Obama often disdains free markets, but he has yet to win over U.S. voters or the Chinese government

Reprint of a post dated Monday, September 29, 2008

Do we want a command economy?

The most persuasive evidence that Barack Obama is unfit for the presidency is the frequency with which he deploys one phrase, "I will invest." The implication is inescapable. He plans to install a command economy. He will decide which path to the future is the right one.

This is not what the framers had in mind, nor is it the formula the United States has followed in building the world's mightiest economy.

The president did not tell the Wright brothers to build an airplane.

The president did not tell Thomas Edison to design a light bulb.

The president did not tell Henry Ford to build a car.

The president did not tell Jonas Salk to find a remedy for polio.

The president did not tell Babe Ruth to hit 60 home runs in a season.

Each of these pioneers saw a potential market and tried to accommodate it, confident that rewards would follow.

There have been many other pioneers, some driven by benevolent impulses, others by a desire to get rich. Some got lucky and stumbled across useful products while working on something else.

It is comonplace now, especially among leftists, to disparage wealth-seeking, but without it we wouldn't be where we are.

Paradoxically, it seems to be acceptable among leftists to stuff one's pockets if one is doing so in a government office. Executives of Fannie Mae hauled in tens of millions of dollars each in a few years, at times by cooking the books to inflate profits.

Where are the howls of outrage about this form of wealth-seeking?

In writing the constitution, the framers were influenced by the initial publication of Adam Smith's "The Wealth of Nations" in 1776. The book highlighted the role of free markets and laid the foundation for modern capitalism. Its principles are woven into the law of the land.

The book remains relevant today, as was pointed out by Robert Reich, secretary of Labor in the Clinton administration, who wrote this in an introduction: "Smith's mind ranged over issues as fresh and topical today as they were in the late 18th Century - jobs, wages, politics, government, trade, education, business and ethics."

Elections are, of course, free market principles applied to politics.

It is not hard to find examples of a command economy. Cuba is one. Zimbabwe is another. Russia was a superb example until its empire collapsed and it had to adapt to the modern competitive world.

As the empire teetered, Time sent correspondents to Russia to take the pulse of the people.

When asked to describe the Russian system, a blue-collar worker said, "We pretend to work and they pretend to pay us."

Posted by TheRightFieldLine at 9:10 AM

Labels: Adam Smith, economics, Obama, politics, U.S. constitution,

Update:

Eight months into his presidency, Obama has made good on my worst fears. Through legislation and executive actions he has demonstrated across-the-board contempt for free markets.

He seized control of General Motors and Chrysler, ram-rodded a $787 billion "stimulus" that is largely a gigantic pile of earmarks targeted for Democrat interest groups and has refused to even consider markets as an antidote to rising medical costs.

Through legislation, Obama could restore competition to the medical insurance industry by allowing companies to market their products across state lines. Instead, he has brushed the idea aside in favor of more government controls on medicine and medical insurance. One of his objectives is a new government insurance option, which could forego profits, operate at lower costs, and eventually drive private insurers out of business.

Even in authoritarian countries, such as China, however, free markets have important fans, and China now is likely to deprive Obama of one of his most prized objectives.

Taking advantage of low production costs, China has become a trading giant and is regularly adding new coal-fired power plants to its industrial base. China rejects any suggestion that it damage its competetive advantage by assessing a tax on carbon emissions.

In Washington, a cap and trade scheme that would impose such a carbon tax has been passed by the House and is pending before the Senate. If Obama continues to push the cap and trade bill, and the Senate goes along, the U.S. government will  have handed the Chinese a significant price advantage in international markets, and U.S. companies will take another hit.

My bet: markets will prevail. Obama will be deprived of at least one of his two must-pass bills. The other must pass bill, an overhaul of health care, remains on life support. The voter market does not like the seemingly inevitable rationing of health care under the reform proposal.