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Obama's Challenge: America's Economic Crisis and the Power of a Transformative Presidency

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Ronald Reagan famously (and wrongly) said that government wasn't the solution to the problem; it was the problem. In fact, it is the solution to the problem. We have now suffered through thirty years of a federal government that has been intentionally impaired so that it will not function for the American people, but instead has worked almost exclusively for the needs and whims of big business. And big business isn't the solution to the problem; it is the problem. I've been arguing this with free marketers since the eighties when I engaged in countless debates with University of Chicago business school and economics students while I was a graduate student there. There they unleashed such asinine theories as that moldy oldie, "The private sector can do things more efficiently than the public sector." Well, no. The mess in the attempted rebuilding in Iraq and the Gulf Coast have proven that, if it was ever in doubt (and multiple independent studies have reinforced the common sense idea that the private sector is certainly not more efficient than the public, and is definitely less cost efficient, since they have to figure in a profit margin). The whole trickle down idea, which has been put forth repeatedly over the past century, has been shown to be false over and over and over again. As Will Rogers put in so well in the twenties, some people think gold is like water: put it at the top and it will just trickle down. But, Rogers insisted, gold isn't like water at all. Put it at the top and it just stays there. Which is precisely what has happened in the past thirty years, as real wages of the middle class have lowered, as the wealth has been increasingly concentrated in the hands of a tiny fraction of the population (in 1979 29% of the wealth was in the hands of the top 1% of the population, while today around 50% is in the hands of the top 1% -- and comically, 18% of the people in the US believe they are in the top 1%), and those living below the poverty line have increased. The whole idea of a self-regulating and self-correcting free market has been from top to bottom an unmitigated farce for the vast majority of Americans. And that was BEFORE the recent collapse of Wall Street.

Even more than when Robert Kuttner wrote this superb book (which follows other very fine analyses of the economic situation of our economy like EVERYTHING FOR SALE: THE VIRTUES AND LIMITS OF MARKETS and THE SQUANDERING OF AMERICA: HOW THE FAILURE OF OUR POLITICS OUR PROSPERITY), the current economic situation demands and calls out for the kinds of solutions proposed in this book. Unfortunately, 30 years of strongly held self-regulting market ideas have done immense damage to the economy (and it has to be remembered that Jimmy Carter and Bill Clinton also held versions of the same economic ideas made more popular by Reagan and made ridiculous by George W. Bush -- and before the increasingly heard defense of Reagan be made that while Reagan was a true conservative, Bush is not, please recall that Reagan undersaw larger increases in spending as a part of GDP than Bush, most of it on military spending -- though to his credit, when Reagan saw the massive deficits his economic policy was building up he did the responsible thing and raised taxes). One one-star reviewer of this book mentioned Kuttner's appearance Colmes and Hannity's show. I strongly urge people to go to Youtube and view it. Yes, they called each other names (though Sean Hannity truly is an idiot and he truly does merely ape GOP talking points), but what that reviewer neglected to mention is that Hannity took great exception to Kuttner's claims that the economy was in a dire mess. Hannity insisted that the economy was in great shape, that Bush had performed miracles. This was a couple of days before Lehman Brothers went bankrupt and AIG had to seek a $70 billion line of credit from the Fed. My point is that Kuttner absolutely nailed what was wrong with the economy; if anything, the economy was worse than Kuttner said. Hannity was refuted by the events of the next couple of weeks more thoroughly than any TV interviewer (Hannity is right in describing himself as an "interviewer" and not a journalist). Kuttner was completely and utterly vindicated.

The brute fact is that our economy is -- and actually has been -- a mess. Wall Street is collapsing right now, but the quality of life for the bulk of Americans has been gradually eroding for decades. It was not, as Reagan optimistically crowed, dawn in America, but dusk. The next president will come on the scene at one of the most critical moments in American history, not merely at the end of eight miserable years overseen by the worst president in American history, but three decades of government that ignored or neglected the middle class and privileged instead crackpot free market economic pablum. Some take exception that Kuttner assumes that it is only Obama who can be looked to as the bringer of changes; McCain, after all, might win (though that seemed far more likely a month ago, before the implosion of the economy and before Sarah Palin gave a vast number of Americans another reason to vote for Obama). But the brute fact is that McCain truly is just more of the same thing we've seen since Gerald Ford. Though he acknowledged at one point that the knew nothing about economics, what he has said has persistently been the free market party line. Before the collapse of Wall Street, McCain never found a regulation that he liked. For McCain there was no such thing as too much deregulation. So if we want change, Obama is the only game in town. But not just that; he has often spoken of solutions and gestured towards directions that would be definite departures from the past three decades. He has talked of the kinds of ideas that drove United States policy from the beginning of the New Deal until the onset of deregulation and Reaganism, decades that saw some of the greatest decades of economic growth in American history and the greatest expansion of the middle class. We need to go back to what worked and what worked was government using its power to assure that the middle class has a share of the American dream just as the wealthy do. Like Roosevelt put it, America is not better off unless all Americans are better off.

