us the most, including the freedom they are squandering through weakness and socialism.

•Stop bowing to foreign heads of state. You are the leader of the free world. Start acting like it.

•Stop confusing talk with action. Our enemies use your propensity for talking as a stalling tactic. While you talk, they use the time to strengthen their anti-American positions. For example, your talking has done nothing to deter Iran’s aggressive nuclear program.

•Stop viewing government as the answer to all problems. The reason President Clinton enjoyed several years of economic growth is that Presidents Reagan and George H.W. Bush knew that government was the problem not the solution and acted accordingly. Clinton was the beneficiary of their wisdom.

•Stop spending away America’s future. You came into office during difficult economic times and made the situation worse by several orders of magnitude. In less than 18 months you have transformed an economic giant into an economic invalid.

•Stop using words to obfuscate and prevaricate. Do not be confused by the praise of a fawning press, and stop confusing oration with communication. Stop obfuscating and prevaricating. If you want the American people to trust you, start communicating. Stop performing for the press and start saying what you mean in clear and unambiguous language.

•Stop blaming President Bush for your failures. George Bush is no longer president—you are. Stop campaigning and start governing.

•Stop confusing the affection of foreign leaders for respect. Foreign leaders like you in the same way a shark likes its prey. America needs its allies and enemies to respect you not like you.

•Stop using the military for socio-cultural experimentation. Having never served in the military, you have no idea of how your policies on homosexuality will affect those who serve. Stop listening to political admirals and generals and talk to a few privates, corporals, and sergeants.

•Stop confusing hope for a strategy. Hope will not create jobs, reduce the debt, or make America safe. If you really want to give Americans hope, get government out of the way and let the private sector do what it does best—create jobs.

•Stop talking vaguely about change. There is only one acceptable reason for making changes and that is to make things better. If your changes do not make things better for Americans, why make them? If you really think the changes you are making are improving the lives of Americans, get out of Washington, D.C. and talk to the millions of unemployed who still have no “hope” of finding jobs.

•Stop trying to force a healthcare bill on Americans who do not want it. No issue has come to symbolize your presidency more than healthcare reform. Reform may be needed, but none of the various versions of your healthcare reform bill come even close to the answer. True reform would result in better healthcare at lower costs. Your reform will result in a lower quality of care at higher costs and medical decisions being made by government bureaucrats.

•Stop ignoring Americans and start listening. You were elected as President of the United States, not King. We are your constituents not your subjects. Most of your policies fall far to the left of even the most moderate Americans. To ignore your constituents is arrogant at least. At worst it is tyranny.

Mr. President there is one thing you have accomplished during your short time in office. You have managed to make Americans of all political persuasions miss your predecessor, President George W. Bush. Congratulations!

Sincerely,

The American Citizens