President Obama is a Keynesian and social democrat in domestic policy, and has been forced to deal with the worst depression since the 1930s. He has rightfully rejected the conservative laissez faire policies of the last thirty years in favor of government stimulus, investments and support of the economy that have prevented far worse consequences for the American people. In this area his policies are far preferable to those of his Republican opponents and he should be reelected. This is also true of his foreign policy, which is more realistic and pragmatic than that of his opponents and less likely to land the U.S. into another major war or nation-building operation.
President Barack Obama has been successful in dealing with the current global recession and in various areas of foreign policy and should therefore be reelected. Mitt Romney and the Republicans do not have any better plans for dealing with domestic and international problems, and in fact their policies would make the current situation even worse. Obama did save the domestic automobile industry and millions of jobs, and in foreign affairs he wound down the war in Iraq and eliminated Osama bin Laden and other Al Qaeda leaders. This current recession is the most severe since the Great Depression of the 1930s, and unemployment would be much worse today had Obama not stimulated the economy with deficit spending and printing money through the Federal Reserve. He has rejected the free market and laissez faire policies that have been dominant for the last thirty years and revived Keynesian economics. Because of this the U.S. economy recovery has fared better than that of European nations that adopted conservative austerity measures. This is the clear choice that is being offered in the 2012 election, along with the more aggressive military and foreign policy of the Republicans and on both counts Obama is the better and safer choice.
During the current recession, which is the most severe since the Great Depression of the 1930s, the fiscal and monetary policies of John Maynard Keynes have been revived after being largely discredited and ignored for the past thirty years. Obama realizes that Keynesianism was the dominant economic policy in the Western world from the 1945 to the 1970s, and no major depression or financial crash occurred in the period from 1945-73. Even though Keynesianism did not abolish the business cycle, it bottom phases were not so low and its recessions not as long as in the 1930s, the 1980s or the present (Minsky, 2008, p. 160). Governments had to ensure full employment to maintain maximum aggregate demand, while on the supply side taking action to ensure that monopolies and oligopolies did not keep prices artificially high. From 1945-70 “full employment was maintained, real wages rose constantly, economies were relatively stable, and wealth and income inequalities were reduced”, which was definitely not the case in the 1920s and 1930s or in the last thirty years (Skidelsky, 2010, p. 164). Obama often speaks of using government to create a new kind of domestic economy that will be greener, with more investments in science, education and technology, while in contrast his Republican opponents seem regressive and trapped with ideas and policies from the past.
In the present recession, the parallels with the situation in the 1930s are all too obvious, and had Keynesian measures of deficit spending, stabilization and fiscal stimulus not been undertaken promptly the entire economic system would have collapsed. These included a Troubled Assets Relief Program (TARP) designed to aid banks and other corporations facing bankruptcy, an $800 billion stimulus passed in 2009, extensions of unemployment and health care benefits, and new regulations on bank holding companies through the Federal Reserve. If they are withdrawn too quickly, a collapse may still occur, along with radical deflation, mass unemployment and extreme political unrest. No gold standard has existed in the world since 1971, and the policy of the Federal Open Market Committee (FOMC) under Greenspan and Paul Volcker was to achieve a stable currency anchor and “an expectation of a low, stable trend inflation unaffected by macroeconomic shocks” (Hetzel, 2008, p. 2). Given the huge shock of 2008-09, however, this was no longer possible and under Ben Bernanke, the Federal Reserve has been using its emergency powers to carry out FOMC policies not seen since the crisis years of the Great Depression and Second World War. Its policies have been expansionary and inflationary, lowering the value of the dollar to stimulate the economy, setting interest rates as zero, direct loans and subsidies to corporations, two rounds of Quantitative Easing, and direct purchase of two trillion dollars in U.S. Treasury notes. As with the fiscal stimulus, this Keynesian policy was designed to prevent radical deflation and a general collapse like the 1930s.Given the present weakness and dysfunction of the global capitalist economy, the stakes could not be higher, which is why Obama’s continued leadership is far preferable to that of his Republican opponents.
In foreign policy, Obama should be considered a pragmatic and calculating realist rather than an idealist who believes the U.S. has some type of global mission. His style and rhetoric is far more low-key and less militaristic than that of his predecessor or current Republican opponents. He ended the war in Iraq and avoided future nation building operations in the Middle East, while continuing the war against Al Qaeda and using covert means to assist the rebels against the various dictatorships in the region—and offering air cover to the Libyan rebels. He has maintained the alliances with NATO, Japan and South Korea that have existed since the 1940s and also negotiated arms control agreements with Russia (Cameron, 2005, pp. 189-90). Unlike past leaders, Obama never spends any time “lecturing other governments, using threatening language, and tirelessly bragging of the power and virtue of her country” (Johnson, 2000, p. 216). He has expanded the war in Afghanistan but also seems very skeptical of the nation building operations there and plans to turn over the security operations to the Afghans as quickly as possible. After the 2012 election he is most likely to drawn down U.S. troops and deescalate the war. It will still be fought on a low intensity level, with fewer U.S. troops, and will not escalate to a nuclear confrontation or a general war with Iran and Pakistan. Even more than the immense problems of the domestic economy, the most important reason for reelecting Obama is to avoid another major war in the Middle East that will break the budget, lead to oil shocks that will make the global depression worse and possible escalate into a world war.
REFERENCES
Cameron, F. (2005). United States Foreign Policy after the Cold War: Global Hegemon or Reluctant Sheriff, 2nd Edition. Routledge.
Hetzel, R. L. (2008). The Monetary Policy of the Federal Reserve: A History. Cambridge University Press.
Johnson, C. (2000). Blowback: the Costs and Consequences of American Empire. New York: Metropolitan.
Minsky, H.P. (2008). John Maynard Keynes: Hyman P. Minsky’s Influential Re-Interpretation of the Keynesian Revolution. McGraw-Hill.
Skidelsky, R. (2010). Keynes: The Return of the Master. Perseus Books Group.