Kuttner lays out a broad and ambitious program of new government programs that would go a long ways towards undoing the unremittant harm inflicted over the past few decades. These include such programs as universal health care and a dramatic increase in the expansion of alternative energy sources.

What has been lost in the unceasing criticism of government by Reagan and his followers is that government has done a vast number of extraordinarily fine things. It has done far less in the past few decades because it has not been allowed to. If people merely reflected a bit instead of succumbing to brainless anti-government rhetoric they would easily think of dozens of tremendous successes by government. Just a few examples of government at work: the national highway system; most of America's bridges; social security (which even Reagan promoted as a very great thing); clean air and clean water; the national park system; medicare and mediaid; food stamps (so people without money will not starve); guaranteeing civil rights, so that blacks voting today don't have to guess how many jelly beans are in a bowl to be able to vote; the space program; the Bill of Rights; consumer protection (that bans products like the over the counter medical product that in the late 1890s killed over a hundred people in about a week); the G.I. Bill; various programs that have enabled most people in American history to own their own homes; the control of the national water supply (otherwise there would be no one living in California); the National Institutes of Health; the breaking up of the Mafia; and a vast number of other programs and achievements. Anti-government ideologues want to pretend that there are no options other than an all-inclusive totalitarianism and a do-nothing libertarianism, but all of the countries in Europe and Canada that enjoy a better quality of life than we do in the United States (every year the U.S. slips further and further down the list of the countries with the highest quality of life) prove them otherwise. We need government officials that actually believe in government again. We need to get back on track.

Many will be resistant to the kinds of ideas that are put forward in Kuttner's book because they have been steeped in the simplistic and easy-to-digest and parrot ideology put forward on the right from Reagan to the present. One of Reagan's most dubious achievements was convincing people that there were simple answers to complex problems. Yet the world remained complex while people's thinking about it became increasingly simplistic and out of touch. The free market mantra was an incredibly easy one to understand and apply. That it never worked successfully in any country in which it was tried never bothered these people. As Karl Polanyi presciently pointed out in 1944 in his great book THE GREAT TRANSFORMATION (directed at the Viennese School economists who were the teachers of Milton Friedman and other U.S. free marketers and still one of the best and most relevant books ever written about economics), a belief in the virtues of a radically free market is essentially utopian: it does not describe a world that ever has or ever could exist, but one that they could only imagine to exist. We need to get back to a nuanced way of thinking about politics and economics that addresses the way the world actually is, not the way that people imagine it should be. It is only a matter of time that the free marketers resume their mantra of laissez-faire and deregulation. Polanyi said that their response to any economic failures, even when the policies were put forward by true believers in the free market, would be to insist that the principles had not been sufficiently adopted by society, that the markets hadn't been sufficiently free, that there had still been too many regulations. It is pure hogwash, but a position that anyone with a high school education can adopt and apply.

If it sounds like I'm angry, I am. I hate that most of my adult life has been lived in a country that has become the testing ground for so many hare-brained ideas and crack pot nostrums. Not everything was perfect in the United States from the early thirties to the seventies, and there were times when there was a tremendous suppression of individual liberties in the country (though mainly by people who later would be most seduced by the kinds of thinking I've been criticizing in this review). But the middle class was expanding and for a huge number of Americans life made far more sense economically than it does today. What I would like to see is an America with the kinds of social and cultural progress made in the past three decades (with far greater racial tolerance as well as acceptance of all kinds of difference, whether religious or sexual orientation, and a true embrace of gender equality) with the kind of growth of the middle class that took place in the decades before Reagan. Like Roosevelt said, America isn't well off unless most Americans are well off. That is Obama's challenge, to put America back on the path down which we were led by Roosevelt, Truman, Eisenhower, Johnson, and even Nixon. The pro-big business, anti-middle class policies of Carter, Reagan (especially Reagan), Bush 41, Clinton, and Bush 43 have got to go.

I downloaded this on my Kindle and was finished reading in a couple of days. This is a very fair and balanced book which is refreshing. It emphasizes the importance of our current state of the economy, health insurance etc. and the massive changes needed to fix them.
I highly recommend this book.

