Out of Control Policy Blog

President Obama, CEO of America

Sometimes I feel like a broken record, and its because we keep having to say the same thing over and over: be ware the intrusive government and the unforeseen (and foreseen) consequences of expanding executive power. And unfortunately, America might be inoculated to our warnings, thus not hear them as urgently as we are screaming now.

But let this be clear: the government is not all powerful, not all knowing, and does not have all the answers.

Unfortunately, as the White House becomes more entangled with private enterprise, its evident that this view is not holistically shared. And yesterday, as President Obama laid out his vision for the auto industry, he's looking more and more like America's CEO.

Since September (and really it started trending before then) we've seen a scary paradigm shift, one where the government has been the source we turn too for all the answers. We're like a teenager that has screwed up and, despite our intense desire for independence at all other times, we turn to the parents to fix our problems instead of dealing with them ourselves. That attitude has given Washington free reign to slowly tighten its control over business and society.

In Politico this morning, Mike Allen and Jim Vandhehei comment:

Obama’s move to oust the CEO of GM and put Detroit on notice that he is prepared to let icons of American industry fail if they refuse to bend to his will was a calculated attempt to send a message, said an official often consulted by the administration. And that message was unmistakable: In any business-government partnership, Obama himself expects to play the dominant role. 

Now, I don't want to question President Obama's abilities here, nor necessarily to say that he wouldn't make a good CEO of GM. He might have the chops for it. But what I do want to question is his ability to run the Army, the government, AND all the businesses that the government has its hands in, without letting politics get in the way. 

As we have seen with AIG, it is absolutely impossible. Not even the Treasury Department alone can keep up with all it has to manage, much less manage it all effectively, much less know the best course of action without price signals and profit motive guiding its decision making framework. The same goes for the White House.

There is a fundamental conflict of worldviews here. On the one hand, I believe, as history has amply proven, that humans are limited beings, that are fallible, and not omniscient. We have a knowledge problem. We are constrained in our abilities. That is where the power of the market steps in to coordinate knowledge. That is where the profit motive (self-interested, instinctual behavior) steps in to guide market actors towards the best ends for society. 

But this is a fragile, volatile system we libertarians uphold. Government interference can skew any number of factors in the market leading to trouble. Thus the FHA, Fannie, Freddie, and White House push to get more people into homes through government subsidies leading to a boost in housing prices and acting as part of the bubble that came crashing down. Thus the fluctuating interest rates after the Dot-Com bubble that directed people into MBSes as the only place of decent returns. 

And now, the government has its hands in autos, insurance, banking, investment, and its not slowing down. Bailout money has gone to credit card companies, mortgage brokers, state budgets, and now is wanted for newspapers, hospitals, and even porn. 

We can not adhere to this unconstrained view of the government's ability to solve all our problems. They can't do it, and we'll be the ones that suffer the consequences--because we are the government.

Anthony Randazzo is Director of Economic Research


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