Obama's First Year

First of all, I believe that the Obama administration has done an outstanding job navigating a very difficult situation. Above all, they did something that the Bush administration was unable to do - they acted, acted quickly, and acted decisively. However, the approach lacks in a few key ways.

1. The Economy - Obama inherited, as everyone knows, the worst economic context since the great depression. They picked up where the Bush administration left off by bailing out large institutions, mostly banks, deemed too big to fail. They also added an economic stimulus designed to spur growth by investing in infrastructure development. The administration's largest mistake was focusing too much on stabilizing banks and not nearly enough on spurring new economic growth. This crisis was a crisis of effective demand, in mainstream economic parlance, and a crisis of overaccumulation in Marxist terminology. What this means, basically, is that the ownership class has accumulated such a significant portion of the wealth in society that the working class cannot afford to purchase the commodities for sale by the ownership class. In other words, there is not enough demand to fuel economic growth. This means that the commodities for sale must be devalued to the point at which demand can resume, and this is what a crisis does - it devalues commodities. The reason that focusing on stabilizing the banks was such a misstep is that regardless of whether the banks are stable or not, the commodities still have to be devalued, and this is the reason why banks have not resumed lending - it is not good business to speculate on a contracting economy.

Return for a moment to the beginning of the Obama administration. Many, many liberals were horrified by the economic team Obama was assembling. Geithner, Summers and others seemed like the same sort of supply siders that got us in this mess in the first place, and indeed, their first move was a supply side move, shoring up banks, and again, it has not led to economic growth on mainstreet.

The other large misstep was not making the stimulus package big enough. I suspect this is because, holding to supply side ideology, they felt that shoring up banks would get credit flowing again leading to economic growth. It did not, and the stimulus now looks woefully inadequate. The Obama administration must abandon this dedication to failed, supply-side policies and adopt a more progressive approach to economics. I suspect they will, with a large comprehensive jobs package coming in the next year. If they do not, economic life in the U.S. will sludge forward for many, many years.

2. Healthcare - The analysis of this is quite simply. By not spearheading the legislation, and allowing Congress to work it out on their own, the Obama administration lost control of the narrative and allowed Republicans to define healthcare, which they did with great success. Obama needs to understand that, despite his community organizing impulses, he is the President and he has to use that to his advantage - there is no need to develop capacity among Congress, and what matters at this level is to win. I applaud the administration's push for bipartisanship, but, ultimately, it was quite naive.

3. War/Terrorism - This is exasperating, completely. The approach to terrorism, which is a real threat, is fraught with conventional wisdom that does not apply, and there seems to be a fundamental misunderstanding as to what exactly we are fighting. The first assumption is that nation-building will in some way lead to less terrorism, and no evidence suggests that this is the case. When the U.S. goes into a country and begins remaking their infrastructure to 'eliminate havens for terrorists' the terrorists just move to another country. Afganistan, then Iraq, back to Afganistan, and now to Yemen, Nigeria, and Somalia. All of these are week states indeed, but to think that we can stabilize these states and turn them into prosperous Western democracies is quite absurd. The problem lies in the fact that, at least on some level, fighting a war is about controlling territory. Fighting a war in the 21st century is about controlling information, and we haven't the legal, developmental, or military infrastructure to address this fact. In fact, controlling information is anathema to the very values we are trying to espouse throughout the world; in other words, terrorists are exploiting a fundamental contradiction in western society. I agree with Bush in that we are looking at a Cold War, but the fact is that Cold Wars are the wars of the 21st century. The Obama administration should immediately seek to develop an international legal framework for dealing with wars of information in the 21st century, and would allow a rational way forward in dealing with Gitmo and other imprisoned enemy combatants. They should also develop intelligence capacities and infrastructure, and immediately abandon any state building activities.