Obamanomics 101 – The Root Cause of Our Current Economic Crisis

Recently, I was notified by the Naval Postgraduate School that as an alumnus I could have access to their online research resources. I guess they gave that privilege to the wrong guy!

Attached is an article published in the Urban Affairs Quarterly, March 1979, discussing the topic of “Financing Home Ownership, The Federal Role in Neighborhood Decline.” It traces the history of home financing from 1934 to 1979. Its conclusion, ironically, is that even at the time of its writing in 1979 that “federal policies and programs designed to expand the opportunities for home ownership have often contributed to neighborhood decline rather than curing it.” It also describes the credit market that was created for “community organizers” by federal policies. In essence, these federal policies view communities as “sophisticated conglomerates, whose major subsidiaries, the housing market, the business sector, and the social institutions, are themselves composed of smaller economic units, such as households, individual organizations, and enterprises – all of which are integrated through interdependent financial interactions, each depending upon a supply of credit to expand its own capital and make new investment in order to survive.”

In contrast to a capitalist view of the market where monetary investment is made by individuals and by corporations in ideas and capital equipment and the consumer determines winners and losers, the community organizer model relies on the federal government passing socially progressive legislation that makes monetary investment in the “conglomerates,” described above, through quasi-governmental agencies like Freddie Mac and Fannie Mae. Freddie and Fannie provide tax-payer money and access to easy credit to persons who otherwise could not afford it. Enter the “community organizer,” who trains the so-called “disenfranchised” to believe that they are victims of a corrupt capitalist society, that they are entitled to the “American Dream,” and then indoctrinates them in a liberal, socialistic ideology. For the organizer, the medium of exchange for the “American Dream” no longer becomes money, but instead a vote. The “organizer” organizes the communities to believe that they are “companies,” in which society has a moral mandate to “invest.” The “organizer” then forms organizations like the Association of Community Organizers for Reform Now (ACORN) – funded at taxpayer expense – to encourage low income, poorly educated, disenfranchised persons, whose principal asset is that they are over 18 years old but otherwise are clueless, to vote for socially progressive legislators, who will further expand these socially progressive programs. In essence, the “social progressive” seeks to replace equality of opportunity, with equality of outcome. Obama’s euphemism for this model is “being neighborly.” My definition is Marxist socialism.

So the real question is this. If we are about to elect “The Organizer in Chief” to be the next President of the United States of America, does his “trickle up” economic model work? I guess some would point to Europe as a success story; I would think most Americans would disagree. So instead of debating that issue, a better question to ask is “how has the ‘organizer’ model benefitted the community represented by Barack Obama – Chicago?” Chicago is a good example, because of Obama’s long history of service in the community, as a community organizer, state congressman, state senator, and US senator. The elected representatives from this area are all democrats – no republicans to blame! So here goes:

1. In the last six months, more people have been murdered in Chicago (292) than killed in combat in Iraq (221).
2. The state pension fund is $44B in debt – the worst in the country.
3. The Chicago school system is one of the worst in the country.
4. Cook County Illinois (Chicago) sales tax is the highest in the country – 10.25%.

I know, I know – we have not invested enough, the folks have been victimized, and they are entitled to better. I submit we have invested more than we can afford in this 30 year social engineering project. It has resulted in the need to enact a $700B bailout of the credit system that will have to be borne by all of us, our children, and their grandchildren. This “investment” in the alternative economic world of social progressive politics has bankrupted all of us. For someone whose self described strong suit is “economics,” Obama would be well advised to read the modern version of the “Goose that Laid the Golden Egg” by Richard Cummings.