A warning from Paul Rubin:
Until now, this election has been fought on the margins, over marginal issues. But it is important to understand how much a presidential candidate wants to move the needle on taxes, trade and other issues. Usually there isn't a chance for wholesale change. Now, however, it appears that this election will make more than a marginal difference. It might fundamentally change America.
Unlike FDR, Mr. Obama will not have to create the mechanisms government uses to interfere with the economy before imposing his policies. FDR had to get the Supreme Court to overturn a century's worth of precedents limiting the power of government before he could use the Constitution's commerce clause, among other things, to increase government control of the economy. Mr. Obama will have no such problem.
FDR also had to create agencies to implement regulations. Today, the Securities and Exchange Commission and the National Labor Relations Board (both created in the 1930s) as well as the Environmental Protection Agency and others created later are in place. Increasing their power will be easier than creating them from scratch.
Even before the current crisis, there was a great demand for increased government regulation to limit global warming. That gives the next president a ready-made box in which to place more regulation, and a legion of supports eager for it.
But if the coming wave of new regulation from an Obama administration is harmful to the economy, Mr. Obama will take a page from FDR's playbook. He'll blame Republicans for having caused the market crash in the first place, and so escape blame for the consequences of his policies. It worked for FDR and, so far in this campaign, blaming Republicans and George W. Bush has worked for Mr. Obama.
I hope we don't have to end the next government-caused depression the way we ended the last one.
I read not too long ago man on the street interviews in both mumbai and shanghai. the predominant view was that the usa didn't produce enough oil by design and more importantly that the global financial meltdown was caused by our government, also by design. the last time we were considered the "good guys" doing the liberating this time...
Yes, but last time the country was ruled by big-city machine politics. Despite the misty-eyed nostalgia of the True Believers, most people in the 30s voted for FDR because the local ward heeler told them to, and they did what he asked because he was a conduit to jobs, good contracts with the city, local connections that made business and personal life possible. I think the devotion of Average Joe to the theoretical ideals of the planned economy was always more inferred than implicit.
And now...? Mass communications and easy travel have completely changed that equation. People pay attention to national politics much more than local, and the importance of the party machine on a practical level has faded to almost zip, unless you're actually in the business of politics.
So I suspect any new New Deal is going to bear the same resemblance to the original that a "reality" TV show bears to, well, reality. It will look similar, have fine-sounding similar names -- but its practical impact will be modest, at best. Fact is, while people are dissatisfied around the margins, and because utopia and immortality are apparently not going to arrive this generation, they generally prefer their lives the way they are, and will tolerate only cosmetic changes to it.
Things might change if we had a real Depression 2.0, or a real war, but, scaremongers on the left and right notwithstanding, I'm not seeing much evidence for that just yet.
Another practical reality... humanity's control over matter and energy is much more refined than 70 years ago, and the locations that generate these accelerating changes are not confined to the leftist twit-ruled lands.
My solace at a possible control-freak federal government is that the decentralizing potential of these technologies (energy, manufacturing, etc.) undermines the central economic rationale of big government... that of economies of scale.
Serious question: Am I being too Pollyannish in this thinking?