I have in my hands a book titled Obamanomics: How Bottom Up Economic Prosperity Will Replace Trickle-Down Economics (Seven Stories Press: New York, 2008), by John R. Talbott. Talbott is an impressive man, having been an investment banker for Goldman Sachs and the visiting scholar at UCLA’s Anderson School of Management. He has appeared on CNN, Fox, CNBC and CBS as a commentator and has written five previous books.

Talbott argues that Obama has shown us that he understands divisions among races, religions and political views and how these divisions have prevented us from coming together as a people. Talbott has studied Obama’s speeches and campaign policy statements and believes that he understands a government that acts according to truly democratic principles. These include lobby reform, fixing our healthcare system, slowing global warming, preventing unnecessary wars and improving education. 

But what will this do for the economy? Talbott argues, and as a real opponent of industry and business, that Obama’s approach will create a fairer and better system that benefits everyone equitably. The problem here is simple but one has to read Talbott carefully, and understand the real nature of the problem, to see it and understand it.

The devil here is always in the details. I have no question that Barack Obama is a sincere man who loves his country and wants to change things that he believes with all his heart need to be changed. In fact, on some of these points I actually agree with him. But the details are really in the economic thoughts behind these changes. And the problem is that the candidate is not very specific about some of these details. (This is common in elections. Tell the folks what you want to change and then deal with the details after you are elected! Both parties do it. Bush did it for sure.)

But there is a worldview behind Barack Obama’s view and his goal to use the federal government to bring about greater compassion. To confuse compassion, in this case, with worldview, is a categorical mistake. It would be like confusing "compassionate conservatism," which President Bush ran on as a big theme, with principled conservatism, which I much prefer to the Bush variety, with legislative progressivism. This is not about personalities or compassion in the end. It is not even about Barack Obama as a man. It is about something far higher and more important in political theory and practice.

Behind all of this political talk is the ideal of a just and wise legislator who has a plan to make society more equitable through state solutions that handle basic economic problems. Rousseau said: "The legislator is the mechanic who invents the machine." Saint-Just wrote, "The legislator commands the future. It is for him to will the good of mankind. It is for him to make men what he wills them to be." And Robespierre added: "The function of government is to direct the physical and moral powers of the nation toward the end for which the commonwealth has come into being." I believe most modern Democrats, and a load of Republicans, would share that view of government. I do not.

What I question here, as Adam Smith did before me, is "the man of system." To accomplish the objectives Obama desires will require people be seen as objects within a great system of ideals. The legislator who believes this system will work to make human differences of no real account and by this will seek to bring about essential conformity.

The late Frederic Bastiat, a nineteenth century economist, has the best answer to this that I know. Bastiat authored The Law, an 1850 classic that every informed citizen and public leader ought to read once in their lifetime. (At 80 pages even moderns can read this one.) Bastiat notes that the problem with this approach, the approach of Obama and Talbott, is very simple—legislators begin to treat people as clay, clay that can be molded by higher forces and powers in an all benevolent government. Said Bastiat: "

[But these people] are your equals! They are intelligent and free human beings like yourselves! As you have, they too have received from God the faculty to observe, to plan ahead, to think, and to judge for themselves."

Bastiat spares no prisoners in his arguments. After showing why governments make bad decisions about private decisions he cannot control his outrage and explodes at politicians by writing: "Ah, you miserable creatures! You think you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don’t you reform yourselves? That would be sufficient enough."

But do not misunderstand the alternative that Bastiat advances against progressive legislators running a compassionate government. Bastiat is equally critical of a democracy that hails the people’s wisdom in choosing leaders who will then have all the power to govern well. The democrat hails the people’s wisdom. In what does this great wisdom consist? Bastiat answers: "The people who, during the election, were so wise, so moral, so perfect, now have no tendencies whatever; of it they have any, they are tendencies that lead downward. . . . If people are as incapable, as immoral, and as ignorant as the politicians indicate, then why is the right of these same people to vote defended with such passionate insistence?"

But the $64,000 question is raised by this comment: "If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always so good?"

