Among the Intellectualoids

A Little Bit of Economics

Our president knows it all about a subject he has no use for.

By From the October 2009 issue

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The same Barack Obama who earlier declared himself “a student of history” has more recently become “a student of economics.” According to reports out of the White House, the president combines an omnivorous appetite for the most arcane financial detail, with the ability to summarize and simplify economic issues in a way that causes those around him to gasp in drop-jawed admiration.

Let us drop in on the “economics” PDB, as they call it at the White House. This is the brainchild of chief of staff Rahm Emanuel. It follows the Presidential Daily Briefing, and it typically includes Treasury Secretary Timothy Geithner, economic adviser Larry Summers, budget director Peter Orszag, and other brainiacs in a 40-minute jam session devoted to financial and economic matters.

Recently, for instance, some of the president’s advisers gave him a chart-filled briefing on “House Prices, Consumer Debt and Consumption.” At the end of this session, according to Emanuel, Obama rose from his chair—levitating in the lotus position—and declared, “Guys, this is a great research. But you’re telling me that people have been using their homes as ATMs. I could have told you that.”

According to this behind-the-scenes story, the president raises “questions about administration proposals to regulate certain derivatives, such as credit-default swaps,” and sharply questions his economic advisers on their methodology in calculating homeowners’ “loan-to-value” ratios.

What’s more, we are told that Mr. Obama invited Nobel laureate economists Joseph Stiglitz and Paul Krugman to the White House for dinner, and may curl up at night reading their books—eschewing his normal preference for French novelists, German philosophers, and gay/black/feminist freedom fighters. “I’ve dealt with other people in that position—their eyes glaze over,” Professor Stiglitz recalls, his own eyes misting at the memory. “You can tell they’re waiting to get out of that meeting. With him, it was totally different.”

Where, one wonders, is the president’s newfound love of economics going to lead in his never-ending quest for self-fulfillment and enlightenment? I will hazard a few guesses:

1. Anything that the president “learns” will only strengthen his conviction that he already has all the answers.

2. Under the tutelage of scholars like Stiglitz and Krugman, his study of the “wishful science” (what used to be called the “dismal science”) will only reinforce his natural tendency, as an über liberal, to think of people only in the abstract…a blank canvas waiting to be painted, or a great mass of dough waiting to be shaped…as opposed to considering the possibility that they might be responsible, sentient human beings capable of thinking and acting for themselves.

3. He will remain hostile to the basic notion that free enterprise and individual choice are the primary basis for creating wealth and prosperity—in this or any other society. His belief in government as the great agent of innovation and change is rooted in a deep-seated dislike and distrust of the business world. He grew up thinking of business as a dull, soul-sapping activity with thuggish overtones.

CONSIDER THAT PORTRAIT that Mr. Obama draws of his maternal grandparents, with whom he lived as a young boy and again as a high school student in Hawaii. This is how he describes his grandfather, an unsuccessful furniture salesman, in his memoir, Dreams from My Father:

An old copy of Dale Carnegie’s How to Win Friends and Influence People still sits on his bookshelf. And growing up, I would hear in him the breezy, chatty style that he must have decided would help him with his customers. He would whip out pictures of the family and offer his life story to the nearest stranger; he would pump the hand of the mailman or make off-color jokes to waitresses at restaurants. Such antics used to make me cringe.

So the glad-handing grandfather was always something of an embarrassment. The grandmother, however, is a different story. Without the benefit of a college degree, she rose from secretary to become the first female vice president at the Bank of Hawaii. Surely, that was something to be proud of? Well, not really, it seems. Obama writes of “Toot,” the strict, commonsensical, and hardworking grandmother:

I came to understand that her career spanned a time when the work of a wife outside the home was nothing to brag about, for her or Gramps—that it represented only lost years, broken promises. What Toot believed kept her going were the needs of her grandchildren and the stoicism of her ancestors.

“So long as you kids do well, Bar,” she would say more than once, “that’s all that really matters.”

That’s how my grandparents had come to live…Gramps still wore Hawaiian shirts to the office, and Toot still insisted on being called Toot. Otherwise, though, the ambitions they had carried with them to Hawaii had slowly drained away, until regularity—of schedules and pastimes and the weather—became their principal consolation.

