American Socialism and Economic Policy

Socialism was an economic order based on government ownership and management of all the “means of production.”  For Marx and Lenin, that meant complete nationalization of all private firms and industries. Having an economic plan was a second essential for a socialist economy, and those two principles were combined with the redistribution of incomes and the pursuit of extensive social welfare policies.

The first socialist president of the United States, President Barack Obama, came to office after genuine socialism had been abandoned in most parts of the world, but economic problems and the need for economic policies remained pressing needs of that time.  After the financial freeze of 2007 much work was still needed. The financial freeze had basically been overcome by President Bush and Henry Paulson, but the Dodd-Frank recession that followed in its wake was left for President Obama to address. Obama and Larry Summers promoted a large stimulus spending package of nearly a trillion dollars, but the funds were not spent to rebuild infrastructure. Obamaexplained that no “shovel-ready” infrastructure projects could be found. As a result, this huge fund was unfortunately frittered away in support of failing local governments which had overspent on pension programs, etc., wasteful expenditures for temporary green jobs, political payoffs, and other varieties of pork. This is all addressed in some detail in my book, Socialism; the bottom line was that there was no useful economic effect from the massive expenditures, since unemployment continued to climb.

The normal pattern for business cycles is that the phase of recession is followed by a recovery. The upturn is usually sharp as everyone is anxious to satisfy pent-up demands after the recession and restored confidence drives a period of rapid expansion. The Obama administration, however, pursued anti-economic policies that thwarted economic growth in one of history’s slowest recoveries. These policies included a war on coal and carbon for environmental purposes and the Obamacare dictum that businesses must provide health care for full-time workers. The result of the latter was that firms

began immediately to hire only part-time workers.  These misfortunes were followed by the Dodd-Frank financial restrictions after the onset of the Great Recession.  Those restrictions stifled the banking activity that would have financed a post-recession, small business boom.

For these and other reasons, the recovery after 1908 was extremely slow and painful. The labor-force participation rate plummeted; the food-stamp rolls, the ranks of the disabled, and the numbers in poverty all increased dramatically. The incomes of the middle class, however, did not do so; nor have they increased in decades. In my book on socialism I wrote that “it was an insult to the intelligence of the voter when President Obama repeated incessantly that the economy was moving in the right direction, but there was still work to do. That’s like a coach of a 0-16 NFL football team insisting that ‘our last loss was only 73-3. The field goal we made was great and we’re going in the right direction, but there’s more work to do.’” (Socialism, p. 740.)

The problem with socialism is that it can do no more than put its hopes on Keynesian expenditures to stimulate a depressed economy. In the aftermath of 2007 and 2008 the Obama-Summers Keynesian stimulus was a waste. There was no socialist economic solution for the Great Recession. One can rail continuously that Reaganesque solutions are “trickle-down policies” that only help the rich, but there is no solution in this talking points criticism.

Progressives, who favor massive deficit finance to solve all problems, also favor a continuous flow of commercial regulations that tend to thwart business growth. They also favor continual tax increases to finance wasteful projects have no effective solutions for the macro economy. The Obama economy left the country stagnant, indebted and disillusioned.

 

 

Friends, as you can see from the menu at the top of the page, this website has a link to “Order a Copy” of the book.  I turned down a prestigious publisher, who wanted to publish my work as three separate volumes and charge $360 for the whole set.

But I decided to self-publish the book so you could buy an electronic copy at a very low price, or paperback or hardbound copies  at a reasonable price on Amazon. Check it out.  If you buy, your friends may think you are a genius!