Obama's Misguided Approach America Has Become Too European

A jobs protest in Los Angeles: America needs to become more American again.
AFP

A jobs protest in Los Angeles: America needs to become more American again.

A Commentary by Thomas Straubhaar

Part 2: A Return to Traditional American Virtues


Both the behavior of the American government and the Federal Reserve makes one thing clear: They do not see the solution to the US's economic woes in a return to traditional American virtues. Obama is not calling for the unleashing of market forces, as Ronald Reagan once did during an equally critical period in the early 1980s. On the contrary: Obama, driven by his own convictions and advised by economists who believe in government intervention, has taken a path that leads far away from those things that catapulted America to the top of the world in the past century.

The Obama administration's current policies rely on more government rather than personal responsibility and self-determination. They are administering to the patient more, not less, of exactly those things that led to the crisis.

The crash was partially caused by a policy of cheap money. If interest rates stay as low as they are, the state will get into more and more debt. One day these debts will have to be repaid, together with interest and compound interest. This will result in tax increases, which will reduce wages, the result of individuals' hard work. In addition, low interest rates will make saving unattractive for private individuals, thereby making it harder for America to break with its addiction to credit.

Helping America's Enemies

It's not just wealthy Republicans who are now accusing Barack Obama of betraying American ideals, although the conservative zealots of the Tea Party movement go too far in their criticism. They regard the Obama's administration approach to fighting the crisis as a treacherous attack by dark powers on the freedom of the United States. For them, Barack Obama is working on behalf of America's enemies.

But the move away from policies based on the American Way, which made the US by far the world's stronger economy, is also making well-meaning observers increasingly nervous. They are asking questions like: Why should the government care about the economic status or health of individuals? Why should one person pay for the misfortunes or illnesses of others?

The highest commandment of the American worldview was always to maximize individual freedoms and minimize government influence. It was an approach that was highly successful. According to that rule, self-directed action would remain the rule and government intervention the unpopular exception. But that is no longer the case.

Loss of Faith

This raises a crucial question: Is the US economy perhaps suffering less from an economic downturn and more from a serious structural problem? It seems plausible that the American economy has lost its belief in American principles. People no longer have confidence in the self-healing forces of the private sector, and the reliance on self-help and self-regulation to solve problems no longer exists.

The opposite strategy, one that seeks to treat the American patient with more government, is risky -- because it does not fit in with America's image of itself.

In Europe, the state is the result of centuries of struggle by relatively homogeneous societies and it has always played a major role in European societies. Therefore, a broad majority of the population supports economic policies based on government intervention, especially in difficult times. And Germany's current successes in dealing with the crisis suggest that the Europeans are probably right in their approach. The German economy will probably grow more this year than the American one. In Europe, government-prescribed medicine goes down well.

But what is good for Europe and Germany does not automatically work for the US. The settlers of the New World rejected everything, which included throwing out anything with a semblance of state authority. They fled Europe to find freedom. The sole shared goal of the settlers was to obtain individual freedom and live independently, which included the freedom to say what they wanted, believe what they wanted and write what they wanted. The state was seen as a way to facilitate this goal. The state should not interfere in people's lives, aside from securing freedom, peace and security. Economic prosperity was seen as the responsibility of the individual.

End of the American Way?

If you take this belief away from Americans, you are destroying the binds which interlink America's heterogeneous society. Removing this belief could lead to conflicts between different sections of society, clashes which have long bubbled beneath the surface.

What could help would be a return to the American Way, the approach which made the US so historically powerful. The success of this model is illustrated by history. In 1820, twice as many people lived in the United Kingdom as the US, and its economic performance (measured by gross domestic product) was three times as strong and the average standard of living (measured by GDP per person) was a quarter higher. Today, there are about five times more people living in the US than the UK, America's economic performance is about seven times better than Britain's and the average American is about 50 percent better off than the average Briton.

What should be done? It would be more intelligent to repair the elevator which helped the US rise from the bottom of the heap to the top, instead of trying to transplant a European style of operating onto American soil. Either the US follows the American Way -- an approach characterized by a shared history, economic success and constant progress -- or the US will have to adjust itself to the "European" way, sparking economic and social tensions in the process.

If the US manages to revert to its former ways, there is potential for hope. If not, the American age will have really come to an end.

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