As President Obama approaches the 100-day mark of his presidency, hedelivered a speechTuesday at Georgetown University in which he laid out what he sees asthe foundation of a new economy. Using this crisis--and his gift oforatory--Obama signaled that the fight for the next economy beginsnow.
He alluded to the Sermon on the Mount to describe the stronger, morefair economy he envisions: "There is a parable at the end of the Sermonon the Mount that tells the story of two men," he said. "The firstbuilt his house on a pile of sand, and it was destroyed as soon as thestorm hit. But the second is known as the wise man, for when '...therain descended, and the floods came, and the winds blew, and beat uponthat house...it fell not: for it was founded upon a rock.' We cannotrebuild this economy on the same pile of sand. We must build our houseupon a rock."
I think the speech is important for what it reveals about Obama'sunderstanding of the task ahead--building a new economy out of theashes of our failed one.
Katrina vanden Heuvel
As President Obama approaches the 100-day mark of his presidency, hedelivered a speechTuesday at Georgetown University in which he laid out what he sees asthe foundation of a new economy. Using this crisis–and his gift oforatory–Obama signaled that the fight for the next economy beginsnow.
He alluded to the Sermon on the Mount to describe the stronger, morefair economy he envisions: “There is a parable at the end of the Sermonon the Mount that tells the story of two men,” he said. “The firstbuilt his house on a pile of sand, and it was destroyed as soon as thestorm hit. But the second is known as the wise man, for when ‘…therain descended, and the floods came, and the winds blew, and beat uponthat house…it fell not: for it was founded upon a rock.’ We cannotrebuild this economy on the same pile of sand. We must build our houseupon a rock.”
I think the speech is important for what it reveals about Obama’sunderstanding of the task ahead–building a new economy out of theashes of our failed one.
But real and grounded concerns about the administration’s bank bailoutplan remain. As Nobel prize-winning economist Joseph Stiglitz wroterecently in a New York Times op-ed the Obama administration’s plan is “far worse than nationalization:itis ersatz capitalism, the privatizing of gains and the socializing oflosses…the kind of Rube Goldberg device that Wall Street loves –clever, complex and nontransparent, allowing huge transfers of wealth tothe financial markets….” Other good thinkers share this view,including Paul Krugman, Simon Johnson, William Greider and RobertReich.
While Obama’s speech lays out some strong principles for a newfoundation, the administration’s financial team remains unwilling tounderstand that we’re not just going through a financial crisis or apanic, but the failure of a whole model of banking. We are living amidthe blowback of an overgrown financial sector that did more harm thangood.
As The Nation‘s Greider has argued we needa new banking system–smaller and more diverse and responsible to thepublic interest. Creating this new system is where public resources should be committed,not to saving banks that are “too big to fail”. We should create publicbanks and non-profit savings and lending cooperatives to serve as animportant check on private commercial banks. We need to make banks theservants–not the masters–of our economy. Only when we do thatwill a new regulatory framework do what’s needed; it would be a mistaketo simply re-regulate the shadow bankingsystem which got us into this mess.
If this realization begins to sink in through the failure of the currentplan–and Obama’s commitment to pragmatism and experimentationsuggests he might be willing to move to Plan B with sufficient pressurefrom mobilized citizens and thinkers who envision a different model thanthe Summers/Geithner approach–then we’re on the road to laying thefoundation, the rock, for a new economy.
But creating that new economy will require what Obama himself might call”tough choices”–and some different “pillars” from the ones heoutlined today. We need affordable health care; pensions above socialsecurity; and sustained public investment in areas vital to high wagesin a global economy–affordable colleges, world-class public schools,and a 21st century infrastructure. We need to restructure–not justre-regulate–the financial sector so that banking is once again a”boring” occupation devoted to making loans to the real economy, not peddlingexotic and (as we now know) toxic instruments. We need to break-up andrestructure major banks that are on life support and “too big tofail.” And we need to fight for the Employee Free Choice Act–sothatworkers are able to organize and bargain collectively, and the middleclass is rebuilt and strengthened.
The mother of all fights lies ahead–beyond the first 100 days–aslobbies mobilize to halt the reforms needed to rebuild and reconstruct anew economy of shared prosperity. The drug and insurance companies, thebusiness lobby, multinationals that seek to retain tax havens –they will all warn ominously of massive job losses, failed businesses,and much sufferingfor each and every needed reform offered.
Despite the flaws of the bank bailout, President Obama has signaled thatwe can work toward a new economy. But it will require a massivemobilization of citizens. We’ve had thirty years of themarkets-know-best-and-are-self-correcting, government get out of theway, let CEOs rule, maximize executive profits–dogma. Thecatastrophic results are in. Now begins the fight to rebuild a balancedeconomy in which government is on the side of the people, corporationsare held accountable, and workers are empowered.
Long-term challenges should be seized, not ignored–lest we remain onshifting sands.
Katrina vanden HeuvelTwitterKatrina vanden Heuvel is editorial director and publisher of The Nation, America’s leading source of progressive politics and culture. She served as editor of the magazine from 1995 to 2019.