Socialism was an economic order based on nationalization of all private industries, or at least those industries described by
Lenin as the “commanding heights” of the economy. 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 a part of reality. After the financial freeze of 2007 much work was 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 spent not to rebuild infrastructure, since no “shovel-ready” infrastructure projects could be found. Essentially, the money was 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 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. Normally the upturn is sharp as everyone is anxious to satisfy pent-up demands from the downturn and restored confidence drives a period of rapid expansion. The Obama administration, however, pursued anti-economic policies that thwarted economic growth in history’s slowest recovery. These policies included a war on coal and carbon for environmental purposes, the Obama care dictum that businesses must provide health care for full-time workers (so firms basically only hired
part-time workers), the Dodd-Frank financial restrictions stifled banking activity that would have financed a post-recession, small business boom, and so on.
The recovery 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.’” (This irreverence is found in the footnote of the book, Socialism, on 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 stimulus was a waste. So 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, favor a continuous flow of commercial regulations to thwart business growth, and 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.
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