President Bush on Saturday called on nations to embrace free trade, urging them to resist the temptation to resort to protectionism, even as turmoil races through the world's markets. "One of the enduring lessons of the Great Depression is that global protectionism is a path to global economic ruin," Bush told an economic gathering here during his final scheduled foreign trip as president. "We refuse to accept protectionism in the 21st century. … There is a risk that slower world growth could lead to calls for protectionist measures, which would only exacerbate the current economic situation," the APEC nations, including China, Russia and the United States, said in a statement. Bush came to Peru seeking to bolster support for his plan to tame the global economic crisis. A week ago in Washington, he and other world leaders backed a plan of economic stimulus mixed with improved oversight and regulation. The APEC group said Saturday that it would "strongly support" the general guidelines outlined in Washington. "Our nations must maintain confidence in the power of free markets," Bush told the gathering. – LA Times
Dominant Social Theme: Bush is a free-marketeer through and through!
Free-Market Analysis: Not. One wonders how in the world President George Bush can get up on the big stage and call for free markets given the state of the country that he is leaving behind. This is not to say that another American president will necessarily be able to reinvigorate Western free-markets, but as Bush's term draws to a close it is instructive to remember that even rhetorical endorsement of free-markets were fairly absent from this administration's vocabulary for both of his terms.
It is apparent, at this late date, that American voters likely didn't get what they expected from Bush. Voters spent most of the first term, it seems, waiting for signs that government was going to be cut and programs phased out. In the second term, the waiting finished – according to our American friends – when Bush went down to New Orleans and promised $200 million to help rebuild that hurricane damaged city. There was no talk of private initiatives only of government power and government solutions. This was in keeping with the rest of a presidency that emphasized raw military power, erected several new bureaucracies of the most terrifying sort, including the inaptly named Homeland Security and virtually doubled the national debt from $5 trillion to over $10 trillion.
By now, perhaps, most Americans are fairly immune to the large numbers coming out of Washington, but then again never have so many government solutions been proposed so nakedly and with such rawness as now – certainly not since the end of World War II. It is as if the entire economy is being mobilized behind federal power, with both the American central bank and Congress doing their part to stuff the sinking economy, like a turkey, with the breading of monetary inflation.
Before the massive outlays are over, the recognized total of American reflation to try to counteract the financial crisis, may be another US$10 trillion. Only this time, it will take perhaps two years to reach that figure instead of 200 years. Will Barack Obama be any better? His choices thus far provide a vision of a continuity with past administrations that is notable only for its determined cohesion.
Former Treasury Secretary Lawrence Summers, who lost out to New York Federal Reserve President Timothy Geithner for the Treasury post, is expected to be the top economic adviser in the Obama White House, according to two sources close to the transition. Lawrence Summers served as Treasury secretary under former President Bill Clinton. Selection of the Obama economic team comes as President-elect Obama offers an outline of his economic recovery plan to create 2.5 million jobs by 2011. Obama, in the weekly Democratic address Saturday, said American workers will rebuild the nation's roads and bridges, modernize its schools and create more sources of alternative energy. Summers, who served as Treasury secretary in the Clinton administration, will be named chief of the National Economic Council by President-elect Barack Obama at an event in Chicago, Illinois, on Monday, the sources said. Geithner's nomination to be Treasury secretary, the top economic post in the Cabinet, will also be officially announced at Monday's event, the sources said. (- CNN)
Nothing about Obama's incoming administration thus far would seem to spell CHANGE, though that of course if the slogan he ran on. United States policy as it ran (down) under Bush will likely not change, nor will economic policy. In fact, if Obama really does put in place an economic plan to "create 2.5 million jobs" he will likely succeed in turning a bad recession into a worse depression. There are several academic studies that have been floated recently that point out that Roosevelt's New Deal employment programs, with their enormous outlays, merely managed to prolong the agony – making what might have been a recovery in the early 1930s, an endless depressive sojourn that lasted until World War II.
No, the Bush/Obama years, ironically enough, will likely provide an honest money gold and silver boom that should culminate toward the end of Obama's term. By then, the inflation in the pipeline will have hit the mainstream economy and the monetary elite likely will be bickering furiously about whether or not to confiscate gold. Which apparently they are currently loath to do. Good on them! That's about the extent of the positive activities for which Western economic leadership can be held responsible, for the moment. As for the rest, it's every citizen for himself or herself. Free markets exist regardless of rhetoric and the invisible hand is a heavy one when we attempt to thwart it. Obama will find that out, as Bush already has.
Hopefully, it won't take a World War to reinvigorate American-style free markets. But actually America has not offered a free-market economy since the twin socialist impositions of the Federal Reserve and the graduated income tax in 1913. President Bush certainly did little or nothing (outside of a tax cut or two) to change the direction in which America is headed. And Obama, unburdened by expectations in this direction, will do even less.
It is most likely the Obama years will be a kind of Roosevelt Lite. He will be lauded by the mainstream press, which will make much of minor accomplishments. But the chances of the full scale mobilization that Roosevelt was apparently able to mount is much less feasible in the 21st century. This is a result of the level of American irritation with politics generally and specifically as a result of the Internet which has educated a burgeoning generation of individuals about alternative social and economic organizations.
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