I think all of you here would today acknowledge that we've lost a sense of our shared responsibility. We've failed to guard against policies that all too often rewarded financial manipulation, instead of productivity and innovation, policies that favored Wall Street over Main Street—and hurt both. Our free market was never meant to be a free license to take whatever you can get however you can get it."
When Barack Obama uttered these words, at a much-heralded speech in which he announced his plan to rescue the American economy, he received a huge ovation. That was itself remarkable, given that he delivered the speech on March 27, when many of us—including the man who is now his opponent for the presidency—were paying much less attention to the economy than we are now. The ovation was more remarkable because he delivered the speech on Wall Street, to a throng of financiers.
The 30-minute talk began on a historical note, with a look back at the foundations of the American economic system that offered a glimpse at the candidate's fundamental economic philosophy. He described the tension between letting the so-called free market operate on its own, and forcing regulations on the market—and how the debate on that topic was waged by Thomas Jefferson and Alexander Hamilton.
"Our free market has been the engine of American progress," Obama said. "But the American experiment has worked in large part because we've guided the market's invisible hand with a higher principle—that each American does better when all Americans do better."
Somehow, the nation has fallen sway to an ideology that sees government oversight as un-American. Talk of basic fairness can get someone called a commie. But the fact is, Wall Street wants someone to be in charge.
Last month, The Economist magazine conducted a poll of leading economists that delivered startling results. "A majority—at times by overwhelming margins—believe Mr. Obama has the superior economic plan, a firmer grasp of economics and will appoint better economic advisers."
The respondents said they saw the election as crucial. And 80 percent said Obama has a better grasp of the situation. Among Republicans, 46 percent of professional economists said they trusted Obama and 23 percent favored McCain.
And, of course, Obama has been endorsed by the richest man in the world. A highlight of the second presidential debate came when Tom Brokaw asked the candidates to say who they'd appoint to take over the Fed if they were elected. McCain's first answer was Warren Buffett, "the Oracle of Omaha," who, according to polls, may be the most trusted man in America when it comes to money matters. (McCain revised his answer to mention eBay's Meg Whitman.)
When it was his turn to respond, Obama conceded that he too likes Buffett. And he couldn't help but add, "I am pleased to have his support." (Buffett has said of Obama, "I would let him run my company." In the world of business, there is no higher praise.)
Marc Andreessen, founder of Netscape, is a fan of Obama's chief economic adviser, University of Chicago professor Austin Goolsbee.
Writing in The Guardian, Daniel Koffler says Obama's "language of personal choice and incentive" derives mostly from Goolsbee, who calls himself a "behavioral economist."
"Goolsbee agrees with the liberal consensus on the need to address concerns such as income inequality, disparate educational opportunities and, of course, disparate access to healthcare," Koffler writes, "but breaks sharply from liberal orthodoxy on both the causes of these social ills and the optimal strategy for ameliorating them.
"Instead of recommending traditional welfare-state liberalism, Goolsbee promotes programs to essentially democratize the market, protecting and where possible expanding freedom of choice, while simultaneously creating rational, self-interested incentives for individuals to participate in solving collective problems."
Still Goolsbee sees the fundamental problem at the heart of the American economy as the gulf between the super-rich and the middle class. Over the last six years, Goolsbee has said, "the typical worker had seen income grow hardly at all, while the cost of education, healthcare and energy have all gone up."
That is not merely a moral problem for Goolsbee and his follow-thinkers, but also a practical one, because an economy cannot flourish in a society thus constructed. And his solution, the one that will drive the economic plan of the next president of the United States, God willing, is to bridge that gulf.
"Despite Obama's reputation for grandiose rhetoric and utopian hope-mongering," says The New Republic's Noam Scheiber, "the Obamanauts aren't radicals, far from it. They're pragmatists."
The first stage of Obama's pragmatic plan has been announced. Once the patient is out of intensive care, Obama will be able to put in motion the heart of his economic plan: the creation of a new economic engine driven by millions of new "green-collar" jobs.
Key to this plan is the restoration of trust—in the credit markets on Wall Street and in the homes of Main Street; the return of fairness seems secondary. But it's built into the program. In Obama's view, that's the way Hamilton, Jefferson and their associates designed the American system. Without it, the economy can't function. His plan will bring it back.
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