Free Markets, Free People

The sad state of the union

Richard Epstein analyzes the performance of Barack Obama as President of the United States, and unsurprisingly, finds it wanting.

In working with matters overseas, the President must lead.  The most that one can expect of Congress is to authorize or ratify the actions that the President must implement. Presidential leadership, announced in a single and decisive voice, is essential, for no one can expect a deliberative body to take the lead in foreign statecraft. On domestic affairs, the opposite stance is appropriate. It is wise in general to look to the Congress to take some leadership in setting basic social and economic policies. But the President gets this division of labor exactly backwards. He is far too passive on foreign affairs and far too meddlesome on domestic ones, which is why his policies in both domains have failed.

A very succinct statement of Obama’s failure.  That leadership thing again … he isn’t one.  And he has no idea how to deal within the political reality of a 3 branch government … even though he was, allegedly, a legislator and Constitutional scholar.  He’s spineless when it comes to the part of the governmental pie that is his pretty exclusively (i.e. foreign policy) and a petulant child in matters concerning domestic affairs using his “pen and phone” to accomplish his goals (goals that are likely to be dismantled at the first opportunity a new president has) rather than working in the prescribed system.

Epstein goes on:

Starting on the foreign policy side, Obama’s policies are driven by the flawed proposition that “smarter” leadership lies in building coalitions that “combine military power with strong diplomacy.” This position, he said in his State of the Union, pays concrete dividends: “In Iraq and Syria, American leadership—including our military power—is stopping ISIL’s advance. Instead of getting dragged into another ground war in the Middle East, we are leading a broad coalition, including Arab nations, to degrade and ultimately destroy this terrorist group.” 

It is all wishful thinking. Militarily, it is never enough to stop an advance if it allows the enemy to use the breathing space to entrench itself further in the places that are under occupation. Obama’s word choice of “ultimately” allows for endless equivocation and delay. The odds of putting together an effective coalition without demonstrable leadership are slim to none, for the President’s only firm commitment—not to use ground troops ever against ISIL—signals to our allies that they too can discharge their obligations by flying the occasional sortie against ISIL positions.

The President may think that it has been an accomplishment to reduce over the past six years the number of American troops in Iraq and Afghanistan from close to 180,000 to under 15,000. But to everyone else, the civil disorder attributable to American disengagement signals that America is not an ally to be trusted.

The President therefore grossly miscalculates when he concludes that “The shadow of crisis has passed, and the State of the Union is strong.” Unfortunately, the facts on the ground show the opposite. Right now the President is bogged down in negotiations with the Iranians over their deployment of nuclear weapons. Little visible progress has been made to date.

And there’s very little incentive for the Iranians to actually cooperate.  It’s all about stalling and buying time.  Meanwhile, Russia and Iran have signed a military pact.  Any guess who has already lost to Iran and just doesn’t know it yet?  It appears at least Congress does and is trying to do something about it (and yes, it’s supposedly outside the scope of their charter, however, Mr. Pen and Phone has declared how he plans to operate … why not Congress.  As someone said, ‘it’s like there are no rules anymore’).

Originally, the President supported at most a six-month moratorium on sanctions in order to lead the Iranians to the bargaining table. Yet when faced with their stalling tactics, he has pleaded for additional time, thus backing away from his explicit promise to keep a firm deadline for making a deal and vowing to veto any legislation that tries to firm up the initial position. Congress may well intervene to keep him to his original word. Generally, this kind of interference is most unwise, but the bipartisan unhappiness on the Iran problem reveals a complete and bipartisan breakdown in trust between Congress and the President.

That’s probably as interesting as anything – even Democrats in Congress have had their fill of Obama’s foreign policy incompetence.  Bottom line?

