During his speech today on housing and financial market regulation, Barack Obama gave a little history lesson on the economic beliefs of two of the Founding Fathers, Alexander Hamilton and Thomas Jefferson:
Hamilton had a strong belief in the power of the market. But he balanced that belief with the conviction that human enterprise "may be beneficially stimulated by prudent aids and encouragements on the part of the government." Government, he believed, had an important role to play in advancing our common prosperity. So he nationalized the state Revolutionary War debts, weaving together the economies of the states and creating an American system of credit and capital markets. And he encouraged manufacturing and infrastructure, so products could be moved to market.
Hamilton met fierce opposition from Thomas Jefferson, who worried that this brand of capitalism would favor the interests of the few over the many. Jefferson preferred an agrarian economy because he believed that it would give individual landowners freedom, and that this freedom would nurture our democratic institutions. But despite their differences, there was one thing that Jefferson and Hamilton agreed on: that economic growth depended upon the talent and ingenuity of the American people; that in order to harness that talent, opportunity had to remain open to all; and that through education in particular, every American could climb the ladder of social and economic mobility, and achieve the American Dream.
My take: I can already sense the more economically conservative Capital Commerce regulars rolling their eyes as they read that excerpt. Their criticism might make the following points:
1) I thought the Democrats were the party of Jefferson. Don't state parties always have those Jefferson-Jackson dinner fundraisers?
2) Obama sees how the economy can be "beneficially stimulated" by government, but the obverse? Not so much. Yet many at least partially blame the housing/credit crisis on a government central bank that was too tight in 1999 and 2000 and then too loose in 2003.
3) Big budget deficits may prevent Democrats from implementing a high-spending "new New Deal" if Obama or Hillary Clinton becomes president. But they could implant a New Deal on the cheap via more regulation, whether in finance, healthcare, or energy. It is kind of like when the minimum wage is raised instead of the earned income tax credit. One is reflected on government's books, the other on the private sector's.