The piece essentially signified his surrender to Wall Street and big business. He writes:"...throughout our history, one of the reasons the free market has worked is that we have sought the proper balance. We have preserved freedom of commerce while applying those rules and regulations necessary to protect the public against threats to our health and safety and to safeguard people and businesses from abuse...Sometimes, those rules have gotten out of balance, placing unreasonable burdens on business—burdens that have stifled innovation and have had a chilling effect on growth and jobs."
What kind of history book is he reading? Excessive regulation stifles small business, yes. But the larger the business, the firmer the hand government must place to ensure that profit-seeking does not endanger the lives of American citizens.
Let's be crystal clear here. When a company fires its workers and moves its production off-shore (such as Evergreen Solar, which closed its factory in Massachusetts to move to China), it hurts Americans. Poverty is a health and safety threat against citizens. Jobs boost the economy, but it's production jobs that stabilize it. I'm no economist and my grasp of all the economic theory mumbo jumbo is is pretty basic, but I'll try to explain what I mean.
Since the 1990s, America has seen a drastic decline in production jobs (the "goods" part of "goods and services"). Some of that is due to technology innovations, and some due to off-shoring and H1-B work visas. Where American job growth has increased is in service jobs (most significantly in health care services).
For example*: U.S. Bureau of Labor Statistics reported an increase of 103,000 non-farm payroll employment in December 2010, and "Employment rose in leisure and hospitality and in health care but changed little in other major industries."
Service industry jobs, for the most part, move money around (and thus stimulate the economy). You take your 20 dollars to a restaurant for a meal, and that restaurant sends that money to the people that grew the vegetables and raised the meat, but only after skimming off the top to pay their employees and cover their operating costs. Those employees take their portion of your money and spend it somewhere else. And so money moves around and the economy is stimulated. But stimulation is the foreplay.
Production jobs are the foundation of the economy, a place where money essentially stops moving and turns into something else- a product. Why is this so important? Because money doesn't really exist anymore. Banks don't carry the total amount of money of their customers in their vaults; they don't need to. Most of it moves digitally, and a huge portion of that movement comes from a figment of imagination called credit.
Credit is where a person (or business) spends money they don't have under the condition that they pay the money they do have to somebody else in smaller increments over time. So a credit company (bank) stimulates the economy by providing consumers money to increase their purchase power. Credit stimulation is like phone sex. It works, but only as long as everybody agrees that it works and nothing goes wrong to prove otherwise. The United States is propped up (almost entirely) by credit stimulation; it's called a debt economy.
A major problem with credit stimulation is that it artificially makes things more expensive than they really are. A car costs $15,000, but after the loan's been paid, it really cost $20,000 (on a loan with a great rate). The trouble is the car is only worth $15,000. What is especially troubling is everyone pretends that $15,000 is how much they are paying. That extra $5,000 that no one talks about is dangerous. I'm not sure why it's called interest if no one pays attention to it (heh). Don't get me wrong, credit is an incredibly useful tool. But we've gone way beyond that.
Here's why that interest is dangerous. That extra $5,000 basically became an invisible third facet to the economy. It can no longer be called "goods and services"; now it's "goods and services and debt". It's a facet of the economy because a person, company, or bank can make a living on it. You can even package debt into a hedge fund and trade it on Wall Street.
Okay, so what does all this have to do with President Obama's op-ed?
For some reason, government economists think that the value of Wall Street and a consumer's purchasing power determine the strength of the economy. The trouble is that both of them are bubbles, inflated with debt. Somehow, economists maintain a fantasy that a consumer doesn't buy anything with money they don't actually have, despite the overwhelming profits of the credit industry proving otherwise. The other fantasy they live in is the idea that people use the stock market to invest (ie. believing in the value of a company enough to buy a piece of it), despite the overwhelming evidence that people use the stock market to make money and not to help companies grow. Wall Street has become a casino: a few people still go because they love a good card game, but most people like the slot machines.
What government regulation does is help close exploits in the marketplace. A "free market" like what Obama says America is about means there is no economic intervention or regulation by the state. The trouble is that a free market in America does not exist. It can't. Not when "too big to fail" really means "too big for the government to allow to fail". Not when the government buys major shares in General Motors to prevent its bankruptcy. A free market means that taxpayers don't have to pay for companies that blow it.
But, of course, that's not what Obama means. His executive order "requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive".
That is why I mentioned "goods and services". Job creation does not make our economy more competitive, not when the only growth is happening in services. America needs to make stuff. But to do that, we need more economic intervention and regulation, not less. We need to provide reasons to keep production in America, and unfortunately we just can't blame China for being cheaper.
Where the free market works best is in small business and the middle class. Unfortunately small business can't compete with the corporation and the middle class is collateral damage in the class war of wealth distribution.
Obama's executive order, just like the picture of the businessman gleefully cutting through all the red table, is designed to increase the profits of people already making profit. Maybe he's too caught up in the fantasy economy to see it.
