Politics Precedes Being (rich)

Martin Wolf echoes the thoughts I have been having in watching the first days of the Obama administration.  I am very concerned that we have simply elected a celebrity when we need a serious uber-mensch.  Not that the other option would have been better of course.  But to date, I feel like Obama is getting completely outmaneuvered by the opposing team, even though they suffered a serious defeat not three months ago.  He can't seem to get anybody confirmed without a fiasco.  He hasn't proposed anything sensbile for the banks.  He hasn't come up with a serious stimulus package.  And he hasn't put the fucking screws to congress. 

The world desperately needs Mr Obama to take a firmer grip at home and lead abroad. The plans he is now announcing give him a chance of doing the former. The April summit of the Group of 20 countries, in London, is his chance for achieving the latter.

Unfortunately, what is coming out of the US is desperately discouraging. Instead of an overwhelming fiscal stimulus, what is emerging is too small, too wasteful and too ill-focused. Instead of decisive action to recapitalise banks, which must mean temporary public control of insolvent banks, the US may be returning to the immoral and ineffective policy of bailing out those who now hold the "toxic assets". Instead of acting as a global leader, there is resort to protectionism and a "blame game".

I am tempted to hypothesize that things like Japan's lost decade or the Great Depression are not fundamentally economic phenomena at all; at bottom they are politics.  They are created by the structural inability of a poltical system to represent the welfare of the people, the capture of politics by a minority.  Perhaps Obama represented a move away from this stagnation, but congress is firmly mired in more of the same.  Once the political system is hostage to the career calculations of a bunhc of corrupt bureaucrats, countries can do any number or remarkably "irrational" things that we all imagine we have the collective wisdown to avoid -- like inserting protectionist clauses in a stimulus, or bailing out your buddies in the banking industry, or ...

Of course, I am hardly the only one who is seeing these patterns.  Krugman and Buiter and a slew of other are making similar comments.