1932, 1992, 1976 or other?
one more thought on Bush/Obama comparisons...
Earlier, I pointed to the likelihood that Bush would be perceived as Hoover and Obama would be seen as FDR. If so, that would be tons of govt intervention (somehow perceived as laissez-faire) followed by even more massive intrusions of the State-- accepted by the public. That's the most bothersome scenario.
I've also discussed another option a handful of times: Bush I presides over a (milder) recession and (far more successful) effort in Iraq and is replaced by Clinton who, along with a Democratic Congress, over-reaches on health care and other initiatives. The result? A Republican Congress in 1994, as they find their voice under Newt Gingrich's leadership.
Here's a third. Nixon has bold foreign policy initiatives, some really bad economic policies, an administration heavily influenced by Cheney and Rumsfeld, and scandal (the analogy here is Bush's surprising unpopularity). Nixon/Ford are replaced by Carter who was impressively ineffectual-- and is now renowned for being our country's best ex-president. (Name two good things he accomplished as President.)
I think Obama is too smart and charismatic for #3. So, that leaves the frightful #1 or the cynical #2-- or another option: that he'll do some surprisingly positive things.
posted by Eric Schansberg @ 7:14 AM
7 Comments
7 Comments:
The alternative to your first scenario is not your second or third alternative. The alternative to your first scenario is the economic collapse already in progress. Obama has no choice but massive intervention. This will begin, perhaps next week, with an intervention in the auto industry. (Obama is not president yet but his leadership here is evident.)
There are many possible scenarios-- only some of which have easy historical parallels. Obama (and Bush) may well chart their own highly unique course.
Obama certainly has a choice about (more) massive intervention! (If a lot of people agree with you, then scenario #1 becomes much more likely-- by definition.) If the past interventions have not worked, why would one advocate more of the same? We ignore (and are ignorant about) economics-- to fully embrace politics-- at our peril.
The option to do nothing always exists and if employed more often would serve the greater good. When my car makes a funny noise or has an issue, I don't race out to the repair shop. Last winter I waited out a stiff steering column in our van and what do you know- after a month or so the steering worked fine again.
The same thing goes for my health. By the grace of God I have only seen a medical doctor once in the past 15 years and it was to check me for a hernia (was a pulled groin- not a hernia) I don't race out and ask for an antibiotic or a pill to mask my symptom or cover up the effect. I don't just treat the effect, but instead look at the cause to use econ speak.
Maybe our government should let the free market handle this downturn. The more the government intervenes the longer the downturn and recovery will be.
The government doesn't exactly have a good track record solving problems, however, they are quite proficient at creating problems.
In the event, it now appears that Congress, especially the Republicans, aren't inclined to pull the automakers' chestnuts out of the fire. We may see GM declare bankruptcy by year's end. Hopefully, this will take the form of a successful Chapter 11 reorganization, and not the cascading failure of many other companies—with 3 millions jobs lost—that some predict. If the latter occurs, I believe it could destroy the Republican Party. It would be viewed as one more incredible disaster that occurred in the G. W. Bush presidency.
First, an important clarification: any subsidy would almost certainly pull "the automakers' chestnuts out of the fire" on only a temporary basis. Unless they change their ridiculous cost structures, it's just a staggeringly expensive band-aid. Even if they make those fixes, it is inequitable and inefficient to do these bailouts. But a failure to deal with the underlying cause would make the stupidity overwhelming.
That's an interesting claim about the prospective impact of the future of the Republican Party and the historical legacy of Bush. The latter is more probable than the former since a political party extends beyond individuals-- particularly who didn't adhere to its (supposed) principles. But it would certainly be an on-going hit for the GOP and yes, I think it would solidify the (misunderstood but ironically, still accurate) analogy to Hoover.
Let's start with the unions. Sure there is a history of big business exploiting the worker. There is also a history of unions exploiting the worker and big business. Maybe Eric, could tell us the costs and benefits of each alternative, but my guess is that those costs and benefits were never studied before unions took over certain industries. I tell you one thing they suck the productivity and competitiveness from these large automakers in the same way a socialism of medicine will suck the competitiveness from the healthcare industry.
I have been around unions my entire life (hyperbole and antecdotel) but I have seen my family members work 4 hours of an 8 hour shift for 30 years and get paid $50,000 plus insane benefits. Company GE. I have seen people who cannot get fired, even though they refuse to show up or perform work when they do show up. Company UPS. I have seen family members who get 8-10 weeks vacation plus the inflated salaries and benefits. As Eric points out these types of cost structures cannot work. New innovative companies will take the place of the GM's and Fords' The market can fix this over time, the problem is Americans aren't into pain, sacrifice and commitment any longer.
You knows what the revisionists will say about this period. Apparently Bush has erased all his misgivings by being gracious in hosting the Obama's. Bush was the media darling last week. He wasn't a conservative as President. I will agree with that.
Unions are a labor market "cartel"-- an attempt by suppliers to bind together and exercise monopoly power to accumulate its benefits. (To be technically correct, monopoly power from the supply side is called "monopsony power".)
This is defensible-- in terms of equity and efficiency-- if the workers are themselves dealing with a firm (or firms) which have significant monopoly power in a labor market. The prototypical example is the 19th century coal mine-- where it was exceedingly difficult for workers to have workplace options. But competitive labor markets are the norm today, so unions are unnecessary (although useful to their members). Beyond that, because most product markets are competitive, the various inefficiencies introduced by unions are often prohibitively painful.
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