Federal Open Markets Committee Chairman Ben Bernanke is an expert on the Great Depression. President Barack Obama has studied the first Franklin Delano Roosevelt term extensively. The Fed and the executive have acted quickly in the face of systemic calamity in the banking sector. For these students of history, the price of inaction is seemingly greater than the consequences of ill-conceived, hastily constructed measures. Many have conflated the early days of the Obama presidency with the aftermath of the October 27, 1929 stock market crash through the 1932 presidential election. One of the lesser appreciated, common aspects of the two eras is the relative explosion in mass media, and how FDR and Obama have co-opted it.
Internet and cable television now are as prevalent as radio and telephone then. Keynesian policies embodied in New Deal programs facilitated the spread of new technology, for the government created demand where the private sector could not. The alphabet soup of the then newly created federal agencies brought electric power, and with it radio, telephone, and telegraph, for the first time to rural areas in the Deep South, Appalachia and the West. Around the same time, FDR began periodic radio transmissions known as the Fireside Chats which acted as a palliative for an uneasy, uncertain population.
President Obama's current media blitz harkens back to the sonorous, patrician tones crackling over the airwaves. Nearly everyone who so desires has access to television, and high speed internet is widely available. Appearances on the 'Tonight Show,' publicly revealing his picks in the NCAA men's basketball bracket, as well as a speaking tour of swing states all will serve to make the president seem like a guy the common man would want to have a beer with, and this follows in the vein of FDR. One of the signals the original FDR Fireside Chats sent was that he could descend from the ivory towers of old New York City wealth, the Columbia Brain Trust, and the White House to communicate the intentions and the design of his policies in layman's terms to a population which was still only two-thirds literate.
Yet, through the first 100 days, this is where the similarities end. Despite an ambitious media campaign, Obama has clarified little because he has little to clarify. Though the hash left to the current administration by its predecessor is complex, the lack of a coherent plan is glaring. The first priority is shoring up the banking system through outright or partial nationalization. The corollary problem is what to do with the bad assets that continue to pollute the financial system. The Congress and president have taken very little meaningful, decisive action on these measures. What is most alarming is the absence of clear rules where the government has intervened. Few will argue against that statist intervention in the forms of central control of resources, planning of economies, and direction of output are good things. However, if the public is to accept that banking and finance underpins the whole economy, then, in times of distress, that sector must take on the characteristics of a 'public' good and be subject to certain atypical restrictions due to market failure and the pressing need for intervention. Recent spats over the payment of bonuses at AIG have erupted into a debate over the tyranny of the majority (pop quiz. define bill of attainder in 20 words or less).
Sensible policy areas such as renewable energy, health care, and entitlement reform keep cropping up, but sadly distract from a clear, definitive resolution on such a crucial, ongoing issue. In the meantime, stories of lesser financial rescues of the automobile and auto parts industries as well as loose guidelines over who is eligible for TARP relief also deflect attention from the biggest problem of all. Perhaps the worst part of this recession is that there is no exogenous factor or glimmer of hope on the horizon to stimulate growth such as the peace dividend that came at the end of the Cold War. Some economists dispute its effect, but making military technological infrastructure available for commercial use along with the commoditization of personal computing spawned the internet age. No new real business cycle seems likely in the near future. It is a tragedy devoid of a dea ex machina.
Unless President Obama can convey effectively what and how the government is doing to justify deficits equal to 17% of GDP, trillion dollar bond issues, and continual raising of the federal debt ceiling, his luster will fade. Moreover, even with a united government, a weakened executive will find it harder to push through sensible ideas without a few accomplishments to his credit. Having campaigned as the candidate of change, the only visible change thus far has been from the gung-ho, singular style of his predecessor to a mincing absence of conviction due to overstretch. Such a judgment may be hasty. It will gladly be withdrawn if some substance accompanies the glitzy iconography.