The big thing during this election season is agreed upon by almost all the pundits and planners. Will American’s trust Barack Obama? I do not think this is the right question at all. I actually like him and trust him a great deal. I trust him to do what a progressive will always do. He believes that the answers to our great economic problems are best solved by wise and good legislators who make smart choices for the rest of us. I don’t. It really is that simple.

Columnist George Will, who is clearly one of the brightest and best thinkers we have, says Obama’s ideals are too idealistic. I agree. He gives an illustration. Obama says he will "require that 10 percent of our energy comes from renewable sources by the end of [his] first term—more than double what we have now."

So what is wrong with this plan? We do need more renewable energy for sure. As Will noted what is wrong here is the word "require" and "renewable" in the same sentence. By 2012 he would require the economy’s huge energy sector to supply half as much energy from renewable sources as already being supplied by just one potentially renewable source. About 20 percent of our energy comes from nuclear power right now. The spent fuel rods from this source can be reprocessed into fresh fuel.

So what is the problem here? Obama, like almost all American progressives, does not like nuclear energy. (France, which is a very progressive and liberal society, depends on nuclear energy so this is why I call this an "American" issue.)

But regardless of the source what conservatives think about this is different than what liberals think. Conservatives, as Will rightly notes, say: "Seeing is believing. For Liberals believing is seeing." Obama seems to believe that if an outcome is desirable than one can require something to make it happen. So what are the details? Will answers, "Details to follow, sometime after noon, January 20, 2009."

Obama also says he will "get" 1 million 150-mile-per-gallon plug-in hybrids on our roads within six years. Will says, "What a tranquilizing verb ‘get’ is." A huge complex industry is going to produce and get a million consumers to buy these cars. I am not being cute when I say the first million might buy them, since they would likely be deeply dedicated Obama voters. But what about the second and third million?

And how will all of these desired outcomes come about? By the government providing financial incentives and billions of dollars of subsidies. There is no other way to "get" these results in our economy.

Thus we are back to Econ 101. Conservatives often sound like they ascribe morals and magic powers to the economy, thus the term "trickle down" economics. (I hate that term too.) Obama progressives believe, very sincerely and compassionately, that (Will) "a new technological marvel or social delight can be summoned into existence by a sufficient appropriation." These are the same folks who once believed that could change society and our cities by creating "model cities" through urban housing programs in the 1960s. I have lived long enough to see the total collapse of this plan and watched as the high rises were blown up in Chicago. This kind of government planning does not work. Worse yet it removes more and more of the very freedom which guarantees the opportunity that an economy can thrive.

The most common objection to what I say is simple. You must have government regulations or big businesses will run rampant over people. Think Enron. I completely agree. We need regulations and regulators, within reason. Unfettered capitalism is not the answer. We need free markets but we also need morality. The two are not enemies. To believe in the market system is not to believe government has no role at all. It is to believe that government often doesn’t know where it’s role ends.

My fear of Obama is not driven by Sean Hannity or Ann Coulter. I do not much care for either of them to be honest. And my fear is not driven by whether or not he is a secret Muslim. This is utter nonsense. My fear is simple. We have tried to progressively create governmental systems to solve problems like we now face in the past and these have almost always failed. Even social security, which has proven to be an exception, of sorts, though it is a bad investment on the dollar if there ever was one, has now been robbed by Democrats and Republicans in such a way that I honestly doubt I will see all I should get from the system in my lifetime. My kids, forget it.

My fear of an Obama presidency is not a rash, knee-jerk, hyped-up conservative reaction. I simply do not think his progressive economic plans will do a single thing to bring about what he promises and if they do then the long term results are even worse.

Will says that in 1996 Dole campaigned on the question, asked about Bill Clinton’s personal life, "Where’s the outrage?" Will suggests that in this year’s election, with the environmental messianism we are hearing, the question ought to be: "Where is the derisive laughter?"

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  1. jp September 2, 2008 at 8:58 am

    “Trickle down” as they use it is a myth. The bottom of the ladder is generally one of the first area’s that receive money in this system. Tax breaks give businessmen more money to invest and create wealth with, this generally starts with hiring new employees and only down the road do the Businessmen hope to get a return on their investments…lastly.

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