Obamanomics; The Birth of Socially Responsible Economic Theory

Obamanomics  is here and its “hip” and “in” make no bones about it. But it’s genesis was by none other than  President  George Bush with the gleeful assistance of Congress. It is a seminal moment and to the majority of trend -noid-Americans a shift they can readily grasp but choose not too.

Robert Reich in his editorialal states it’s ” bottom up ” as opposed to ” top down” economic policy http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/10/05/INTM139L8L.DTL. I think his article lacks acknowledment of his and Obama’s  theory which in my opinion will create the Socially Responsible Economic Theory. This may be a good thing but it has risks.

The Death of Liberal’s with Sanity.

The Great Mayor Edward Koch http://en.wikipedia.org/wiki/Ed_Koch coined the above phrase http://www.realclearpolitics.com/articles/2006/10/a_liberal_with_sanity.html and while Mayor Koch pushed for affordable housing, and economic development and empowerment he never suggested the creation of a NYC owned bank or insurance firm.

The Clash:

Adam Smith ” invisible hand theory” modernized by Herbert Stein vs

Obama, Kruger, Reich activist government-partenersip theory.

Herbert Stein in my opinion represented the modern economic theory of Adam Smith he has been referred to as a liberal’s conservative and a conservative’s liberal.http://en.wikipedia.org/wiki/Herbert_Stein . Under President Ford right up until most of the Bush administration the role of government has been strong but subtle.

With today’s announcement of government partnerships with banks we have a cataclimic shift of economic theory. As such the modern Adam Smith- Stein  versions of the government role in society has ended. We have entered into the Paul Krugman Robert Reich economic error.

In his article ” Adam Smith did not wear an Adam Smith  necktie Stein argues government intervention with great skepticism.  But this did not mean government could not make rational decisions.

T]he people who wear the Adam Smith tie are not doing so to honorliterary genius. They are doing so to make a statement of their devotion to the idea of free markets and limited government. What stands out in WofN, however, is that their patron saint was not pure or doctrinaireabout this idea. He viewed government intervention in the market with great skepticism. He regarded his exposition of the virtues of the free market as his main contribution to policy, and the purpose for which his
economic analysis was developed.

Yet he was prepared to accept or propose qualifications to that policy in the specific cases where he judged that their net effect would be beneficial and would not undermine the basically free character of the system. He did not wear the Adam Smith necktie.”

The Public -Private Synergy , Paul Krugman Obama Reich an et al;

The Obamanomics theory is really an agressive John Manynard Kaynes Theory. It has has been referred to as ” a third way” .  They use the American rebuilding of Japan as the factual evidence of how ” active” as opposed to ” passive” government intervention in the economy can ” rebuild” and re-habilitate an economy. General McArthur a solider led this effort see” http://www.time.com/time/asia/2006/heroes/nb_macarthur.html. It is historically called the Potsdam Declaration  for the full text see :http://www.ibiblio.org/pha/policy/1945/450802a.html. While we did have sucess in Japan, will this theory of government – partnerships be effective. Krugman is very smart and he just one the Nobel Peace Prize http://www.bloomberg.com/apps/news?pid=20601103&sid=av56boh_S7S4&refer=us He states in the following video that John Manynard Keynes http://en.wikipedia.org/wiki/John_Maynard_Keynes is his hero.


As we know the government owns AIG, Fannie, Freddie Mac, and god only knows what elese after the 700 pluse billion dollar bail out. However, the government discriminated Bear Stearns was saved, Lehman left to go under, ING goes under, others bailed out. And this is the risk  both Republicans and now Democrats when given control have partisan partners. The difference now ” THE PEOPLE ” DIRECTLY OWN THE INSTITUTIONS CREATED.

So, will Democrats behave like the Republicans and let partisan politics hurt the overall economy. Does the failure of such  government partnerships like ” Italy’s Alitalia where although the government owned almost 50% of the entity with the remainder private funding give us an indica that such our present  collaborationwith financial entitys is doomed to failure.  See http://www.signonsandiego.com/news/business/20080918-1104-italy-alitalia.html


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