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Time Is Not on His Side

Mickey Kaus asks a good question: “Why do I get the impression that if Bernanke is right, and we avoid a redemptive New Dealish ordeal, Obama will on some level be disappointed?” Well, a quick recovery would alleviate the pretext for the Grand Design. That’s the one in which labor relations become industrial policy by government mandated interest arbitration. That’s the one in which government’s share of GDP grows and grows. That’s the one in which government-directed healthcare, government-directed cap and trade, and government directed birth-to-employment education replaces the myriad private sector arrangements that have heretofore operated in American society. As Charles Krauthammer explained:

Obama sees the current economic crisis as an opportunity. He has said so openly. And now we know what opportunity he wants to seize. Just as the Depression created the political and psychological conditions for Franklin Roosevelt’s transformation of America from laissez-faireism to the beginnings of the welfare state, the current crisis gives Obama the political space to move the still (relatively) modest American welfare state toward European-style social democracy.

Without the Great Depression II there is no New Deal II. But there’s a catch. If the Great Depression II proceeds, will the American people be patient and return a large Democratic majority to perpetuate the unproved policies? Or will people react as they did in 1980, realizing that a period of economic turmoil is threatening the fabric of American society and our standing in the world? (Or one may recall the 1938 Congressional elections, in which Republicans made a startling comeback.) I suspect the American public’s willingness to put up with economic chaos has decreased significantly over the last 70 years.

So, prolonged crisis may not be Obama’s political ally — no matter how inviting an atmosphere of crisis may be. And thus far, none of the policies he has proposed will enhance our prospects for a quick turnaround. That’s a problem, even for a president as audacious as Obama.