In 1864 the incorruptible but unqualified general Nathanael P. Banks led his army up the Red river to what would become an inglorious (or glorious depending on what side you were on) flogging by forces under Richard Taylor.
One of the things that complicated his retreat was that the annual rise of the Red River didn’t materialize. Banks was unlucky in that he hadn’t realized that in 1855 and 1846 (every 9 years) the river failed to rise. Now Banks had no idea about said cycle so perhaps he can be excused for this mistake, but whatever his deficiencies as a general his experience as both Governor of Massachusetts and Speaker of the House of Representatives provided him with the sense to listen to Major Joseph Bailey a person with practical experience in dams, but no formal education. Bailey was not only able to save the fleet by his exertions but provide a dry-shod crossing at a second point in the retreat saving the army.
What does this have to do with the economy? Just this: An economy like the Red River had a regular cycle and during those cycles you can usually tinker a bit without a lot of issue, but the best solution is to wait things out and let the business cycle take it course.
Once in a while however the cycle is extreme, just like the 9 year cycle of the Red. During those times it is very hard to convince people to wait it out. Particularly if previous tinkering have made things worse. When this happens you need people with actual practical, rather than theoretical experience to make a difference.
Right now we are in an extreme business cycle. Like any cycle the best move is to hunker down, not panic, and wait for the cycle to finish.
The problem if you are a political animal is that there is no credit to be had for the business cycle, and when times are bad the people demand action. The trick it to attempt to tweak the cycle so that you are able to take credit when the cycle is in your favor and divert blame to your foes when the cycle is against them.
Now president Obama is not a man with practical business experience. He is surrounded by and has emerged himself with people who’s experience is not in the business cycle, the creation of jobs or the stimulation of an economy and frankly his goals and priorities are in the direction of government control not the free market.
If president Obama had a Joseph Bailey to advise him, he could make tweaks to actually stimulate businesses to hire. He would decrease regulation, drop taxes and make transactions for small business and manufacturers more fluid.
But president Obama decided instead that his statist agenda was the way to go and convinced democrats that his tinkering with the business cycle and allocation of stimulus money would mean a better economy come election day, just in time to keep them in office, and they believed it, the more fool them.
Will the president change course after the election? I don’t think think so, he doesn’t have a Joe Bailey and he wouldn’t listen to one if he had. The republican party will have to do it for him, if they are willing that is.
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