I never thought I’d see the day when a Russian President demonstrates a better understanding of basic economics than his American counterpart, but that best describes the reality in which we find ourselves in the Age of Obama. I’ve written several times in the past two years on the inherent irony in the fact that European countries, having experienced decades of economic malaise, are now moving away from the socialist economic model that produced that malaise while President Obama embraces it. Now, in a particularly noteworthy twist of irony, the Russian President, Dmitry Medvedev, has also reached the conclusion that central planning simply doesn’t work, and it’s the private sector that’s the engine of economic growth and higher future living standards. Via the AP:
“The proposition that the government is always right is manifested either in corruption or benefits to ‘preferred’ companies,” he said.
“My choice is different. The Russian economy ought to be dominated by private businesses and private investors. The government must protect the choice and property of those who willingly risk their money and reputation.”
“Corruption, hostility to investment, excessive government role in the economy and the excessive centralization of power are the taxes on the future that we must and will scrap,” he said.
Compared to Obama, Medvedev sounds downright “Friedmanesque”. You know things are upside down, and we must be living in an alternate universe, when the Russian leader makes more sense than our own. To be sure, Medvedev’s comments were directed at his powerful Kremlin rival, Vladimir Putin, but his words can be just as easily applied to the economic policies of the Obama Administration. When he points out that big government necessarily manifests itself “in corruption or benefits to ‘preferred’ companies”, it’s not difficult to envision the rampant cronyism engaged in by Team Obama.
This is evident in the enormous subsidies to Obama’s buddy, Jeffery Immelt, and the hundreds of billions in other payoffs contained in the Porkulus bill. It’s evident in the nonsensical winks to his union boss puppet masters while an environmental disaster raged in the Gulf of Mexico. It’s evident in the thousands of waivers so his friends could avoid the disaster that is Obamacare (20% of which, surprisingly, went to Nancy Pelosi’s district). It’s evident in the billions of dollars in goodies that went to Goldman Sachs and other large, “Obama-friendly” financial institutions at the expense of everyone else in the Dodd-Frank bill, and the myriad other benefits and payoffs to political cronies from this, the self-described most transparent administration in history (or something).
Medvedev also notes that the economy must be dominated by private businesses, and the government’s role is to protect those who willingly take risks. Private property rights and enforceable contracts are, of course, fundamental to the free market. Without this crucial guarantee, there is little, if any, incentive to risk one’s capital. Obama’s decree to fleece General Motors’ bondholders in order to enrich his union campaign contributors is instructive. It perfectly illustrates how little Obama understands markets, and how wedded he is to the corruption of cronyism. Why would an investor risk his money in an enterprise that can be effectively nationalized by government fiat? This is what’s done in, well, Putin’s Russia. Apparently, much to our detriment, it’s also par for the course in Obama’s America.
Medvedev continues by noting that an economic environment which legitimizes official corruption, hostility to investment, and excessive centralization of power are akin to “taxes on the future”. He’s right. The “taxes” will take the form of inevitably lower future living standards as capital flees to safe havens where private investment is welcomed rather than repelled through an environment of hostility. Hostility to business, of course, has been a hallmark of the Obama Administration since its inception. Governor Palin spoke to this very issue in a recent Facebook Note when she responded to the heavy handed attempt by Obama’s NLRB to force Boeing into aiding him politically by hiring more union workers whose coerced contributions would flow to his campaign coffers:
President Obama has the opportunity to prove that he cares about keeping jobs for working class families in America. He can speak up about his appointees at the National Labor Relations Board (NLRB) who have their boots on The Boeing Company’s neck. Does the President support the rights of businesses and working class people in right-to-work states to make sound decisions without government regulatory agencies unfairly punishing them?
Does the President realize the real concern here is not that businesses will choose to locate in one state over another? It’s that businesses will choose to locate in other countries because thanks to the Obama administration’s job killing policies and over-reaching regulatory boards the business climate in the United States is growing toxic. South Carolina’s Senator Jim DeMint reminded President Obama that the President said in his State of the Union address: “We have to make America the best place on Earth to do business.” I agree with this sentiment, Mr. President. If we want to keep good paying jobs for working class families in the United States then you shouldn’t pit South Carolina against Washington state because eventually every state will suffer when businesses declare “enough is enough” with these tactics and decide to relocate in more business-friendly countries.
Exactly, and this is why for the first time in recent memory, the U.S. is not leading the economic recovery, but lagging it. The Obama Administration’s obvious ignorance when it comes to economics and resulting hostility to business is predictably causing capital to seek other alternatives, which even Medvedev understands. As I mentioned above, it’s truly a bizarre world we live in when the Russian leader understands economics 101 better than our own leader. At least for the next 17 months that is.
Update: (h/t John_Frank) How bad is it? Obama’s own Chief of Staff calls some of his economic policies “indefensible”, via Fox Nation:
White House Chief of Staff Bill Daley took heat from business executives Thursday for the Obama administration’s regulatory expansions. Daley also said he didn’t have any good answers for some of what President Obama is doing and expressed frustration about the “bureaucratic stuff that’s hard to defend.”
“Sometimes you can’t defend the indefensible,” Daley said at a National Association of Manufacturers (NAM) meeting.
Oops. If I were Daley, I’d think about heading back to Chicago after that burst of lucidity. Maybe Daley stuck his thumb in Obama’s eye on purpose, though, so he’ll no longer have to defend asinine statements like this. Heh. Only in Obama’s world are productivity enhancing inventions bad for the economy. Maybe we can go back to harvesting corn and wheat by hand. That will result in hundreds of thousands, if not millions, of new jobs in the Midwest, right?