The President, through his foreign policy, has lost the confidence of his allies across the globe and has emboldened the aggressive behavior of our enemies. Lacking confidence in the United States, our allies will have to fend for themselves, which helps explain the hopeless impasse in the Israeli-Palestinian negotiations, and the recent coup in Yemen, to which a few drone attacks are no response. There is also the strong likelihood that Afghanistan will lapse into further violence. It boggles the mind that the President can gloss over such massive failures with empty platitudes.

Indeed. But then “empty platitudes” are one of his few “strengths”.  Naturally, he’s full of them.


The situation on the domestic front is different. On these issues, the President knows that none of his short-term proposals are likely to get through a Republican Congress that is set against further tax increases and government transfer payments. But he nonetheless charges forward in an effort to build a populist political base that will perhaps in time enact most of his program.

But politics aside, the President wholly fails to understand the importance of economic growth in his relentless attack on economic inequality. The difference between these two programs is striking. A growth-program seeks to expand the size of the overall pie, trusting that the able and hardworking people whom the President lauds will be able to garner their share of the pie. The key point here is that gains from growth are sustainable because no firm has any incentive to back away from employment contracts that work to its own advantage. The hands-off policy thus improves economic incentives and reduces administrative overhead at the same time.

None of this makes the slightest impression on the President, who has concluded that his own brand of “middle-class economics works.” At one level, he is surely correct to insist that everyone “gets their fair shot, everyone does their fair share, and everyone plays by the same set of rules.” But it hardly follows that the way to make “working class families feel more secure” is to ply them with a set of educational, housing, and health care subsidies, all of which have to be paid for by someone else, whose life is made less secure by the constant threat of ad hoc government intervention.

This is the cognitive dissonance we often note with leftists in power.  They may be quite bright intellectually, but economically, most are illiterate.  Nothing is “free” … someone pays for it.  And 90% of the time those paying for it are in the middle class.

Then there are the big lies they push in an effort to make themselves look better in the eyes of the public, even though fact don’t support their claims.  Not that it stops them from continuing to claim success.  For instance:

He speaks about the 11 million jobs created since the depths of the last recession. But his claim is full of holes. Right now, the total number of employed individuals in the United States is about what it was six years ago, notwithstanding a population gain of over 15 million people. Worse still, virtually all the gain in employment has come from part-time employment, which is encouraged in part by the Obamacare mandate that stipulates that employers must provide health care insurance for those who work 30-hours a week or more—a topic on which the President was mysteriously silent in his State of the Union address.

So what happens when you begin to believe your own lies?  You make stupid decisions or you back stupid policies:

Unfortunately, the President has already proposed an increase in the capital gains tax to 28 percent for people who earn more than $500,000 in order to fund a variety of educational programs, chiefly by offering a free ride to students who attend community colleges and maintain a 2.5 average, which he hopes would hone skills needed for middle class jobs, but which is more likely to lead to grade inflation. But the argument is wrong on both sides. Proprietary schools are more likely to train people for jobs than community colleges, because they face market responses when they don’t perform. The President’s program thus increases government subsidies without any promise or expectation of improved performance.

Yet the increase in the capital gains tax creates a double whammy. The first point is that the reduction in capital investment that this tax promises will make it more difficult for wages to rise. The simple proposition here is that capital and labor are complementary goods, so that higher wages depend on the better facilities and equipment that makes labor more productive. The second point is that the increase in capital gains rates is likely to translate into a reduction of taxable income. Unlike income from earnings, the capital gains tax is only triggered by a sale or other disposition of property. The high tax results in a reduction of the number of sales. That in turn not only decreases tax revenues, but also the efficiency of the capital markets, because it is more costly for people to switch their investments from inefficient to efficient firms.

And that’s why this man should be no where near the White House.

But we told you all that before he ever ran.


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19 Responses to The sad state of the union

  • In Iraq and Syria, American leadership—including our military power—is stopping ISIL’s advance. Instead of getting dragged into another ground war in the Middle East, we are leading a broad coalition, including Arab nations, to degrade and ultimately destroy this terrorist group.”

