“It was hard for me to believe that you were entirely serious about that socialist question,” Obama [told the New York Times], defending his policies as consistent with free-market principles.
“The fact that we’ve had to take these extraordinary measures and intervene is not an indication of my ideological preference, but an indication of the degree to which lax regulation and extravagant risk-taking has precipitated a crisis,” he said.
Like the alien in the 1951 classic, The Day the Earth Stood Still, Barack Obama has been having difficulty convincing knee-jerk conservatives, on Wall Street and elsewhere, that he’s come to save capitalism, not to destroy it.
Yes, the equity markets are not the ultimate arbiter of economic health, but in light of yesterday’s gains, fears that the America we know and “love” was coming to an end – for better or worse – seem grossly exaggerated. Jeff Macke, who suggested on CNBC’s Fast Money, that under the Obama administration, we would be well advised to “work until we made $249,000 and then take the rest of the year off,” will have to postpone his Spring idyll in Aruba. Will Larry Kudlow, of the same network, who has been warning us all to prepare for “Obama’s War on Investors,” now start telling his minions to stand down?
Just a week ago, Mike Huckabee, Renaissance man of the Religilous Right – one part James Dobson and one part Stevie Nicks – railed against Obama’s economic plan:
“Lenin and Stalin would love this stuff,” says former Arkansas Gov. Mike Huckabee. “The Union of Soviet Socialist Republics may be dead, but a Union of American Socialist Republics is being born.”
Is lovable Mike ready to admit that Lenin and Marx long ago joined the firm of Shearson Kuhn Loeb Marx Lenin & Medvedev (known to the homeless intelligentsia around Harvard Square as Dewey … oh, you get the picture)?
Like FDR before him, Obama assumes the mantle of the presidency at a time of economic meltdown. (A meltdown, much like the Depression, of our own making; but that’s another post.) And braving the taunts and torrents of criticism from both left and right – but especially from the disingenous right – is navigating a course designed to once again save capitalism from itself. To the chagrin of the (so-called) left, he is not going to dramatically alter the American corporate or banking systems, storming the offices of Mother Jones magazine in the name of a Scandanavian-style cradle-to-grave welfare state. Neither, to the chagrin of the right, is he going to back down from his commitment to address the obvious inequities in the current system, to end the decades-long rape of the middle and working classes by their executive overlords, to raise the top marginal income and capital gains tax rates by some incremental amount, and to insist that the government builds and sustains the legal and human resources necessary to ensure that the stewards of our large public companies are bound by the fiduciary responsibilities they accepted when they became officers of those companies.
Fiduciary responsibility: to wit, corporate officers (whether of banks or motor companies) are the custodians of large sums of other peoples’ money – our money, investors’ money. Schemes that lead to excess corporate compensation – whether they are built on bad loans, clever stock option manipulation, or just the bald assertion that one person’s honest labor is worth 400, 600, 800 times that of another – are just simple theft.
Reining in excess compensation, and increasing marginal taxes on incomes at the far end of the earnings bell curve, is not socialism. It’s shareholder activism, writ large, and (finally) with the power of the federal government behind it. Here’s hoping that yesterday’s rally means that Wall Street’s instinctually right-wing know-nothings, and their financial commentariat echo chamber, can wrap their collective head around the fact that this is hardly the apocalypse. It’s just an adult president telling them, as gently as possible, that they have to start acting nice, and give back some of their friends’ toys. As the whining and tantrums in the pits and trading desks start to settle down, I expect the equity and the credit markets will settle right down with them.