There are two things that most pundits commenting on the parameters of the Obama stimulus package don’t seem to get.
First, the package is not aimed at jump-starting an economic recovery. It is designed to mitigate the impact on average Americans of a still-looming prospective, unprecedented global economic meltdown.
Second, it involves a desperately-necessary, profound and fundamental restructuring of the core elements of what constitutes value and wealth in the national economy.
On both counts, simply offering tax cuts, instead of stimulus policies, as many would prefer, is simply way off point. An undifferentiated tax break to all the same components of the present economic miasma will fix nothing. It will provide momentary relief, at best, for many of the same rotten apples that have already contaminated the national and worldwide economic barrel.
Just how bad are things, really? The best wisdom appears to be that, still, no one really knows, or is saying. CNBC-TV financial contributor Paul Kedrosky said it best this week, when he said there is simply no historical precedent for the current mess.
There is no textbook to tell anyone how this will play out, because the mind-boggling extent of the last 28 years of unbridled speculation, greed, excessive consumerism and leveraging has never been seen before, and it has infected like a lethal, airborne virus the entire planet, not just the U.S.
Notwithstanding the vanishing value of paper instruments everywhere, what about the value of basic commodities? What is the real value of a pair of sneakers, after all? How long can the world support a system where people are willing to pay $250 for a pair of shoes that could just as well be sold for $5? As this system unravels, amazingly skewed investment, and employment, priorities begin to implode.
We learn as this spectacle unfolds that wealth, value and employment have all been so misallocated toward activities that do not generate real or sustainable growth that, on the flip side, necessary components of such sustainable growth have been starved, depleted and are simply incapable of turning the situation around.
Values plummet, the paper and consumerist-driven economy crashes, millions are thrust out of work, and something dwarfing the last Great Depression ensues.
Another CNBC commentator was not restrained this week, in talking with a building manufacturing components businessman, in pronouncing the “massive crash” that is imminent in the commercial construction industry. “I do not use that term lightly, because that’s what the experts are telling me,” she said.
Obama’s policies are aimed as insulating as many average Americans as possible in the face of what’s to come.
Moreover, indications are that Obama and his economic advisers are looking for a sustainable recovery by going all the way back to Alexander Hamilton’s “Report on Manufactures,” delivered by the nation’s first treasury secretary in 1791, a blueprint that informed the national industrial, manufacturing and infrastructure “American System” development policies of Henry Clay, the Whig Party, Abraham Lincoln and even FDR.
At the core of Hamilton’s seminal work, derived from the fundamental, ingenious insights he first articulated as author of most of the revolutionary Federalist Papers, is a scientific definition of true value, or wealth.
Stripped of its specific policy initiatives, such as incentives to industry, infrastructure development and tariffs, the work identifies the core of economic value in something that’s been called “human capital.”
Namely, it is the empowerment and development of the creative potentials of the individual, whose rights are universally protected under the terms of the U.S. Constitution, who is the basic unit of value. The nation’s policies, thereby, must be directed to the education, promotion of science and technology, liberation from superstition and tyranny, and sustainable advancement of the productive powers and well-being of not only the individual, but of future generations of them, as well.
Today, on top of the rubble of the current mess, we can only hope that Obama’s team is constructing its new policies to launch and direct a revival of just this notion.