Redstate

By Pejman Yousefzadeh Posted in Barack Obama | Economic Policy | Economy — Comments (3) / Email this page » / Leave a comment »

Political speeches on the economy rarely turn out well. The politician giving the speech runs the risk of either being exceedingly detailed and technical (thus boring his or her audience) or issuing platitudes (thus signaling that the speech has no meat or meaning behind it whatsoever).

If one is to err, of course, one ought to err on the side of being exceedingly technical. Unfortunately, Barack Obama, in his speech on the economy, opted for platitudes.

Read on . . .

As with most pronouncements from the Democratic Party concerning the economy, Obama argues that there isn't enough of a regulatory structure and this supposed lack of regulation is responsible for the onset of a financial crisis. However, as with most pronouncements, Obama does nothing to show any kind of serious causal relationship between a supposed lack of regulations and the downturn in the economy. He fails to show how the economy thrives in a regulatory environment. We had regulations galore in the 1970s . . . and the stagflation that accompanied those regulations. In the wake of the Enron and Worldcom scandals--which Obama mentions and decries--we enacted Sarbanes-Oxley. That worked quite poorly, now didn't it?

Given the failures experienced in the not-so-distant past in the course of efforts to regulate the business environment, one would think that a Presidential candidate would think twice--and perhaps three times--about resorting to the shibboleth of "regulation" as some sort of cure-all for America's economic ills. But Karl Marx may have ended up being right about one thing: History does indeed repeat itself; the first time as tragedy, the second time as farce. The cue for the farcical was given in Obama's speech with his calls for more regulations.

Not only are more regulations demanded, a unified regulatory structure is demanded as well. Senator Obama argues that we should "streamline a framework of overlapping and competing regulatory agencies." This sounds good on paper, but again, how well have such bureaucratic "streamlining" efforts worked in the past? They do nothing to decrease the actual size of the bureaucracy itself. They do nothing to cut the budgets of said bureaucracies. They only serve to mix and mash a whole host of competing agencies into one superagency that will supposedly solve all our problems, but in fact, only serves to make those problems worse.

As Brother blackhedd wrote in an e-mail to me, we certainly have not seen any benefits of creating the superagency that is the Department of Homeland Security. Instead of augmenting America's security structure, DHS has only served to throw the country into a miasma of confusion when it comes to security procedures--confusion leavened by the occasional bout of administrative incompetence. I might add that we certainly have not seen any benefits whatsoever in the creation of a superagency that is supposed to deal with the collection and analysis of intelligence. Quite the contrary; the national intelligence reforms and the superagency they have created constitute a bureaucratic and policy nightmare.

Why should we believe that a consolidation of bureaucratic agencies regulating the financial sector should turn out any better? Such a move may turn out even worse than DHS and the National Intelligence Directorate have turned out. The subprime market and the ongoing credit crisis represent very knotty, very complicated problems for the private sector and for policymakers to tackle. In order to successfully tackle these problems, we are going to have to do so deliberately--even tediously--so as to ensure that we have a proper handle on the many intricacies of our current economic challenges. Instead, Senator Obama argues that we ought to just sweep away the current regulatory structure and replace it wholesale with a new supersized structure, without engaging in the close examination of the issues and the facts that the current situation requires.

Count me out when it comes to this approach. I have seen this movie before and it does not end well. To be sure, there is something to be said for getting rid of dilatory and useless regulations--you will find few advocates more ardent than me on this matter. At the same time, however, if we are going to have a regulatory structure in place, it would be far more preferable to have the current one, with its competing agencies checking one another and potentially having each agency in the position to specialize in a particular facet of the new economy; the better to issue rules and regulations that actually make sense.

The worst thing that we could do is to come to the facile conclusion that all we need is a bigger, more expansive agency which does to economic policy what the Department of Homeland Security does to national security policy and what the National Intelligence Directorate does to spycraft. The worst thing that we could do is to create some kind of gargantuan bureaucratic structure where the left hand does not know what the right hand is doing and vice versa, a structure that is unchecked by any other agency in the field of economic regulations, an agency that is as blissful in its ignorance about the facts surrounding the economy as it is confident in its belief that it can solve whatever problems we face in the economic realm by fiat and the waving of some kind of magic bureaucratic wand.

Lots and lots of people would have fallen asleep if Barack Obama got up to a podium and sounded like Ben Bernanke. But at least, Ben Bernanke knows what he is talking about. He doesn't content himself with the constant repetition of policy shibboleths. He offers details and specifics with which to agree or to take issue. Policy-laden speeches don't go over well with the rah-rah crowds that frequent Presidential campaign rallies. But some of us don't want rah-rah rhetoric. We want facts. We want arguments. And we want some rigor and vigor behind those arguments.

We didn't get that from Barack Obama. Maybe next time, but I'm not holding my breath.