The state of the Obama presidency is not ‚??just fine.‚?Ě To avoid that fate, recently, we learned that President Obama met early on with a gaggle of historians to determine how he could become ‚??transformational.‚?Ě Both Obama, and many of those historians, however, miss the basic point: presidents that concentrate on government action to effect social change generally fail. Those that foster private initiative, however few, do far better.
Many presidents came into office facing economic troubles. Some respond by pushing government action. Others rely more on private initiative. Reagan and JFK were of the latter.
Under Eisenhower, the US faced three recessions. Once Kennedy was in office, he said we suffered from a ‚??restricted economy‚?Ě and faced the possibility of ‚??a chronic deficit of inertia.‚?Ě Kennedy responded by challenging Americans. He promoted a mix of government programs but primarily he relied on private initiative to restore the American economy.
JFK wanted us to land on the moon, to achieve peace for ‚??all time,‚?Ě and care for the World through the Peace Corp. Those were ambitious goals that relied on government action. JFK‚??s main economic prescription, however, were large tax cuts. Those cuts, signed into law by Johnson, were designed for ‚??those in the middle and upper brackets, who can thereby be encouraged to undertake additional efforts . . . and invest more capital.‚?Ě
By doing the above, JFK set national goals and his policies directly engaged Americans in the success of his programs. Their success would become his and they became invested in his presidency. Those are the makings of a successful leader and president.
Americans would man the Peace Corps and it would be Americans that would carry his economic torch to success. Indeed, after the cuts were enacted the economy grew on average over six percent for three years and tax revenues jumped 62 percent.
Twenty years later, Reagan used a mix of government programs and private initiative to ensure his success. America would transcend the Soviet Union through a government build up which was based, in significant part, on private companies that provided defense materials. More importantly, Reagan would pick up where JFK left off and dramatically reduce tax rates. Reagan made it clear from the outset that government was the problem and he wanted to get it out of the way so that Americans could succeed. They did and he did.
Reagan and JFK both challenged Americans to achieve new heights — not primarily through government action — but through freeing the American economy and spirit. By emphasizing private effort not public programs — and enacting policies that allowed that to happen, they lifted a nation and changed the world.
By contrast, the United States has had its share of activist presidents. The likes of FDR and Nixon believed they could use the power of the presidency to make society more perfect. Both made government programs the center of their domestic agenda. From New Deals to Medicare to wage and price controls, FDR and Nixon pulled every conceivable lever of government they could in pursuit of better economic times. Neither presidency, however, was successful in economic terms.
Neither FDR nor Nixon truly engaged, let alone relied on the American people to achieve economic success. Instead, they empowered government and, like a distant overlord, sent Americans the tax bill.
Government, as we have seen once again, cannot create prosperity. It can tax it. It can take it from one person and give it to another — but it cannot generate it let alone sustain it. That is forever the realm of the private sector.
So it surprises me little that the social engineer Obama met with historians fascinated with the power of the presidency. They, like Obama, believe government can be an effective social engineer. Obama’s policies, however, have proven that false once again.
Our Founders, among the most historically learned ever, understood the limits of government to create social good. In chasing that good, they knew government would destroy freedom and private initiative or, as Milton Friedman would warn, they knew that by emphasizing equality over freedom we soon would have neither. Instead, they wanted presidents who relied on the Americans to pursue their lives, liberty and happiness and they wouldn‚??t be surprised one bit by the failure of yet another social engineer as President.