Tuesday, February 19, 2008

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Musings about the Obama backlash

It's just so three hours ago to talk about how an Obama cult member gets through the day or how Barack Obama can help sustain marriages that cross party lines or how Obama is feeling the love in Japan and Europe. Right now it's all about the backlash!!

Kevin Drum is all over this meme. Deep within the Obama cult, The New Republic's Christopher Orr implies that Republicans like David Brooks were just waiting for Obama to surge... so they could then pull the super-secret double-cross and drag him down into the mire.

As a potential Obama-can, I'm still on the fence. This is not because of Brooks' column today though he is clearly one spur for this conversation. Rather, Clive Crook got at it a bit better in his Financial Times column:

Mr Obama is a paradox, as yet unresolved. His plan and his votes in the Senate show that he is a liberal, not a centrist. And he is no wavering or accidental liberal. His ideas are of a piece. He sees – or convinces people that he sees – a bigger picture. And yet this leftist visionary is pragmatic, non-ideological and accommodating of dissent. More than that, in fact, he seems keen to listen to and learn from those who disagree with him. What a strange and beguiling combination this is.

It makes him an electrifying candidate – one the Democrats would be crazy not to nominate – but also, to be sure, a gamble. If Mr Obama is elected, it might turn out that there is no “there” there. Indecision, drift and effete triangulation are one possibility. Equally disappointing would be if the office wore away the pragmatism and open-mindedness, to reveal an inner dogmatist. Perhaps, though, Mr Obama really can transcend Washington’s partisan paralysis and build support for one or two big important reforms – starting with healthcare. Voters (and commentators) have the better part of a year to decide whether this pushes the audacity of hope too far.

Now, on the one hand, Steve Chapman soothes my anxieties here when he compares Clinton's mortgage plan with Obama's:
Obama is not a staunch free marketeer, but he grasps the value of markets and shows some deference to economic laws. Clinton, however, tends to treat both as piddly obstacles to her grand ambitions.

You don't have to take that from me. Some on the left see the Illinois senator as suspiciously unenchanted by their goals and methods. Robert Kuttner, an economics writer and co-editor of The American Prospect, scorns Obama's advisers as "free-market guys who want to use markets to somehow solve social problems, which is like squaring a circle." New York Times columnist Paul Krugman denounced Obama because his health-care and fiscal stimulus plans "tilted to the right" and concludes Obama is "less progressive" than Clinton.

If progressive means issuing dictates that prevent informed people from entering into mutually agreeable and economically valuable transactions, that is undoubtedly true. Many liberals prefer to rely on command and control. Nowhere is the contrast between the Democratic contenders more vivid than on how to deal with the fallout from the epidemic of mortgages gone bad.

Clinton has a stunningly simple solution, as stated in one of her TV ads: "freeze foreclosures" for 90 days and "freeze rates on adjustable mortgages." Those are a perfect answer, assuming this is the question: How can the government reward irresponsibility, discourage mortgage lending and increasing the cost of financing a home?....

Obama is not willing to let this turbulent market sort itself out without the intervention of government, but he offers nothing remotely as alarming as Clinton's dual freeze. Among his main proposals are tougher enforcement of laws against fraud and deception and mandates for "easy-to-understand information" for borrowers -- ideas few advocates of economic freedom would find objectionable.

More important than what he advocates is what he doesn't. His chief economic adviser, Austan Goolsbee of the University of Chicago, told me that Obama thinks "we shouldn't have a blanket policy of bailing out everyone." In formulating remedies, Goolsbee said, "you have to think how not to reward bad behavior."

On the other hand, we get to what Obama is saying right now, and I start to get very worried. The Financial Times' Edward Luce explains:
Barack Obama on Monday made an aggressive pitch at Ohio’s blue-collar workers by proposing a “Patriot Employers” plan that would lower corporate taxes for companies that did not ship jobs overseas.

The proposal, which came two weeks before the critical Ohio primary and just before on Tuesday’s nominating contest in Wisconsin, is the most radical any presidential candidate has put forward so far to mitigate the perceived effects of globalisation on US manufacturing....

Mr. Obama’s plan met instant scepticism from otherwise sympathetic Democratic economists who said it would require a large regulatory apparatus to put into practice. They also said that companies could “game the system” by spinning off overseas subsidiaries in order to reduce the offshore-onshore workforce ratio.

“I would say that this plan is borderline unimplementable,” said a Democratic economist in Washington. “It is also puzzling. Normally presidential candidates only come up with plans that are unrealistic when they are losing. But Obama is now the favourite.”

Clive Crook, correctly, concludes that this plan is, "on its economic merits, remarkably stupid." And I haven't even gotten to Obama's NAFTA-bashing.

So what's a possible Obama cultist to think? I can offer four words of solace in considering whether to embrace a President Obama:

1) Part of this is the remaining primary schedule. Wisconsin, Ohio, and Pennsylvania are all fertile ground for economic populism, and this is presumably why Obama has been tacking in this direction. As John Broder and Jeff Zeleny point out in today's New York Times:
[B]oth candidates appear to be looking for ways to avoid taking positions that would give them problems in the general election or expose them to a business backlash....

