Saturday, November 8, 2008

Dear President-Elect Obama...

Dear President-elect Obama:

You've been elected, and with a broad mandate, but the devil is in the details. How will you deliver?

You ran on a platform advocating change and unity, bringing accountability to government, and rejuvenating a suffering middle and lower class. However, most of the concrete policies you specified in your campaign are rather moderate, aimed at targeted small interventions, and seem to lack a cohesive vision. In one sense, this is good, because it grants you flexibility to respond to changing circumstances. In another sense, however, it is worrying - particularly given the broad array of challenges facing you.

Perhaps the most important point is this: do not let the size of recent financial bailouts or the government deficit distract you from deeper goals. Please remember the wisdom of Sir John Maynard Keynes, the great British economist: target a deficit in times of trouble towards sustained employment and economic renewal, so that you can increase revenues and balance the budget in times of economic health. In crafting your economic stimulus package, you would do well to remember your commitment to the middle and lower class, to the most vulnerable in society. Furthermore, you should try to aim at finding positive synergies that allow you to harness the crisis stimulus for longer-term goals. This is particularly relevant in terms of environmental, social welfare, and infrastructural objectives.

To illustrate, consider the following example. Lagging infrastructure in the United States is most apparent in two areas: energy and transportation, particularly rail transport. At the same time, we are embroiled in two wars abroad, at least one of which (Iraq) is significantly tied to oil. These two categories of infrastructure represent an enormous opportunity to achieve multiple objectives and follow through on the message of change and pro-lower class growth that propelled you to the White House.

Investing in the construction of rail transport - particularly high speed passenger rail - would provide hundreds of thousands of jobs to an industry deeply hurt by the burst of the present asset bubble, while reducing our long-term dependence on foreign oil, reducing harmful greenhouse gas emissions, and reducing America's long-term dependence on wasteful automobile, jet, and truck transport. Along similar lines, the provision of federal subsidies to local and state governments promoting mass transit systems, would have a similar impact. Such measures might run into some opposition (particularly from oil and auto industries), but that type of opposition could easily be cast as relying on corporate self-interest rather than the public good.

A very similar case can be made for clean energy subsidies and construction, particularly smaller scale technologies with less potential harm which can be utilized in local settings, maximizing the safety and security of our energy infrastructure while minimizing the long-distance transport of oil and coal. Wind (particularly in the Midwest and Appalacians) and Solar (particularly in the southwest) both provide excellent alternatives, and should be supplemented with other locally applicable solutions - such as tidal power and geothermal. Other initiatives, such as clean coal and nuclear should be explored, but have a larger number of detrimental side effects - coal mining and radioactive waste both cause ecological issues if mismanaged. Once again, these initiatives provide jobs and have the potential to reduce american utility bills, to the benefit of the middle class. They may be opposed by the coal and oil lobbies, but these lobbies again have selfish corporate profits as their interest, not the public good or the long-term health of our economy.

Lastly, please remember your commitments to social welfare, health care, and education. Please remember that all commitments should be funded with a progressive tax structure aimed at minimizing inequality (while maintaining incentives to entrepreneurs) and minimizing speculation. Measures like a small tax on financial transactions, or a Tobin tax on currency transactions, have minimal impact on long-term investment and savings (or normal business operations), but a substantial impact on "casino capitalism." Furthermore, these progressive tax measures could be earmarked to pay for health care and unemployment insurance, both of which would achieve substantial demand-side fiscal stimulus in their own right.

Mr. President-Elect, you have set yourself lofty goals. However, you have also signaled a willingness to play political hardball. You have a Vice President who is a major figure in the Senate and wields enormous respect. You have a Chief of Staff who is a similarly high-ranking member of the House of Representatives, and is a close political ally. You have built a mass movement that can be mobilized to provide support for your initiatives, and have tremendous personal charisma to rally the people. Coupled with an appropriate political strategy that begins with decisive and successful immediate action - through a stimulus plan that captures the synergies between many of your goals - you could achieve long-lasting and visionary success for this country.

In short, Mr. President-Elect, you have tremendous potential. Please do not waste it.