Writing in Forbes recently, Dinesh D’Souza presents the bizarre idea that Barack Obama’s presidency can be best understood by realizing that “Incredibly, the U.S. is being ruled according to the dreams of a Luo tribesman of the 1950s [that is, Obama’s late estranged Kenyan father]. This philandering, inebriated African socialist, who raged against the world for denying him the realization of his anticolonial ambitions, is now setting the nation’s agenda through the reincarnation of his dreams in his son.”
D’Souza needs to get out more. Specifically he should have a talk with Timothy Carney and Charlie Gasparino, whose books demonstrate beyond question that the best phrase to sum up Obama’s presidency is not “African anticolonial socialist” but “American Progressive corporatist.” Carney’s 2009 book is titled Obamanomics: How Barack Obama Is Bankrupting You and Enriching His Wall Street Friends, Corporate Lobbyists, and Union Bosses (it was reviewed in the June 2010 Freeman). Gasparino’s recently published book is called Bought and Paid For: The Unholy Alliance Between Barack Obama and Wall Street. Neither writer could be mistaken for a left-winger.
The political establishment, helped by the mass media and intelligentsia, has long played a game in this country. It consists in depicting the competition for power as between two blocs: one hostile to business in the name of social justice, the other friendly to business in the name of “the free market.” Each bloc’s talking points and pet projects are calculated in superficial ways to reinforce its signature theme. Whenever the blocs need to rally their respective bases, they accentuate their surface differences. The “antibusiness” bloc accuses its opponents of being, say, Wall Street lackeys, while the “pro-free-enterprise” bloc accuses its opponents of being, say, socialists.
It’s all a sham that serves each side’s interests. The rivals actually want two variations of the same thing: the corporate state, a system of economic privilege that transfers wealth via government from market entrepreneurs, workers, and consumers to well-connected business interests.
What we have are two factions of a single establishment. Differences in rhetoric notwithstanding, both are friends of and beholden to big entrenched manufacturers (military contractors lead the way) and big financial institutions. Neither faction wishes to do anything to undermine the interests of these businesses. And for their part, the business people have no desire to antagonize either side. They need one another: The politicians need the campaign funds and economic cooperation; the businesses need the subsidies, guarantees, low interest rates, and impediments to competition. The banks in particular need friendly relations with politicians (federal, state, and local) who float debt that brings big fees for bond underwriters. It’s one close and lucrative alliance (which is not to say the various parties agree on every detail). Thus it has been throughout American history. (Doubters should consult Arthur A. Ekirch, Jr.’s classic, The Decline of American Liberalism.)
Obama to the Rescue
Enter Barack Obama. “For the most part, Obama had been good to the banks—really good. They’d gotten everything they wanted in terms of bailouts and handouts and reaped enormous profits because of it,” Gasparino writes. “. . . The fact of the matter is, when you strip away the name-calling and class warfare coming from the Obama administration, and when you ignore Wall Street’s gripes about the new financial reform legislation that will put a crimp in some of its profits, these two entities are far more aligned than meets the casual eye. They coexist to help each other—in an unholy alliance against the American taxpayer.”
Gasparino points out that Obama signaled his eagerness to be Wall Street’s friend at a meeting with the big players during his presidential campaign, and they came through with the money. Wall Street had no reason for remorse when they saw his economic appointments and advisers: Timothy Geithner (formerly of the New York Fed), Lawrence Summers (Treasury secretary under Bill Clinton and former World Bank president), Paul Volcker (former Fed chairman), Robert Rubin (formerly of Goldman Sachs, later of Citigroup), Ben Bernanke (reappointed as Fed chairman), Rahm Emanuel (formerly of Goldman Sachs), and Greg Craig (a political insider who has gone on to represent Goldman Sachs from one of the nation’s top law firms). Many other Wall Street insiders, whose names are not so well known, have the President’s ear.
Gasparino’s thesis is confirmed by the essential continuity between the Bush and Obama administrations. Wall Street got first consideration beginning when the rotten fruit of bipartisan housing and monetary policies became apparent. If anything, the Obama team has substantively treated Wall Street better than the Bush team did. The Fed has gone into the business of allocating capital selectively, buying up mortgage-based and other “assets” of dubious value from institutions deemed too big to fail. One must guard against being deceived by political rituals. The Dodd-Frank financial “reform” is portrayed as the long-overdue taming of Wall Street, but no one who pays close attention believes that. The usual players will help write the myriad rules the new law calls for, and they are not likely to harm the insiders’ interests.
Sure, Obama bashed Wall Street last fall. No surprise: There was a campaign on and his party was in deep trouble; unemployment was stuck above 9.5 percent; and the disillusioned base needed rallying or it might not have shown up at the polls. The bigwigs at Goldman and the other firms may not be happy about the rhetorical roughing-up. They may even be concerned that a desperate Obama will do something in the short run that could reduce the growth of profits and executive pay. Such uncertainty is surely one reason for the reluctance to invest and slow recovery. But it’s unlikely that any big player fears that the future holds a radical anti-capitalist revolution.
The daily talk-radio and cable-news alarms about this being the most radical left-wing administration in U.S. history should be chalked up to base-rallying on the other side. As I suggested at the outset, the American political system capitalizes on the division in public opinion over the role of government by propagating the myth that there is a grand war raging between the advocates of Big Government and the advocates of Free Markets. In fact, it’s an intramural competition between two rival factions that favor government management of the economy—with a few differences in detail—on behalf of special interests.
Why the charade? All the better to exploit the productive classes, those that would be prospering in a freed market.