Democratic Economics and Parallels to the 20's

I was going to write a more targeted article even before this weeks issue of The Economist
arrived at my doorstep, but after reading the magazine(and their view on Democratic Economic Policy) I've decided to expand my frame of reference. Because well, they're right.

Miserabilism as Democratic Policy

I'm sure everyone has heard about Hillary and Barack threatening to withdraw from NAFTA in an attempt to woo Ohio voters.
They both, but especially Barack Obama, portray the United States as a place where a mother must compete with her child for minimum wage employment - at a time when unemployment is low by historical standards.

They've been quick to blame NAFTA for job loss that is probably better attributed to the Chinese or Indians. NAFTA definitely isn't the demon they've created in the minds of the American voter; free trade allows consumers to get better items at cheaper prices. This increased purchasing power is exactly what we need at a time when the dollar is ruined and we're heading into a recession.

Mr. Obama has sponsored two bills in his short history that seem to indicate he's thrown away his common sense. The failed Fair Pay Act would have ensured that women and men get the same pay, not for the same work, but for what the government deems equal. His second bill is called the Patriot Employers Act which would reward American companies for NOT expanding overseas.

Naturally, the rich (who already bear nearly all America's tax burden) will not be voting for a Democrat in 2008. But if Mr. Obama is to be believed he intends to raise their tax burden to around 62.3%. Hope - but not for all americans.

Luckily for us, the Democrats always veer populist during the primaries. It is merely a question of how much they do in the Presidency.

Parallels to the Great Depression

Recently I've compared Barack Obama to FDR. Their "Change" and "New Deal" programs sound similar - both are very vague during the race for the White House. And both men are silver tongued and charismatic. The problem with that comparison is that FDR had the experience(as governor of NY) to cobble together a policy on the fly, and I doubt Obama will be able to do the same.

The whole era in general has stark similarities to the depression: the United States is burdened by war debt(WW1 in the 20's), people have mortgages that they can't pay(buying stock on margin in the 1920's), a depreciated dollar might have the same effect on purchasing power as overproduction and subsequent unemployment of farmers in the 1920's; the straw that may break the Camel's back is electing a protectionist president(the tariffs in the 20's were the highest in peacetime history).

For many, this is unsettling - and unfortunately it gets worse.

If Barack Obama truly has become the demagogue that his new speeches indicate then he seems to resemble not FDR but one of the fascists that arose in the Europe during the same period.


- Spero

http://www.economist.com/opinion/displaystory.cfm?story_id=10766009