Decision Making and Leadership in the Economy February 20, 2009 at 3:41 am
Now that the world has accepted that we are in a serious economic recession, we’ve moved on to the tougher step of what to do about it. President Obama has emphasized the need for fast government intervention to prevent a total economic collapse. In his public statements, Obama seemed willing to negotiate the content and size of the American Recovery and Reinvestment Act, but it was clear that a swift passage of the plan was not negotiable.
Some Republicans opposed the plan altogether. These folks fixate on the partial truth that free markets are self-correcting. When you are sick, your body has the ability to heal itself. Government interference would have “unintended consequences” that could harm the economy even further by upsetting its natural course, or at best would be a huge waste of taxpayer money. This is a reasonable argument that is marketed to voters in an unreasonable way: “government-based solution = socialism”.
To move the discussion forward, Obama firmly rejected this view largely (if not completely) out of pragmatism. When you are sick, you can boost your body’s ability to heal itself. We have many brilliant minds at work researching ways to manipulate the economy; now is the time to use them. Doing something is better than doing nothing.
By dismissing the do-nothing subset of Republicans right away, Obama effectively pushed the decision making process forward. He made clear that the rejection was a matter of their argument’s merit and evidence. It was a dispassionate (in the academic sense) response that must have stirred a strong emotional response within the gut of many hardcore free market capitalists. As we saw in the 2008 elections, the rhetoric of anti-socialism still invokes strong emotions among many Americans. I believe that there was potential to throw the stimulus plan completely off the rails, and we would be watching the business cycle turn into a death spiral while social cohesion wears thin. I thought President Obama was charitable and decisive in how he handled this segment of the Republican Party, projecting both an open mind and the confidence to be “the decider.” Doing nothing requires no courage and always leaves you with somebody else to blame.
Here’s the video of President Obama’s first press conference that informed this post, in particular his comments at 10:10 of the video. Bonus fun: replace the words “a hat” with “my ass” at 11:45.
Leave a Reply