February 19, 2011
Obama Squandering Our CapitalBy Bryan S. Myrick
Glowing comparisons of President Barack Obama to President Ronald Reagan, though in vogue among the echo chamber classes in New York and the Capital, fail woefully upon even the most superficial scrutiny.
Another historical figure may be a more apt match the president's leadership style, though one who will not be opportunely lionized by the editors of Newsweek, the New York Times, or the Huffington Post. Obama's crusade to reform the relationship between business and government is taking on the flavor of another fool's campaign from the dawn of the last century.
In June of 1916, as World War I mercifully approached its zenith, British Field Marshal Douglas Haig made final preparations for a major counteroffensive against the German army in the Somme region of northern France.
Despite being self-assured about a quick victory, Haig also expected Britons to accept massive loss of life as a necessary and natural element of victory:
The first day of the Somme offensive saw 57,000 British lives cut down by organized German resistance. Haig was undeterred and pressed his forces in the months following to push forward over and over. The general adapted his tactics only after a half million British soldiers had died on the battlefields of France.
Last week, Obama spoke at the U.S. Chamber of Commerce, an assembly including some of the nation's leading employers. In the cause to save his own sinking legacy by rescuing the U.S. economy, he defined his expectations for America's business sector in a 34-minute address.
The president urged the business community to embrace a stronger relationship with the federal government, endorse massive public spending in research and development, and look beyond the bottom line in decisions to keep operations (and jobs) in America.
At the core of the president's address was an appeal to make sacrifices for the common cause.
"Even as we make America the best place on Earth to do business, businesses also have a responsibility to America," the president said.
Lacking only the personal experience on which to make credible claims of solidarity with business owners, Obama proclaimed, "I understand the challenges you face. I understand you are under incredible pressure to cut costs and keep your margins up. ... I get it."
"Now is the time to invest in America," he declared.
Haig's miscalculation squandered the critical resource of a nation at war -- the force of men willing to place themselves between the enemy and their homeland -- and might have been fatal to the cause had America not sent men to patch holes in the Allied lines.
Obama's gambit toys with the nation's desire for economic recovery and, in a paradox similar to Haig's Somme maneuver, puts at risk the very objective he purports to be working for.
Any hope for recovery will start with businesses having the prerequisite key for unlocking opportunity -- abundant capital. During the Obama years, businesses have learned to perceive the government as a competitor in that marketplace. Through the State of the Union last month and the U.S. Chamber of Commerce address, Obama has made it clear that he has no intention of easing off on the government's appetite for funds. In light of continued high unemployment and rising inflation fears, his persistence is a trait only Haig could be proud of.
Though Obama in his post-midterm makeover has altered his tone -- opting to describe his vision of a perfect relationship between government and business in fluffier terms, as a "virtuous circle" -- it is just a rebranding of the same old self-devouring serpent that economists have repeatedly warned against. In brief, Obama wants businesses to outsource their research and development to Uncle Sam. The government will fund programs to research and develop new technologies for the eventual employment of American workers in homegrown industries.
Put another way, the President's vision for America's future is to take money out of the economy (read that as taxes) to be spent by the government (read that as deficit spending) in the development of marketable innovations (never mind where the incentive comes from for creating marketable technologies without a functioning profit motive). Jobs are created in the production chain of the resulting goods or services, providing the fuel for future research and development funding. Business would be able to pay the comparatively higher wages and benefits to American workers partly due to the savings from not having to run their own R&D programs.
The virtuous circle model promoted by Obama looks good on paper, but it fails miserably in practice, due primarily to the fact that the federal bureaucracy has the combined strategic sense of...well, Field Marshal Haig. After all, this is the same federal government that frequently asks for funding to upgrade technology and then ends up spending billions of dollars on obsolete proprietary systems that refuse to communicate with the outside world.
The warning signs for business leaders is, therefore, right out front in Obama's economic plan. At the onset, the desire to have the federal government even more aggressively assert its right to the fiscal equivalent of prima noctis -- laying first claim to an ever-larger chunk of the American earnings pie -- the closed economic system is born, and killing it becomes far more difficult.
Tax battles, the package of spending initiatives laid out by Obama in his recent State of the Union, adding massive new entitlements such as the national health care law, and pressure to lift the federal debt ceiling all open the door for the federal government to have the means to acquire what Vladimir Lenin called the "commanding heights," the institutions and mechanisms through which the entire economy can be steered.
Blinded by ideology, Obama is able to ignore the cancerous side-effects for an economy placed on a steroid-laced diet of government spending -- inflation and currency devaluation being of chief long-term concern. Should we consider these necessary sacrifices in Obama's campaign to "Win the Future"?
Obama's call to American business to invest in the economy is no less of a fool's crusade than Haig's. It is a siren's song to lull the American innovative engine into a new economic arrangement in which government spending becomes the seed for growth, one that embraces again the failed New Deal economics of President Franklin D. Roosevelt.
This time, we must be smart enough to recognize the difference between sacrifice and suicide. Walk away from the Somme this time, soldiers. This time, the costs of sacrifice may just be the very thing we are trying to save.