December 23, 2009

It's that time of year

We're nearing one year of President Obama's tenure, and I was thinking it might be nice to lighten up a little. One way of thinking about what we've been through, after all, is to recognize this is what most of us thought would happen. We knew last year that 2009 would be a lousy year for anybody to be President. Remember? I think the President was so caught up in the campaign to become President that it perhaps did not register just how tough this job would be at this particular time.

"America was in a throe, a kind of eschatological heave..." Norman Mailer wrote those words in his wonderful Armies of the Night book, way back in the Vietnam protest days. Something like that is going on now. Most of the bad news is economic, of course. We're going through a painful and long-delayed transition from the import/service/information economy to something else, probably based on Green energy and smaller scale enterprises. Obviously it will take years to get there, but the journey has to be made. Presidents who govern at such times, during difficult transitions, usually have a miserable time and are thrown out of office as thanks for their efforts. I'm thinking of Jimmy Carter in 1976-1980. He's generally denounced as a lousy president in our revisionist histories, and a lot of this concerns high inflation and the Iranian hostage crisis. But another major problem he faced was the transition from American peak oil (around 1970) to the beginnings of OPEC power over the American economy, which we allowed to happen by not dealing with the energy crisis then. Carter was definitely on to this, but Americans did not want to hear about "shortages" or "conservation" or efficiency or anything else sensible. It was better just to get rid of the guy who talked this way, and give us a President who would tell people what they wanted to hear: it's Morning.

So we went from oil self-sufficiency to the present state of helpless dependency where we import about 2/3rds of what we use: 14 million barrels out of a daily habit of about 20, or 25% of world usage. All that oil costs a fortune, and it has been the main driver of the imbalance of trade. And it makes us responsible for a hugely disproportionate (per capita) contribution to climate change. My guess is that Barack Obama, a bright guy, figured out what happens to Cassandras who acquaint Americans with inconvenient truths. The problem is: how do we ever confront the necessity of change without having it forced upon us in the present, chaotic, dislocating way by Reality? This seems to be the chief problem with over-reliance on "free market" ideology: it's a blind pig staggering around a crystal show room.

Meanwhile, the blogs (like mine) are in full roar, having gotten addicted to negative dissidence during the Bush years. At this point, you can read so many different versions of the same apocalyptic prognoses, on so many different blogs, in so many different ways, that it's getting a little silly. I do think there is quite a bit of stabilizing inertia built into the world's interlocking economies, after all. It's not all negative stochastics. For example, the Chinese have warned us that they don't have as much money to buy Treasuries anymore. The Selbstschadenfreueders immediately leap upon this as definite proof that America's complete bankruptcy is only days away. They drive this point into the ground. I read it one place, then see that blog's point quoted on another blog, then another blog starts talking about the "consensus" that we're bankrupt, and pretty soon 5 million angels are doing the mazurka on the head of a pin. I think what the Chinese were trying to convey is that they've got a large stake in dollar-denominated assets, and the U.S. needs to cool it in terms of demanding more investment.

And so Obama has begun talking about fiscal restraint as a main focus next year. You know: duh. Then the liberal Keynesians (Krugman, Dean Baker) call this restraint "idiocy" and bad economics because only by running up the deficit can we hope to revive the economy that wasn't really working in the first place. I think this is the difference between pundits and people who actually have to make decisions in the real world, based on real world restraints. Krugman is reciting something he read in a text, Obama is looking at an overdrawn check book and a banker making ominous noises about calling loans. Obama's right, Krugman's wrong.

If Obama can get past this economic crisis, maybe he will have the elbow room to demonstrate some innovation. It's not really possible now - it's all damage control, all the time. I'm not that optimistic about him, however, and that's a conclusion I'd rather not reach. Some very exciting, interesting things could be done, but I don't think he's going to do them. But maybe the American people will lead the way, for once, and the leaders will rush to get in front of a parade already in progress.

Merry Christmas, one and all.

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