Return to the Man in the Gray Flannel Suit!

Megan McArdle has a pretty fair take on President Obama’s economic proposals in the State of the Union message. After quoting from the interview in which the president said if didn’t turn the economy around in three years he would be a one-term proposition, she remarks:

If Obama didn’t want to be judged on the basis of the economy’s performance, he shouldn’t have let his mouth write checks that he couldn’t cash. If it turned out to maybe be a little harder to steer the economy where you want it than he thought it was, then maybe he should lay off claiming that the Republicans drove the thing into a ditch.

But he hasn’t. Instead he’s complaining that the GOP won’t let him steer–pretty rich considering that he started out with a 60-seat majority in Congress, and chose to ignore the economy in favor of passing a health care bill that has gotten even less popular since we passed it to find out what was in it.

That’s the harsh version. The slightly kinder version is that Obama, stymied by an economy that’s still pretty weak, and an opposition that has no more interest in cooperating with him than Republicans did with Hoover, has turned to a laundry list of weak proposals that sound pleasing to interest groups, but wouldn’t achieve much. Of those, the best was allowing students who study here to stay here; the stupidest was probably adding yet another investigation of bank fraud (what have you been doing for the last three years, Mr. President?) And the worst was the bizarre proposal for states to force students to stay in school until graduation or the age of 18.

She then identifies the connecting thread in the speech as nostalgia for the 1950s or early 1960s. That’s a complaint I’ve made around here from time to time. Whether through ignorance of modern U. S. business or preference for the Fordist model of Big Business and Big Business, collaborating under the guidance of the velvet-gloved fist of Big Government, far too often Democrats tailor their policies towards that temporary, long-vanished Fordist world.

That world is failing everywhere, not just here. It could only exist in the isolated bubble of the 1950s when the U. S. was the world’s only functioning industrial economy, the others rebuilding after the war. Had Big Labor been successful in boosting the wages of its members faster and higher in the 1970s and 1980s, that would only have resulted in the jobs of its members that delivered high wages and only required modest skills being driven overseas faster.

It’s easier for Big Government to deal with Big Business but Big Business has shed jobs at an alarming rate. At it’s peak employment General Motors employed 600,000 people, mostly in the United States. Now it’s a third that. However successful GM is it will never be the engine of job creation it was once upon a time.

Like it or not rather than relying on Big Business to revive the American economy, we need many, many more small, growing start-ups. The president’s proposal for that, easier credit for small businesses, is laughable. Today’s new businesses tend not to be as capital intensive as the new businesses of the 1950s. They’re frequently financed using credit cards. And anybody who’s tried to obtain an SBA loan knows that the ability to obtain one is essentially a signal that you don’t need one.

The most important thing that government could do to aid in the formation of new, young, growing businesses that will provide the jobs of the future is to get the heck out of the way. What do we get instead? The Stop Online Privacy Act which if enacted will beat down new and growing business to the benefit of a handful of established intellectual property barons.