    When I read this what comes to mind is that Obama has decided that our military pilots can use a decade of practice with ‘live’ ordinance.

  • “Instead of getting dragged into another ground war in the Middle East”

    When they left Iraq in 2011, our troops weren’t at war as such. They were protecting and nurturing a progressing, but still fragile hard-earned peace. Does President Obama know the difference?

    • I’ve never seen any way to interpret what he did in Iraq other than that he was determined to lose a war that had already been won. And that’s the way I saw it when he pulled the residual force on the excuse that he couldn’t get a SOFA from the Iraqis, which is pure nonsense. He didn’t get one because he didn’t want one.

      What happened in Libya, with the “get Qaddafi” meme he used to “community organize” the imbecile Republicans (like McCain), really boils down to punishing Qaddafi and his regime for what cooperation they gave in *fighting* terrorism. “Getting Qaddafi” resulted in handing Libya over to terrorists and again making it a terrorist training center, as it had been for the Soviets.

      And I don’t see stupidity in these actions. I see intent, with malice.

      • Yeeeup.

        Plus Iran. The shot-callers over there are NOT like us, and it isn’t possible for a sane person to make the conclusion they are. It IS possible for a person who has wrapped himself in delusional bullshit about who WE are and about who THEY are to make that awful blunder.

        Over to you, Erp…

      • Regarding the SOFA, Maliki offered Obama an executive agreement, which is how Iraq and the US did the 2008-2011 SOFA. Obama rejected it, but then last year, agreed to the executive agreement he had rejected in 2011.

        • He also had plenty of advance warning on the threat from ISIS, but he waited until they had taken control of a huge swath of Iraq and murdered thousands before he finally responded, weakly. I only restate the obvious because the shortness of memory in this country is now epidemic and facts just disappear like dried leaves in the wind.

  • While I agree with much of this analysis, I think Obama has indeed found a single acorn: forcing the Arab states to fight ISIS.

    Sure, its because we are feckless…but really, maybe we should be.

    We now have UAE boys (and girls) and Jordanians, and Canadian and Frogs flying missions in Iraq.

    Amazing how they now find it acceptable!

    Also, the Kurds do better when America is weak…we rely on them, and they collect the chits.

    I’m actually thinking that “leading from behind” has some advantages. But, when Iraq is cleaned out, we’ll see the disadvantages, because Syria is a different ball game. There is also a small risk of Sunni/Shia conflagration that we could prevent with boots on the ground.

    again, Obama is a blind pig here, but he may have found an acorn.

    • I worry most about the Ukraine. While it appears to be the least vital region, it involves superpowers.

      I predict ISIS will collapse before summer if we push an offensive if we don’t…next summer.

    • I’m not convinced the US should have an inferiority complex about its foreign efforts excluding Carter & Obama. Take a look at the US hands off of post WWI. Europe proceeded to get itself in WII in just less than 20 years. Also the Middle East Mess is still fall out of European Post WWI intervention and half-hearted hegemony over the remnants of the Ottoman Empire.

      I’m certain a post WWII world would have sucked if we were a “Little America” like the Left would like us to be today.

    • I think Obama has indeed found a single acorn: forcing the Arab states to fight ISIS.

      I’d have to see some PLAUSIBLE evidence that was a planned outcome of Obamic policy, instead of a mere happenstance. Otherwise, it’s like crediting Barracula with our increasing energy independence. Or, put another way…BWAAAAAHAHAHAHA.

  • Well, this IS a new wrinkle, at least to me. Gobsmacking.

    If you paint your house instead of paying someone to do it who will pay taxes on their earnings (maybe, heh!), you should be forced to pay the taxes.

    • That is to go on the offensive against the future criticism of subsidized daycare being unfair to stay at home parenting

    • I don’t see this as a problem – we pass legislation to make it okay for the government take all the possessions of anyone thinking it’s okay to have the government take all your possessions 🙂

    • “And in some states, she also can’t make a choice about how many children to have.”

