One of the most tragic aspects of some of the more hysterical people in the country since President Obama was elected is the oft-heard charge that he is some sort of socialist. Nothing could be further from the truth. A true socialist seeks to put the "means of production" (aka capital, property, plant and equipment) under the direct control of the workers. In practice, in socialist states, this meant direct control of industries and businesses by the government (not just regulation). When the government starts making the shoes you wear, then you can call Obama a socialist. President Obama could have conceivably have nationalized the banks in 2008/2009 but he decided not to. The bailout of General Motors and Chrysler was done in a fashion that would have made a private equity firm proud and GM is about to go public and buy back stock from the government. If anything, the US Government and the Federal Reserve made important investments in US firms when financing and investment funds were impossible to come by due to the recession. Many of those investments will actually pay off handsomely. The more you learn about socialism, what it really is, the more you understand that a real socialist would have viewed the entire Obama Presidency thus far as one dramatic missed opportunity.
So what is President Obama if he is not a socialist? Well, he is an American Liberal by and large. By this I mean someone who wants to make capitalism work for everyone in the country. Ultimately, some wealth redistribution, infrastructure investment, and health and education spending is necessary for the continued success of global, US-led, capitalism. It is really quite simple. The globalization of capitalism produces overall and often imperceptible benefits for everyone but highly concentrated and steep losses for particular individuals and groups that lose out in the global shifting of production. Political economy models (the Stolper-Samuelson Model, Stopler and Samuelson 1941) predict precisely who will lose out in globalization and who will gain. Abundant factors will gain while scarce factors will lose. In other words, what you have the most of will gain and what you have the least of relative to the countries you trade with will lose. In the US context, we have a lot of capital, so financiers benefit the most. We have few unskilled laborers relative to countries like China, so they lose the most. Ultimately if you do not compensate the persistent losers (unskilled laborers) they will either reject globalization actively (through protest or voting against free trade politicians) or passively. Some wealth redistribution is absolutely essential to maintaining support for globalization. If ordinary people could actually build a little capital, they might see the benefits of globalization through the growth of that invested capital.
President Obama also wants to support global capitalism by increasing the competitiveness of the US economy. If the US economy is uncompetitive in the long term, more jobs will be lost and wages cut, and support for continued globalization will erode. Cutting taxes may make the US economy more competitive in the short run, but damage it in the long-term (but the American voter thinks short term). Cutting taxes ultimately leads to less spending on education, health care, and infrastructure. The first two lead to economic growth by increasing the country's stock of human capital while the last by increasing the physical capital stock. In a sense, much of the stimulus was a long term investment in the productivity of America, something that will probably pay big dividends in the long term. The President has faced short-term consequences for this, and Republicans may actually reap the ultimate benefits if economic growth picks up under their watch. It is a cruel irony. Following the Republicans' advice and merely cutting taxes and spending decreases funds available for the long-term investment in America's economic growth and would hasten the decline of the country and undermine support for global capitalism. But a lot of political hay can be made in the present.
The health care bill will dramatically increase access to affordable medicine for the American public, increasing the quality of our human capital stock almost immediately. It will decouple health insurance from the particular job, allowing entrepreneurs to take risks and a freer movement of labor market participants to the most appropriate jobs. No more being stuck at a job because it provides your health care. This will make the labor market more efficient and lead to less unemployment and more growth. But I guess "taxes!" and "spending!" are simpler for the broader public to understand. President Obama has been doing what is right for America and what is wrong for his immediate political career. He knows this, that is one of the reasons he appears "aloof," because he is not pandering to myopic public sentiment. If someone is going to torpedo support for global capitalism, it is not Obama. Some socialist.
Stolper, Wolfgang F., and Paul A. Samuelson. "Protection and Real Wages." The Review of Economic Studies 9, no. 1 (Nov. 1941): 58-73.
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