Saturday, September 17, 2011

Obama's Fatal Conceit

Politico is out with a few excerpts from the new Ron Suskind book, Confidence Men: Wall Street, Washington, and the Education of a President. Suskind is no economist (much less an Austrian). His poor economic understanding causes him to weave his story in odd directions, often ignoring time bombs he has dropped. (See my review of his book, The Price of Loyalty)

That said, he is good with facts and the inside scoop. They just need to be understood in better context. Here's an important Politico excerpt:
O]n February 14 [2011], the president meditated on the most important things he’d learned as president … ‘The area in my presidency where I think my management and understanding of the presidency evolved most, and where I think we made the most mistakes, was less on the policy front and more on the communications front. I think one of the criticisms that is absolutely legitimate about my first two years was that I was very comfortable with a technocratic approach to government … a series of problems to be solved. …Carter, Clinton and I all have sort of the disease of being policy wonks … I think that if you get too consumed with that you lose sight of the larger issue …
This really sums up Obama's problem. While to sum degree, he seems to understand that "a technocratic approach to government" is wrong. It is hard to see where he truly understands the depth to which he is a technocrat. From his belief that government needs to"create jobs" rather than the private sector to his belief that the government should bet on developing industries such as solar, to his support of various bankster bailouts, to his desire to tax savers, what Obama calls the "rich',  the man is a technocrat/interventionist at every turn.

Leaving aside for the moment that he uses this technocrat/interventionist perspective as justification to reward his political allies, it  is the technocrat/interventionist that is killing the economy. It is what Friedrich Hayek called the Fatal Conceit, the belief that a complex economy can be micromanaged by government. The more the President attempts to manage the economy, the more he will suffocate it. Regulation, i.e., micromanagement, is attempting to redirect the economy in a direction it doesn't want to go.

The President may think he is smart and clever when he has policy wonk discussions, but what this really indicates is that he fails to get the lessons taught to us by Ludwig von Mises and Hayek.

As Mises wrote:
State interference in economic life, which calls itself economic policy, has done nothing but destroy economic life. Prohibitions and regulations have by their general obstructive tendency fostered the growth of the spirit of wastefulness.
The Roman Empire crumbled to dust because it lacked the spirit of liberalism and free enterprise. The policy of interventionism and its political corollary, the Fuhrer principle, decomposed the mighty empire as they will by necessity always disintegrate and destroy any social entity.


  1. I don't take from Obama's comment that he understands that a technocratic approach to government is wrong. I take from it that he just thinks he didn't market it correctly.

  2. Two things that stand out from this:

    1. Obama is not as smart or wonkinsh as he wants us to think. With Clinton, I agree that he was very intelligent although evil and corrupt to the core.
    Obama is just a guy who knows how to look good while reading off of a teleprompter. I would rate him quite mediocre to below average with regard to his intelligence. Listen to his impromptu answers when he is not reading off a teleprompter. The guy is just a slow thinker. He is terrible on his feet and has not put our an original idea in his life. He more than makes up for it with his excellent communication and social skills. See how he pauses mid sentence, how he maintains great eye contact, smiles, has great tonality, animates, and his overall body language. All of those elements coupled with his well written speeches (although vacuous) give the impression of a great intellectual. In a nutshell, he is the anti Ron paul.

    2. He has been marketing his policies very well. If he didn't, given the result s of his policies, his approval rating would be <10%.

    3. Neither he nor his cronies understand the basic truth that government's ability to manage the economy is a fool's errand

  3. Exactly Anon 11:41. Obama's view is that its not that he is taking the wrong approach but that he underestimated how stupid the public was in understanding that he and his ilk know what's best for them. This man is as clueless as they come as to how the real world works. He's got an idea, just as those that advise him do, about how the world works from classes he's taken in college.