      Wow, just…wow…

    • Well, at least it is consistent with the Kelo decision, which says that property “owners” can retain that property only if they maximize government tax payments on that property. And, since you need a building permit ($) to remodel your home, why not require one to repaint it?

  • You mean this bit…
    “And in some states, she also can’t make a choice about how many children to have. In most states, families get more money from the Temporary Assistance for Needy Families program if they have more children. This makes sense, given that it is costly to raise a child. Yet sixteen states have instituted caps on their welfare benefits, refusing to give poor mothers more money if they have more than a certain number of children. The caps were explicitly adopted to try to dissuade poor women from having more babies, although there’s little evidence that they work and people on public assistance have families that are the same size as those who aren’t.”

    From the original stupid article.

    She can’t make a choice….uh, yeah, she can.. She can choose to have kids even if the state no longer pays a bounty to her for every kid she has past number_of_children = (n).
    If she’s having them out of love for the children she can continue, if she’s doing it because it’s “her job” and what she gets paid for, then she discovers the law of diminishing returns kicks in after (n).

    • Yep, clearly the author believes a woman has the right to bang all the alpha c*ck she wants and have the predominately beta male taxpayers pick up the tab for all of it.

      OTOH, the easiest and most humane way of reducing the amount of troublemakers in society going forward is to simply stop subsidizing their production.

      • Soooooo much crazy, packed into one place. Like I said….gobsmacking .

      • Really though, “she can’t make a choice”.

        Other people can make a choise…
        Like these people, the “families with one earner and one stay-at-home caretaker get penalized because they can’t get that credit.”. The make a choice NOT to have both parents work (and choose not to turn Skip and Sally over to someone else to raise for the day).
        Wrong choice it seems, to raise your own kids if you determine you want to do so.
        They shouldn’t get the ‘credit’, they should only pay for others to get that benefit right?
        Yep, screw them, they should turn their kids over to someone else to raise for 8 hours a day, and the government will give them a credit for doing it.

        I have an idea, how about cutting TAXES and stop handing out TAX CREDITS for social engineering policies.

        And did you know that those policies were instituted back at the start of the 20th century specifically to KEEP MARRIED WOMEN AT HOME?
        There’s no proof of that, just the statement that it was deliberately done that way, So, it must be true.
        I can hear those smoke filled back room dealings now “Women are refusing to stay home! We need to tax them more to stop that from happening!”
        Yeah, that’s why that was done back there as the start of the 20th century…even though withholding didn’t kick in until 1943….forget the fact that the tax system was marriage neutral until 1948.
        No no no no, THOSE policies were implemented at the start of the 20th century to penalize WORKING MARRIED WOMEN!!!!!!

        Ain’t it cool when you can establish a tax system that takes away people’s income to hand out to others as credits and then you turn around and blame that system for forcing both parents to work to pay their own bills AND feed the maw of the state too?

        Ah, but the tax system unfairly penalizes ‘working spouses’ who ‘usually’ are women.
        Then I must live in some screwed up househould.
        My wife and I both work and we don’t keep ‘her’ money and ‘my’ money differently, and we never have.
        When only I worked outside the home (because raising three sons is work and she was the one who stayed home with them) and when both of us work now, it’s always been a collective pool of cash.
        Maybe it’s a novel concept that it’s ‘our’ money? My parents did things in the same crazy whack job way we do – hers didn’t.
        And let me just say the results in her family were historically less than optimal.

        So if ‘she’ gets taxed at a higher rate, then “I” lose out just as much as she does according to our personal system of finance.
        Since her money is the same as my money it’s ALL being taxed by ‘the government’ to hand out to someone else for other purposes whether I agree or disagree with those purposes.
        Her’s isn’t taxed at a higher rate than mine on April 15th, we suffer together.

        Pointyheaded progressive liberal asshats who teach law or write professionally for the New York Times or the LA Times must do it differently.
        Why am I not surprised.