An analysis of Obama’s economic policy in his first term is an important resource for understanding what is to come, argues Henry Parkyn-Smith
Jack Rasmus, Obama’s Economy: Recovery for the Few (Pluto 2012), 205pp.
American capitalism continues to veer off the rails, full steam ahead, with one fiscal cliff after another looming, while it drags most of the major world economies behind it. In this context, Jack Rasmus’ dissection of the state of Obama’s economic policy, promises and plans is as pertinent as ever. The most important aspect of his analysis, which distinguishes Rasmus from so many other economists and the mainstream popular discourse surrounding the current financial catastrophe, is that it is framed terms of who the downturn is damaging and what the recovery is supporting. This is the super rich against the working class, profits against unemployment.
Three overarching themes run through the book. The first of these focuses on the lack of recovery, how deep the crisis is, as well as how and why there seem to be few signs of the crisis abating. The second outlines that what recovery there has been is unequal, and how Obama’s regime has acted to support the rich at the expense of the majority of working Americans. Finally, Rasmus proposes a set of alternatives, drawing on ideas of how the US economy can get back on its feet without selling ordinary Americans down the river.
One thing for which Jack Rasmus is perhaps best known is being one of the few economists who saw at very early stages of the crisis that the collapse of Lehman Brothers was much more than a blip. He continues to focus on long term trends and their significance throughout his analysis of the state of the US economy. The book and its analysis and predictions could be viewed to be in many ways vindicated as a large proportion of trends identified here have continued and perhaps become more pronounced since its publication in April 2012. The gulf between rich and poor continues to grow, as do the pronounced housing crisis and the high levels of unemployment. In addition to this, Rasmus makes a strong case for the possibility of a double, and possibly triple, dip recession in the US. This all boils down to the fact that this is the most severe of all eleven US recessions since 1945, as well as being the most lopsided in its impact (p.6).
Reading Obama’s Economy, coming from the perspective of the UK and European economies, there are several striking differences. In terms of lopsidedness, it is interesting to see how, whereas on this side of the Atlantic the ruling elites are fairly clear that they intend to cut public spending and essentially make us pay for the crisis, the Obama administration in contrast does not talk about cuts, but implements them nonetheless, in addition to initiating further policies at the top that result in the poorest being the hardest hit. Given this, one of the key tasks that Rasmus takes on, which stands out and is rarely done so well, is the refutation of the notion that Obama is economically progressive. Within the Democratic Party, Obama is in fact one of the most conservative figures: not only were his pre-election promises neo-liberal and pro-business, the policies he actually implemented during his first term could be seen as being even more so.
Rasmus is clearly strongly rooted in the American labour tradition being, as he is, vice president of the National Writers Union. This is possibly the reason why his comparative perspective and policy suggestions show a strong connection to traditional Democratic Party policies. He compares Obama’s economic strategy with that of Roosevelt, a strong contrast given the similarities he draws between our current crisis and that of the 1930s. It comes as no surprise then, that the alternatives outlined by Rasmus bear similarities to the economic policies of the New Deal. This makes sense. It is argued that by creating jobs and housing whilst simultaneously taxing the rich and reforming the banking sector, the government can not only get the economy moving again, but there would be then less risk of the same old economic problems resurfacing.
Where Rasmus falls short in this otherwise excellent and well supported take on the economy is in an over emphasis on the role of the president specifically. This may seem an unfair criticism of a book entitled Obama’s Economy, but nonetheless it is important. What is notably absent from this critique is the idea that in fact capitalism is systematically flawed and the way it operates inevitably leads to crises whose solution regularly comes at the expense of the working majority. The understanding of this is crucial to explain fully why Obama pursues the policies he does, given also that he is so strongly influenced by the moneyed elite who have an interest in maintaining the way our economic system works. Through focusing on the state as the main agent of catastrophe in the economy, and by extension the potential agent of salvation, the analysis leaves us with a sense of powerlessness about what we can actually do to stop the fallout from the crisis hitting working people.
Nevertheless, though the working class is left somewhat in a state of limbo by his analysis, Rasmus still gives an outstanding account of how they are affected. All the arguments are backed up well with a wealth of staggering data, statistics and examples, resulting in an excellent critique of the Obama administration and the American economy, and an even better tool for those who wish to understand the workings of contemporary American capitalism.