Robert Kuttner has performed a service in Obama's Challenge by bringing to the Democratic nominee's attention the pitfalls to be faced by the next Administration. The USA is facing a profound transition. Our citizens must adjust to the diminished role the US plays, economically, militarily and in its influence. While adapting to this new global reality and the rise of China, India, Brazil, Russia and other nations, the next US President must deal with the severest financial crisis since the Great Depression and the urgent need to shift our economy from fossil fuels to clean, renewable energy.

I hope that Obama, David Axelrod, David Plouffe and all of his team will read Robert Kuttner's wise analysis and go beyond that outdated "economics box" so as to address more fully the systemic crises our next president will face.

Robert Kuttner, the author of this book, has a rare ability to project a current reality forward in time, and surmise the resulting consequences of our present situation. His previous book, "The squandering of America: How the failure of our politics undermines our prosperity" (2007) detailed how the current financial crisis would unfold as a result of too much deregulation. In this book he discusses the ways in which a transformative presidency could address the challenges before our country in the current economic situation. His is a message of both sacrifice and hope. I recommend this book highly to any who have despaired over what our country has become.

Kuttner offers an appraisal of Obama as a uniquely talented, fully equipped, potentially transformative leader that should be obvious to anyone who heard his Philadelphia speech on race a couple of months ago or his near-perfect acceptance speech of recent days. Obama has shown himself to be equal parts intellect and inspiring motivator, a tactician capable of putting his opponent on the ropes by using the opponent's own weaponry, a visionary capable of seeing a perennially green forest but not at a loss for keeping count of the trees in his own back yard (or the number of back yards he's listed as owner of). So Kuttner's book is repeating the obvious and is basically a preachment to the choir. It won't change any minds, especially ones that it can't reach.

What is not so obvious is Kutner's basic assumption: that America's problems and Obama's solutions are so transparently known to everyone that his Presidency is all but assured. In August millions of American voters who had previously fancied themselves as tolerant, unbiased types for allowing the Jefferson's into their home every week, suddenly saw on their giant HDTV screens not merely faces of another color but images of those who are on the brink of representing their own face. It is no longer a matter of viewing the "other" from a safe and comfortable distance, congratulating ourselves on our imagined tolerance, but of being wakened to the real possibility of the "other" becoming "us."

The near-universal distaste for the previous administration and the illogic of a narrowing gap between two candidates, one of whom makes gaffe after gaffe and the other who can't afford the slightest misstep, is testimony to a pervasive, regressive darkness in the electorate, one that could make all of Kustner's arguments on behalf of a progressive Obama Presidency a moot point. McCain merely has to make it to the finish line to enable all those threatened by change--from bigots to wealth "preservers" to "better" Christians to Jehovah's "chosen" to those bottom-feeders who still imagine they enjoy one small entitlement--to "rationalize" their vote for McCain.

Reading Kuttner's book is unlikely to increase your admiration of Obama (how "can" it?) and likely to increase the sting of an imminent injustice should he lose (unfortunate, if not tragic--an Obama Presidency would go a long way toward restoring our tarnished, near-irreparably damaged image in the eyes of the world not to the mention representing a victory for ideas (vs. slogans) and rhetoric (vs. ad hominem mud-slinging and mugging to the camera like the sophomoric cut-up in a high-school play).

What happens behind those voting curtains in a mere two months will show America and the world a revealing self-portrait, one that could be anything but flattering. At that time we may realize the inadequacy of institutional education and the need for an entirely different paradigm for opening minds--perhaps a functional multi-party system. As Al Gore's indignation made clear months ago, unrestrained anger goes little beyond personal therapy. All Obama can do in the final stretch is hope that questioning the debacle of Iraq and seeking to restore the life and limbs of those soldiers who were maimed by it is not equated with a lack of patriotism. On the other hand, once people decide on a course of action, reason is quickly suspended in favor of rationalization (as was the case with Kerry's "swift-boating attackers).

The real "challenge" is not Obama's but a public's that still sees 9/11 as a sanction for running scared and burying its head in the ground, repeating parroted code words--God, values, guns, pro-life and family vs. evil, immorality, peace initiatives, civil liberties and, worst of all, liberalism--as though these terms and oppositions actually possessed thought and meaning. It's time to stop "blaming" Obama, Biden, McCain, or the government for a responsibility that lies with the electorate. If an invasion that was justified by neither WMDs or a connection with 9/11 is now seen as God's will, there's no point trying to talk reason to those suddenly proclaiming "victory." (If we have "won" a war against terrorism / hatred, it's because we created a geographical battleground for it.)

