Guest poster Tyler Durden at Zero Hedge describes “Why I'm Freaking Out.”
Sixteen months into this Millennial Depression, and less than a business quarter into Obama's administration, it is inescapably clear that Team Obama hasn't the slightest idea what it's doing. To pretend otherwise is self-deception. The louts and Constitutional traitors of the Bush administration didn't much know what they were doing either—but they were flat stupid. Team Obama doesn't have that excuse.
I'm a little more sanguine than Mr Durden is. I think that some of the bailout stuff has been Obama ju-jitsu: giving Captains of Industry enough rope to hang themselves, while enabling the administration to say that we tried giving corporate interests the assistance they asked for, and it didn't work, so we need to escalate to doing the Full Roosevelt.
But I am worried about the problems that he worries about, and that even if it is ju-jitsu, the Administration's current tack has delayed doing the right stuff for longer than we can afford. The two I worry about the most are effective economic stimulus and fighting unemployment.
Paul “Nobel Prize” Krugman has been ringing alarms about the stimulus all this last year: the situation is scary, the stimulus is too little and possibly too late) because it's crippled with “centrist” BS, and it will be hard to fix this later.
Infamous Brad speaks to unemployment in an awesome post about the WPA and the Great Depression: Yes We Can Put Americans Back to Work. We Probably Won't, Though.
Nor are today's Republican and Democratic leaders the first politicians to be faced with this question, it is the exact same question that was asked in 1933. And the political elites and the professional economists of our time agree 100% with the political elites and the professional economists of 1933. Our ruling class, just like the ruling class of 1933, believes that government by definition screws up everything it touches. That all government intervention in the economy is inherently bad, that the best it can possibly be is a short-term necessary evil. That the reason that big corporations are big is that they are lead by people who know how to make the best use of money and how to get the best work out of employees. Therefore the political elites and professional economists of our time 100% agree with Frank Roosevelt of early 1933 and with the American Liberty League of the 1930s that what we need is something like the Public Works Administration. What we need, they are 100% sure, is a public-private partnership: government identifies legitimate government needs that aren't currently being met, and bids that work out to private contractors, and audits those programs and those contractors to make sure that not one thin dime of taxpayer money is wasted on any project that's unnecessary or on any expense that can't be justified. And in a sign of bipartisanship, Franklin Roosevelt appointed left-wing Republican Harold Ickes to do just that.
As Timothy Noah pointed out yesterday in a lovely pair of articles on Slate.com, "Wrong Harry: Four million jobs in two years? FDR did it in two months" (with Charles Peters) and an almost immediate follow-up piece when a news item proved his point for him even better, "CBO, Meet CWA: More evidence that Obama's stimulus falls short," FDR, congressional Republicans lead by Harold Ickes, and right-wing Democrats lead by Al Smith were wrong in exactly the same way that Barack Obama, congressional Republicans, and the Democratic Leadership Council are wrong right now. The Public Works Administration did its job. It did it under budget. It wasted not a single dollar. It attracted not a single critic. And it created almost no jobs. In 1933, it turned out that there just plain weren't that many legitimate government jobs that weren't being funded already. As Ickes took his sweet time coming up with more, lest he be criticized for wasting taxpayer money, he found out that there also weren't a whole lot of companies out there begging for the chance to bid on PWA contracts. They weren't crazy about the contract stipulations, and they weren't all that interested in retooling and reorganizing their entire corporate structures to service contracts there were guaranteed to end as soon as the Great Depression ended. As an anti-poverty, anti-violent-revolution government program, the Public Works Administration was an unvarnished, absolute, indefensible disaster. Period. End of story. Nobody even tries to defend it any more; its supporters just pretend it never happened, so they can recommend the same thing the next time without anybody knowing it's been tried before, because by their politics, it's the right thing to do whether it works or not.
And along about the time that Roosevelt was about to lose his temper over this, the First Lady talked him into talking to a very successful social worker named Harry Hopkins, who only wanted a few minutes of the President's time so he could ask one question. He showed the President figures (that he later showed Congress) showing that there were about 3.5 million Americans in 1933 who were heads of households between the ages of 18 and 64 that no employer was going to hire, no way, no how, not for any amount of money, and he asked: “Can you give one legal reason why we can't just hire those people ourselves?”
Barack Obama ... somehow hasn't learned that it's public-private partnerships and tax cuts for corporations and the wealthy, not government make-work programs or benefits for the unemployed, that are the real welfare cheats. Being a Harvard graduate who grew up under the steady drumbeat of pro-corporate propaganda about how evil the WPA was, he's still talking up the need for more public-private partnerships like Harold Ickes' old Public Works Administration.
Obama has pulled a rabbit out of his hat before, where it looked like he was running the wrong way but actually was working a political angle I hadn't thought of. I hope that's true here, too.