“Revolutions in communication and technology have made it easier for companies to send jobs wherever labor is cheapest, and that’s something that cannot be reversed,” Mr. Obama said. “So I’m not going to stand here and say that we can stop every job from going overseas. I don’t believe that we can — or should — stop free trade.”

2) Chapman is still right -- compared to Hillary, Obama remains the more market-friendly candidate. Indeed, this might even remain true if Obama is compared to McCain. The latter's first instinct on other issues (campaign finance) has been to regulate.

3) One wonders if, right now, Obama wants conservative criticism. Assuming he manages to continue his victory streak, this allows Obama to counter-punch while still being on top. This subtly signals to other Democrats that a) he really is a Democrat; and b) Hillary Clinton's not the only only one taking pot-shots from the right.

4) Matthew Cooper makes an excellent point in Portfolio -- if one judges economic competency based on how one runs a campaign, then Obama deserves superior marks:

Obama's sheer abilities as a C.E.O. haven't received much attention. There was no reason to think that a lawyer who had never run anything larger than a Senate office would really have been able to build such an amazing campaign organization. Yes, he was a community organizer, but you wouldn't expect orchestrating street protests to necessarily translate into assembling a machine that stretches from coast to coast and spends tens of millions. One benefit of the endless primary season is that it tests not just the mettle of candidates but also that of their organizations. Obama's campaign is a testament to his abilities. It's flexible. It's fast. And it got built quickly, unlike the Clinton machine, which has been assembling itself for years, like a conglomerate that keeps acquiring new companies. (Disclosure: My wife is a senior adviser to Clinton.) Unlike other insurgent campaigns that have found themselves suddenly within striking distance of the nomination, Obama's rose in a way that was simultaneously revolutionary and orthodox. On the orthodox side, he actually raised the money and secured the endorsements and built the ground operation. Unlike, say, George McGovern or Jimmy Carter, who defeated established front-runners to win the Democratic Party's nomination but faced frantic, last-minute, anybody-but movements led by party elders determined to snatch it from them, Obama did it the old-fashioned way, only in record time. Mitt Romney is the businessman in this race, but Obama may just turn out to be the real C.E.O.
Contrast this with the Clinton campaign, which seems uninformed about the rules in Texas and couldn't name enough delegates in Pennsylvania. Indeed, is it wrong to compare Clinton's "shock and awe" approach to the primaries with prior uses of that tactic.

posted by Dan on 02.19.08 at 02:18 PM



The Patriot Employer Act is actually proposed legislation. It basically puts the IRS in the labor rights business and forces them to get foreign employee headcounts for our multinationals. This would be hard to administer, and would put the administration to an agency that is traditionally undefunded.

My inner tax policy wonk is offended.

posted by: Appalled Moderate on 02.19.08 at 02:18 PM [permalink]

Much has been made of McCain's instinct to regulate markets. I understand that economics are not his first priority, as he himself admits, but his track record in the Senate doesn't reflect an itch to regulate (with the big exception of McCain-Feingold). There's a nice article in Fortune about how Gramm is trying to educate and advise McCain on economics policy.

posted by: wph on 02.19.08 at 02:18 PM [permalink]

"There's a nice article in Fortune about how Gramm is trying to educate and advise McCain on economics policy."

Now *there's* a reason to vote for Obama if I've ever heard one...

posted by: Prison Rodeo on 02.19.08 at 02:18 PM [permalink]

I don't think recycling the favorite talking point of the pro-corruption elements in the Republican Party is particularly helpful in illuminating Sen. McCain's thinking about markets.

You won't find anything in the writings of Smith, Ricardo or von Hayek identifying belief in the virtues of market economics with the conviction that obstacles to the buying and selling of politicians are wicked.

posted by: Zathras on 02.19.08 at 02:18 PM [permalink]

Since Zathras brings up Adam Smith, let us see Mr. Smith channel Sen. McCain:

"But the cruellest of our revenue laws, I will venture to affirm, are mild and gentle in comparison of some of those which the clamour of our merchants and manufacturers has extorted from the legislature for the support of their own absurd and oppressive monopolies. Like the laws of Draco, these laws may be said to be all written in blood."

posted by: Appalled Moderate on 02.19.08 at 02:18 PM [permalink]

Obama is better on economics, but Clinton still holds sway in politics. This is why she is so hated among the right; she will do anything to accomplish what she wants done. She probably would have won in any other year against any other opponent.

posted by: Lord on 02.19.08 at 02:18 PM [permalink]

Democrats are being "Roved"; Obama is an easy target ... they'll portray him as Jimmy Carter which is exactly apt. They've been enabling his ascendance every step of the way.


posted by: The Objective Historian on 02.19.08 at 02:18 PM [permalink]

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