Obama was two years old when his father, a Kenyan of the Luo tribe who had arrived at the University of Hawaii as the institution’s first African student, abandoned his mother. He was five or six when his mother remarried and they moved to Indonesia. This is how he describes Lolo, his Indonesian stepfather:

He was working for the army as a geologist, surveying roads and tunnels, when she arrived. It was mind-numbing work that didn’t pay very much; the refrigerator alone cost two months’ salary. And now he had a wife and child to provide for…no wonder he was depressed.

Later, they become, if not rich, at least well-to-do. But this comes at a heavy price. Lolo has sold his soul to the devil—in accepting a job in the government relations office of an American oil company. In Obama’s words:

Sometimes I would overhear him and my mother arguing in their bedroom, usually about her refusal to attend his company dinner parties, where American businessmen from Texas and Louisiana would slap Lolo’s back and boast about the palms they had greased to obtain offshore drilling rights, while their wives complained to my mother about the quality of Indonesian help. He would ask her how it would look for him to go alone, and remind her that these people were her own people, and my mother’s voice would rise to almost a shout.

Then there is the celebrated passage in Obama’s book that describes his first and only experience inside a real business. This is in the mid-1980s, soon after his graduation from Columbia University. He hopes to find work at a civil rights organization, but is turned down everywhere he applies. “Like a spy behind enemy lines,” the disappointed would-be social reformer then goes to work for “a consulting house to multi-national corporations”—with plush offices in mid-Manhattan. He is soon promoted to “the position of financial writer”—with his own office, his own secretary, a suit and tie, and regular contact with “Japanese financiers and German bond traders.”

The problem with this account is that it is, ahem, highly embellished. According to Dan Armstrong, one of the president’s colleagues from those days, what he had described as a “consulting house” to big companies was nothing more than a “sweatshop” filled with young people churning out newsletters on international business. They showed up for work in jeans, never wore ties, answered their own phones (no secretaries), and “had neither reason nor opportunity to interview Japanese financiers or German bond traders.” Rather than doing learned analysis of financial matters, they did quick editing and rewrites of material submitted by correspondents in the field.

Even at this young age, it seems that Barack Obama cut an impressive figure. “He was very smooth and smart and together,” Beth Noymer Levine, another co-worker at the firm, told PBS. “I was 23, and I felt like a human train wreck next to him.”

But that only begs the question of why it would be necessary for him to appear to be more than he was. Given the absence of any suggestion in his book that he ever had even the slightest interest in finance or economics in high school or college, why would he casually let slip phrases and sentences (e.g., “Then one day, as I sat down at my computer to write an article on interest rate swaps…”) that make it sound as though he possessed the financial sophistication of a Wall Street professional?

WELL, ONE POSSIBLE EXPLANATION is that he thought he did, even if he didn’t. Bankers and business people simply don’t rate very high in his estimation—so why shouldn’t he think he knows as much or more than they do…even inside their own areas of expertise?

The exact same point applies to leading congressional figures like Nancy Pelosi, Chuck Schumer, and Barney Frank, all of whom have spent their entire adult lives in politics—never having to meet a payroll, make a budget, or submit to the discipline of putting the investment contained in a business plan to the acid test of winning or losing in the marketplace.

Together with the president, they have become the new Masters of the Universe—the new Know-It-Alls who will take care of the rest of us poor, unfortunate slobs who cannot be trusted to make the right choices on our own. They will tell us what kind of cars to drive (like the tiny new Government Motors Volt, which will need huge government tax rebates to offset its ridiculous $40,000 list price) and where to go to get health insurance or find a doctor. Goading them on are figures like Paul Krugman, the Joseph Stalin Professor of Economics at Princeton University, who rhapsodizes in his New York Times columns on the benefits of Big Government.

One wishes that the president would find another intellectual pursuit.

A little economics is a dangerous thing.

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About the Author
Andrew B. Wilson, a frequent contributor to The American Spectator and a former foreign correspondent, writes from St. Louis.