Saturday, June 20, 2009

Nudged off a cliff

At the onset of the 2008 American Primary season I was cheering for Obama to win the Democratic ticket. My first choice for President was Rudy Giuliani, but if I had to settle for someone on the other side of the aisle, Obama was my first pick, at least in the beginning. He had an alluring swagger, a persuasive type of “funky cold medina”. Having also read “It takes a village idiot” P.J O’Rourke’s review of Hillary’s book, I had no appetite whatsoever for a Hillary Presidency.

Then one day while I was driving my car, listening to the Economist podcast, I heard something that set off alarm bells in my head. It was an interview with one of Obama’s economic advisors Richard Thaller discussing his theory called “Nudge”. The basis of the theory is that people are essentially too stupid to make optimal choices when presented with a wide variety of consumer products, and thus the government should “nudge” them in the direction they ought to go. You are too inept to select the optimal cell phone plan, therefore you require Uncle Sam to intervene, reduce the number of available choices, and then shove you towards the phone that the government feels is best for you.

Need a new car? Well don’t bother getting off the couch you lazy Neanderthal, you need a Chevy Volt! As I was listening to this man speak, a man helping to shape Obama policy, advocating the government usurping choice because people are too stupid to be consumers; that was the moment when I “jumped the shark” on Obama. From then on, my “Spider Sense” was tingling, and I began to see the forest through the speeches. By the time Obamania had accumulated an insurmountable lead, I was yearning for Hillary!

While I have been marginally satisfied with Obama’s foreign policy, his budget and stimulus packages are a disaster waiting to happen. They are taking over banks, General Motors, are talking about a massive cap and trade bureaucracy, nationalized health care, and running a deficit of 15% of GDP at a time when ballooning national debt is teetering on the verge of collapsing the treasury and the American Dollar. Their government is extending an alarming level of control over the private sector in the name of bailouts, despite the fact that economic evolution is best served when bad business is allowed to wither into extinction.

At this pace, Uncle Sam is becoming Uncle Fat Albert. The economy is showing signs of recovery, which some experts think is a “dead cat bounce”; while other experts believe the worst is behind us. The kick in the pants is that the Obama economic Manhattan Project hasn’t even started yet! It is all in the pipeline, but most of the money has not yet been spent. So what happens when the market has been trending upwards for months, then Obama activates his stimulus, and the economy tanks? Jon Stewart may have to apologize to Jim Cramer, who tried to warn us back in February that this is too much too soon. Too big to fail? They should have let GM go out of business, because then other more efficient producers would have stepped in to fill the void. Instead, the taxpayers just bought real estate on the Titanic, which has once deemed too big to sink, but guess what happened?

There are inefficiencies in consumerism to be sure. If banks keep giving people extra credit cards, people will spend the money whether they can pay it back or not. If people make less than $30,000 per year, they will sign that sub-prime mortgage for the $250,000 house they can’t afford because they want the nice house that much. That does not mean that we need a massive new regulatory framework for the financial system. All we need is a simple mathematical equation that says banks are not allowed to issue credit beyond a fixed percentage of a person’s net income. Done! I do not want to see government start to manipulate the banking system, the automotive industry, the insurance industry, and suddenly start pushing and nudging me in the direction that I “ought” to go because Uncle Fat Albert knows best and I am just too stupid to make choices.

"When buying and selling are controlled by legislation, the first things to be bought and sold are legislators."

-P.J. O'Rourke


  1. It's funny listening to fellow Canadians get all alarmed that the US is emulating Canada now. Look at us! We've got the wheat board, the milk boards, the lumber industry as a whole, almost every industry in this country is protected or controlled by the government. The US is just following the failed Canadian model. Well I guess it's not that bad actually I mean I think the US will still probably at least have SOME multinational companies and a proper diversified economy unlike here.

  2. Obama has no foreign policy. He just apologizes for exploiting Arabs and Africans. Wait until the Russians and the Chinese take him on. It will be disaster.