By Devin Conn, Guest Commentary
In reviewing Obama's presidency in a larger historical perspective, it is apparent that compared to the dictators, tyrants, and monarchs of a previous era, we are quite fortunate to have a leader who does not exhibit the same brutality of force as the rulers of the past. Nevertheless, because of our ability to identify the faults of our elected leaders, and our tradition of free speech, we are compelled to speak out against them, and decry their misguided policies.
The economic policies orchestrated by this administration have been predicated on a short-term fix, which comes at the expense of exacerbating the economy's prospects in the long run. Of all legislation passed during the Obama Administration, the stimulus package and the bailout were particularly damaging to the economy's true recovery.
This administration advocated the bailout in the midst of economic uncertainty in order to ensure that large institutions that were "too big to fail" would not crash, something experts believed might cause a systematic failure. Their perspective was focused on a myopic view that there would be an initial spike in unemployment as many large banks and corporations would fold, and the market would not correct itself quickly enough. With this in mind, the administration sought a speedy solution, without taking future ramifications into account.
Whenever the government engages in a behavior of distributing public funds to any private organization, it is engaging in what William G. Sumner, a nineteenth-century political scientist, described as "choosing winners and losers." It became evident that in order to save certain industries, government had to actively choose which industries would receive preferential funds and which would not. The unfortunate consequence of being forced to make this choice is that bureaucrats and politicians may become corrupted when making such decisions. Daniel J. Mitchell, a CATO Institute scholar, noticed examples of this trend manifest in which groups received government funds. Mitchell found that as soon as the bill was passed, a long queue of lobbyists formed, trying to get a piece of the multi-billion dollar pie.
The anger and disillusionment, which has been growing recently, can be attributed to the populace's disapproval of large institutions profiting off of a dire situation, while the majority of the citizenry is forced to foot the bill. Meanwhile, the businesses that were poorly managed seem to be rewarded for their incompetence.
Nevertheless, while large institutions were bailed out, it appeared that the economy still suffered from stagnation. Another remedy was certainly needed in order to ensure that employment could bounce back to its optimal level. The stimulus package, a new piece of legislation aimed at tackling the unemployment problem, would infuse capital into segments of the economy in the most need. The principal fallacy of the administration was in overlooking that this capital is merely being reallocated from private sector loans to public sector handouts.
Did this produce the desired goal of lowering unemployment? Unfortunately, it appeared that the stimulus actually may be the culprit for an even greater level of unemployment. While the experts conducting the recovery plan estimated it would lower unemployment to 7.5 percent, the actual statistics calculate the current level at over 9.5 percent. The administration's economists failed to account for the strain placed by an environment of less capital and more regulations, the inevitable result of which was more layoffs.
Reviewing these economic policies, we may ask how the current administration could lack the foresight to see the possible flaws in laws that were passed in a quick and hasty manner. To be fair to President Obama, we must recognize that our present situation allows us to analyze the past, while he could not foresee the inevitable consequences of these bills. However, many of the consequences could have been avoided by merely not interfering with the natural cycles of the economy. While this is an imperfect method, it would have produced a better outcome than unwarranted and unneeded meddling. Will the president learn from the mistakes of his past when making decisions for the future? If we do not change course now, we could be faced with a stagnant economy foryears to come.
Devin Conn is a senior political science major. He can be contacted at conn11@up.edu
