You know, each of us is only here because somebody somewhere felt responsibility, yes to their families, but also to their fellow citizens. Also to our country’s future. That’s the American story. The American story is not just about what we do on our own. Yes, we’re rugged individualists, we expect personally responsibility and everybody out there has got to work hard and carry their weight.In the statement above, President Obama is arguing three points:
We also have always understood that we wouldn’t win the race for new jobs and businesses, and middle class security if we were just applying some ‘you’re on your own economics.' It’s been tried in our history and it hasn’t worked. It didn’t work when we tried it in the decade before the Great Depression. It didn’t work when we tried it in the last decade. We just tried this. What they’re peddling has been tried — it did not work!
- That capitalism (ie, 'you're on your own economics') does not lead to increased economic growth and personal freedom.
- That when capitalism 'was tried in the decade before the Great Depression' it did not work to increase economic growth or result in more personal freedom.
- That capitalism 'was tried in the decade before the Great Depression.'
- And that communism (or the 'responsibility' of those who work hard and are successful to give up their wealth and freedom and property to those who do not) leads to more economic growth and personal freedom than capitalism.
Before I use my grade school education to easily refute his three points, let me pause for a moment to drop my mouth in stunned disbelief that this communist is running our nation right now and is even seriously considered by many to have a good chance at winning reelection.
- The suggestion that capitalism- defined as an economic system that includes private ownership of the means of production, creation of goods or services for profit or income, the accumulation of capital, competitive markets, voluntary exchange, and wage labor- does not lead to increased economic growth is just beyond stunning. Nations which have adopted largely capitalism economic systems- USA, Britain, Germany, Singapore, Japan, etc- have had far superior results than nations which have attempted other economic systems- Soviet Union, Yugoslavia, China under Mao, Cambodia under Pol Pot, etc. In economic growth, human liberty, quality of life, amount of personal liberty, and treatment of the poor, capitalism has demonstrated again and again to be a great economic system. It is bad at giving power to elites because of its emphasis on voluntary exchanges, and it is bad at giving wealth to those who do not labor for it because of its reliance on wage labor, and it is poor at keeping a stable class system in place because of the high mobility of capital, but unless you want those things (which Obama does) than capitalism is a very good economic system to adopt.
- Let's take the year 1929 as a good date for the start of the Great Depression, which would mean that we would need to analyze the economy of the United States from 1919 to 1929 to get a fair sense of whether 'on your own economics' (aka, American capitalism) led to increased economic growth. Through the beauty of a website called Measuring Worth (which appears to be led by a slew of top university professors), we can establish in real terms just exactly what the economy did during this time period. From 1919 to 1929 in the United States, the CPI went down .1% (meaning goods were cheaper to buy) and the real GDP went up 3.48% (meaning Americans were more wealthy). From 1923-1929, the unemployment rate hovered under 5%- and that wasn't a phony number either like Obama is pushing now. New products and services were introduced- automobiles, radios, electric iceboxes, electric irons, fans, electric lighting, vacuum cleaners, other laborsaving household appliances, growing electricity, etc. For skilled and semi-skilled male workers real average weekly earnings rose 5.3 percent between 1923 and 1929, while real average weekly earnings for unskilled males rose 8.7 percent between 1923 and 1929 (source)- in other words, this economic growth helped out the poor and unskilled the most. I could go on, but I think the case has been made that when 'on your own economics' was tried in the decade prior to the Great Depression, it worked, it worked well, and it would work again.
- The above point is based on the fact 'on your own economics' was tried in the decade prior to the Great Depression, but as Lawrence Reed (President of the Foundation for Economic Education) documents in his booklet Great Myths of the Great Depression, this was not really the case. After decades of amazing and booming success from 1836 to 1913, America decided to adopt another failed central banking system in 1913, and after that point we can clearly see that our economy wasn't as 'on your own' as uneducated people like Obama argue and that the less 'on your own' the economy got the more trouble it got into. One prominent interpretation of the Federal Reserve System's actions prior to 1929 can be found in "America's Great Depression" by economist Murray Rothbard- using a broad measure that includes currency, demand and time deposits, and other ingredients, he estimated that the Fed bloated the money supply by more than 60 percent from mid-1921 to mid-1929. By 1928, the Federal Reserve was raising interest rates and choking off the money supply, which is just the sort of economic uncertainty from the government that leads to a decrease in economic growth. Rising calls for higher tariffs (that led to the Smoot-Hawley Tariff, passed in June 1930, which was even harsher than the Fordney-McCumber Tariff of 1922) and dramatic increases in government spending (starting in 1929) also led to a sharp but regular recession caused by government policy escalating into a full out Depression. All it would take now to turn this Depression caused by government policy into a historic and awful Great Depression was more government intervention.
- President Obama suggests that economic success is built on a sense of shared responsibility in the nation. He may be suggesting some sort of communism or socialism- to each according to their needs, to each according to their abilities- but in further thought I think that President Obama is more properly asserting a different idea. Obama is suggesting that our economy be state-directed and heavily regulated, where private property and private enterprise is contingent upon service to the nation, and the state should step in when it views private enterprise as failing or inefficiently distributing money (for example, it is 'not fair'). These ideas aren't anything new- they are the very definition of fascist views on the economy. I'm no economic expert, but from speeches like this one, it sounds like President Obama is pushing for alternatives to capitalism such as syndicalism or corporatism. These economic models have been unsuccessful wherever they have been tried.
As we can see, President Obama has revealed himself in his recent speech to be ignorant of history, economics, and political theory, and has been led by his lack of knowledge and education in these subjects to advocate policies that have led to failure and worse. President Obama isn't a bad guy- just ignorant, naive, uneducated, and I think honestly unaware of how dangerously close his policy suggestions are to fascism and communism. But if a small-time government teacher from Flint can deconstruct and rip apart his speeches and policy suggestions this easily, I think it demonstrates that he should not be re-elected as President of the United States.