We recently saw lots of sit-down strikes and demonstrations — the various efforts in Wisconsin, the Occupy movements, and student efforts to oppose tuition hikes. None of them mattered much or changed anything. There is a sit-down strike, however, that has paralyzed the country and has been largely ignored by the media.
Most economists since 2009 have been completely wrong in their forecasts, reminding us that their supposedly data-driven discipline is more an art than a science. After all, a great deal of money is invested and spent — or not — based largely on perceptions, hunches, and emotions rather than a 100 percent certainty of profit or loss. And the message Americans are getting is that the Obama administration is hostile to investment and business, and thus should be waited out.
Barack Obama’s original economic team — Austan Goolsbee, Christina Romer, Larry Summers, Peter Orszag — have long fled the administration, and have proved mostly wrong in all their therapies and prognostications of 2009. Despite the stimulus of borrowing over $5 trillion in less than four years, near-zero interest rates, and chronic deficits, the U.S. economy is in the weakest recovery since the Great Depression and mired in the longest streak of continuous unemployment of 8 percent or higher — 38 months — since the 1930s. The Mexican economy is growing more rapidly than is ours. Why did not massive annual $1 trillion–plus deficits spark a recovery, as government claimed an ever larger percentage of GDP, and new public-works projects were heralded by the administration?
Much of the answer is found in the collective psyche of those Americans who traditionally hire, purchase, or invest capital. An economy is simply the aggregate of millions of private agendas, of people sensing and reacting to a commonly perceived landscape. Yet since January 2009, that landscape has been bleak and foreboding.
Take the debt. The problem is not just that Obama has borrowed $5 trillion in less than four years, but also that he has offered few plans to reduce the ongoing borrowing and none at all to pay down the debt. Instead, he has demonized as heartless anyone who opposes his serial $1 trillion annual deficits. That demoralizes the public, who privately know that they cannot buy everything they might wish, and who expect that government will not, either. In the business community, there is the unspoken assumption that, at some point very soon, either taxes will have to rise, the currency will have to inflate radically, or debts will have to be renounced — all equally foreboding for those with capital. Some even believe that Obama is not a haphazardly profligate spender but a deliberate one who welcomes the radical measures on the horizon to stave off bankruptcy as laudable in themselves.
Take energy. We are reminded that the ANWR field in Alaska — and others far greater there — are still off limits. So too are over 25 million barrels off the California coast. Federal leases have been vastly curtailed in the Gulf of Mexico, off the Eastern Seaboard, and in the American West. The cancellation of the Keystone pipeline, which would have kept billions of U.S. petrodollars inside North America, coupled with Solyndra-like federally subsidized solar and wind boondoggles, sent the message that the government would oppose energy that was profitable and subsidize sources that were not.
Worse still, in less than four years, we have now an entire corpus of Obama-administration quotations blasting fossil-fuel energy. The president himself promised skyrocketed energy prices with his now-stalled cap-and-trade proposals. He mused that new regulations might bankrupt coal-burning companies. He ridiculed the idea of increasing oil and gas supplies by more drilling and instead pointed to the importance of proper tire pressure and regular tune-ups and spoke of tapping America’s vast algae resources. Secretary of Energy–designate Steven Chu mused that he wanted gas to reach European price levels, apparently in hopes of curbing fossil-fuel consumption while making alternative sources of energy more competitive. Interior Secretary Ken Salazar, who as a senator had claimed that even $10-a-gallon gas would not prompt him to open up federal lands for oil and gas leases, shrugged that there is no way of knowing whether $9-a-gallon gas is on the horizon. More recently, it was disclosed that an EPA regional administrator, Al Armendariz, had bragged of trying to “crucify” and “make examples” of gas and oil companies in the manner that the Romans did to conquered peoples.
The current renaissance in American oil and gas production is primarily a private effort to drill on private land, despite rather than because of the Obama administration. That the Obama administration takes credit for private companies’ finding new sources of low-priced oil and gas, despite government hopes that they would fail, only heightens the sense of private-sector cynicism and pessimism. The result is that “speculators” do not believe the oil companies will be given access to enormous energy reserves on public lands — and that, to the degree they drill new wells on private lands, a horde of apparatchiks from academia such as Mr. Armendariz will make life difficult for them.