Wednesday, September 22, 2010

Reality and Political Reality

Someone in the G.W. Bush administration once said "We make our own reality". While this revealed the source of many of the problems encountered and created during 2000 - 2008, yet there is a sense in which it is true. As when Nixon took the dollar off the gold standard and said that it was "a problem for the rest of the world", there are times when a situation makes no sense legally or on its merits, but makes total "sense" if you understand political power. Of course with the Nixon and Bush examples and others of this kind, a tension is created that at some point must be resolved, sometimes sooner, sometimes later. I'm saying that you always end up paying for ignoring actual reality.

But political reality is a powerful force, strong enough to affect actual reality. Early computer crackers used to do "social engineering" which was pretending to be a support tech and calling someone on the phone and asking them for their password. Investor and currency speculator George Soros talks about "reflexivity", how expectation can change the market, making it an imperfect measure of value. He also used this to his advantage, most famously in breaking the British pound. President Obama will have a hard time getting anything done the rest of his term because of the angry and popular protests of the "Tea Party".

I mention all this because lately I have been thinking about David Brooks' idea of a different, winning approach President Obama might have taken. Brooks suggests that Obama should have skipped health care, given up on any short-term fix for the economy, and instead taken a long view by starting to make structural changes in the country that would help our economy prosper ten, twenty, and thirty years down the road. He says that Obama should have explained his plan clearly and told the people that it was going to be difficult for a while. Knowing Brooks as a decent and reasonable man, I assume that assurances of help for the unemployed would have also been given.

I immediately like Brooks' focus on long-term structural change; he seems to be the only one talking about this. With an economy based 70 percent on retail do I need to say any more to convince you that we need to rethink and redesign our society?

For the rest of the idea, it would clearly have political appeal since with no 700 billion dollar stimulus and no big health care bill you would have no Tea Party. And it is possible that there would have been some bipartisan support for the structural change. Brooks sees the importance of this political value of good will and much less opposition.

But I remind you that if Obama had done this we would have had at least 15 percent unemployment (in my opinion) and no health care bill (which I see as a long term very good thing). But if he had prepared people for the high unemployment and promised support for the unemployed (and I think you would have to promise a freeze on home foreclosures as well), and if Republicans had given significant support to this and to his structural legislation, and if the climate in Congress was one of problem solving rather than open war, I would take it.

David, if it is true as you say that half the Republicans would have gone along with something like this, you have convinced me.

No comments: