Hillsdale College Professor Paul Rahe writes to comment on second thoughts among some prominent supporters of Obama:
In Tuesday’s New York Post, Charles Gasparino reports that, although they will not admit anything of the sort in public, people like Morgan Stanley’s John Mack, BlackRock’s Larry Fink, Greg Fleming (once at Merrill Lynch), JP Morgan’s Jamie Dimon, and Goldman Sachs’ Lloyd Blankfein, who backed Obama at the time of the financial crisis last Fall, are now, in private, expressing grave misgivings.
Even more to the point, he reports,
I’m told that Treasury Secretary Tim Geithner and chief economic adviser Lawrence Summers have both complained to senior Wall Street execs that they have almost no say in major policy decisions. Obama economic counselor Paul Volcker, the former Fed chairman, is barely consulted at all on just about anything — not even issues involving the banking system, of which he is among the world’s leading authorities.
At most, the economic people and their staffs get asked to do cost analyses of Obama’s initiatives for the White House political people — who then ignore their advice.
It’s almost the opposite approach, the Wall Street crowd complains, from the last Democratic president, Bill Clinton, whose main first-term achievement — deficit reduction — was crafted by his chief economic adviser, Robert Rubin. . . .
Obama, according to Wall Street people who regularly deal with his economic and budget officials, is acting as if he has a blank check to do what he wants, while ignoring the longterm costs of his policies.
As one CEO of a major financial firm told me: “The economic guys say that when they explain the costs of programs, the policy guys simply thank them for their time and then ignore what they say.”
In other words, the economic people feel that they have almost no say in this administration’s policy decisions.
None of this is surprising. Everything that Gasparino says makes perfect sense. Tim Geithner may have played fast and loose with his income tax returns, but he is no fool. Nor is Larry Summers, and Paul Volcker – who, under Jimmy Carter and then Ronald Reagan, began the painful progress of bringing the stagflation of the 1970s to an end – is a man to whom we all owe a debt of gratitude.
Geithner is a relatively young man whose time has come. It is understandable that he would suffer, at least for a time, in relative silence. Larry Summers is in a different position. Within the world of economics, his is a name to be conjured with; and, unlike Paul Krugman, he has not in public prostituted himself for partisan advantage. It must be excruciating to watch while Obama’s wrecking crew destroys the foundations for American prosperity. For Paul Volcker, who is a senior statesman, it must be much worse.
At some point, if these men have any self-respect, they will have to separate themselves from the current administration. At the time of the campaign, there were plenty of indications of Obama’s radicalism. But the Democrats on Wall Street and many of our leading economists chose to look the other way. Now a number of the latter find themselves associated with an administration that cares far less about American prosperity than about rearranging economic, social, and political relations in the country to their own liking.
Here is a question to ponder. If Barack Obama had a fully free hand, what would he do? I suggest that we should pay close attention to developments over the last few years in Venezuela – for the direction in which Obama’s proposals point is the one followed by Hugo Chavez. That he admires what Chavez has done is evident from the fact that he has lent Chavez a hand in his attempt to export the Venezuelan revolution to the Honduras.
When I was working on my book Soft Despotism, Democracy’s Drift, I read a work that Walter Lippmann, the co-founder of The New Republic, published in 1937. In it, with an eye to the New Deal, he observed that, while
the partisans who are now fighting for the mastery of the modern world wear shirts of different colors, their weapons are drawn from the same armory, their doctrines are variations of the same theme, and they go forth to battle singing the same tune with slightly different words. . . .
Throughout the world, in the name of progress, men who call themselves communists, socialists, fascists, nationalists, progressives, and even liberals, are unanimous in holding that government with its instruments of coercion must by commanding the people how they shall live, direct the course of civilization and fix the shape of things to come. . . . The premises of authoritarian collectivism have become the working beliefs, the self-evident assumptions, the unquestioned axioms, not only of all the revolutionary regimes, but of nearly every effort which lays claim to being enlightened, humane, and progressive.
So universal is the dominion of this dogma over the minds of contemporary men that no one is taken seriously as a statesman or a theorist who does not come forward with proposals to magnify the power of public officials and to extend and multiply their intervention in human affairs. Unless he is authoritarian and collectivist, he is a mossback, a reactionary, at best an amiable eccentric swimming hopelessly against the tide. It is a strong tide. Though despotism is no novelty in human affairs, it is probably true that at no time in twenty-five hundred years has any western government claimed for itself a jurisdiction over men’s lives comparable with that which is officially attempted in totalitarian states. . . .
But it is even more significant that in other lands where men shrink from the ruthless policy of these regimes, it is commonly assumed that the movement of events must be in the same direction. Nearly everywhere the mark of a progressive is that he relies at last upon the increased power of officials to improve the condition of men.
What worried Lippmann the most was the failure of those who considered themselves progressives to “remember how much of what they cherish as progressive has come by emancipation from political dominion, by the limitation of power, by the release of personal energy from authority and collective coercion.” He cited “the whole long struggle to extricate conscience, intellect, labor, and personality from the bondage of prerogative, privilege, monopoly, authority.”
It was, he said, “the gigantic heresy of an apostate generation” to suppose that “there has come into the world during this generation some new element which makes it necessary for us to undo the work of emancipation, to retrace the steps men have taken to limit the power of rulers, which compels us to believe that the way of enlightenment in affairs is now to be found by intensifying authority and enlarging its scope.” It is with Lippmann’s warning in mind that we – and Barack Obama’s economic advisors — should contemplate the present discontents.
Paul A. Rahe holds the Charles O. Lee and Louise K. Lee Chair in the Western Heritage at Hillsdale College. Professor Rahe is the author, most recently, of the companion studies Montesquieu and the Logic of Liberty: War, Religion, Commerce, Climate, Terrain, Technology, Uneasiness of Mind, the Spirit of Political Vigilance, and the Foundations of the Modern Republic and Soft Despotism, Democracy’s Drift: Montesquieu, Rousseau, Tocqueville, and the Modern Prospect.