Forget all that--along with the health insurance, energy independence and ecological talk. But if we need heros, let's make sure the adversities overcome by Obama and Biden get the same coverage as a POW's or a mother's challenges. Finally, let's not forget about the economy and each candidate's plans for reviving and reclaiming it (especially from the "truly elite"--who are not the overly educated or "liberals" but the 5% of the wealthy on whom Obama would raise taxes). If these issues aren't enough to swing the election, the only consolation is knowing that, regardless of the outcome, we will once again deserve what we get.

I found this book to be well written and very interesting and informative. I live in New Zealand so this book also gave me a lot of background information of which I had been unaware. For example Kuttner definitely views Obama as more "mainstream democrat" than I had assumed from the usual media.

This is an especially interesting book as it was published BEFORE the Wall Street crash and before the election. It compares the situation and Obama to the situations and other presidents who rose to meet and create new pathways for the future. I just hope the author is correct about how this could all (positively) turn out.

No one can deny Robert Kuttner's premise - our next President really has his work cut out for him. But Kuttner goes further; he makes a strong case for the notion that the next President will have to be a great president. His examples of greatness, in a transformative sense, are Abraham Lincoln, Franklin Roosevelt and Lyndon Johnson.

In Kuttner's view, each of these Presidents entered office without an agenda of dramatic change, but the circumstances they found, once in office, forced each of them to transcend politics to become the kind of leaders the nation desperately needed.

The Republican, Abraham Lincoln, had no plans to abolish slavery when he ran for office in 1860, but grew in his realization that slavery was immoral - and must be addressed. His eloquence and his political gifts, along with the Civil War itself, allowed him to end that blight on the nation's conscience.

Franklin Roosevelt was committed to budget balancing and budget cutting when he campaigned in 1932. What he found upon assuming office was a deepening economic depression and a nation demoralized. He used his gifts of optimism and communication in a dramatic search for practical - not ideological - solutions.

Lyndon Johnson assumed the Presidency after John Kennedy's assassination, and found a highly segregated nation. His awakening to the plight of African-Americans was nothing short of remarkable for a Texas politician. His compassion and tenacity - with the passage of the Voting Rights Act - finally made possible the fulfillment of the promise of Lincoln.

Kuttner believes that the current crisis gives Obama this opportunity to grow into this kind of transformative leader we need to move forward in economic equity, health care reform and education. Obama is not there yet. His health care plan, for example, is not transformative to the degree we need. But of the two choices, Obama has the intellect, the character and the temperament to become a great leader.

Leaders, after all, do compromise and collaborate and understand politics; however, they also take us to places we have not imagined previously. They aspire us to rise above our old ways. They lead us to a new vision.

Not every President has the talent to lead us in this transformative way. George W. Bush, for example, when faced with a growing concern about global warming - decided to ignore the evidence. Entering office to decades long stagnation of middle class wages - he cut taxes on the wealthy and boosted deregulation. Following the tragedy of 9-11, he pushed for the invasion of a weak country and promoted the torture of prisoners. His leadership didn't call out our better selves - it exacerbated our weaknesses.

Kuttner promotes a number of transformative ideas for consideration. One that deserves consideration is the professionalization of the service employees of the nation's social service sector. We can all agree that the nation's children and elderly deserve high quality care, but current policies and regulations push the service equation towards lower prices, not higher quality.

The front line staff of America's nursing homes, residential treatment programs and day care centers are largely poorly trained, poorly educated, short-term employees. Private children's homes in KY face frighteningly high turnover rates every year. Higher governmental standards could force the hiring of better educated and more intrinsically motivated workers. In turn, as higher skilled workers demand higher wages, these good jobs could become a decent wage option for workers displaced by globalization and the decline of manufacturing.

Our vulnerable children and aging population would receive better care, and these newly enhanced jobs could not be outsourced to other nations.

Kuttner leaves us where Obama entered the race - with the possibilities of hope. Heaven knows we need it.

Robert Kuttner goes into some detail regarding the economy and how progressive programs could be a great help. He recognizes the political problems involved in getting these programs started and recommends some strategies that Barak Obama could pursue. His presentation is very insightful - maybe he should be an advisor to the president elect.

Very interesting: He wrote this book and submitted it to publication well before the election and at least a half year before it became obvious to most people as to how wide and deep the present depression (my word) is. Is this guy a prophet?

The economics of civilization are a compendium on the commerce and economy of life. Today, tomorrow and yesterday have filled many libraries on reactions to wealth of nations. Experience tried nothing and is always new. I liked the book because it explained what education and money have in common.