We are told that once again there are logjams at the Treasury Department. The Washington Post reports:
Government officials, inside the Treasury and out, say the unresolved issues are piling up in part because of vacancies in the department’s top ranks. But some of the officials also cite the Treasury’s ad-hoc management, which is dominated by a small band of Geithner’s counselors who coordinate rescue initiatives but lack formal authority to make decisions. Heavy involvement by the White House in Treasury affairs has further muddied the picture of who is responsible for key issues, the officials add.
So we haven’t made much progress on getting former GM CEO Rick Wagoner off the payroll or getting the toxic asset purchase plan off the ground. And we haven’t seen roll out of the program to get credit to small business. Oh, and whatever happened to the financial regulation overhaul?
There is more to learn here than simply not to hire a “genius” who can’t manage his own taxes. Yes, it is apparent that Tim Geithner, who fiddled while the financial crisis burned and had some difficulty in responding to the Asian financial crisis, lacks critical communication skills and was not the best choice for the job. But this is about more than just one hapless Treasury secretary.
Let’s be honest: the entire American economy cannot be effectively micromanaged out of the Treasury building or the White House, let alone by a joint team of officials from both. The nature of a dynamic, nimble economy such as the one Americans have enjoyed is that it is not subject to the whims of politicians and the dictates of a few bureaucrats. A single company like GM, not to mention a sector of the economy or multiple sectors, is not amenable to the ponderous decision-making and political horse-trading which characterizes government decision-making.
GM, for example, now must not only figure out how to reorder its relationship with dealers and the union and make attractive cars and reduce costs. It also must please its handlers in Washington who have an agenda that often interferes with GM’s desire to make a profit (i.e., survive). The Obama team may want GM to build micro-cars in Detroit; the way for GM to survive may to make mini-vans in Mexico.
One can imagine that even a Treasury secretary superstar would be hard-pressed to run car companies, redesign banks, manage executive compensation, “eliminate the cycle of boom and bust,” set up and manage a toxic asset plan, stress test banks, negotiate banks’ exit from TARP, and then devise a whole new set of tax hikes to pay for the Obama agenda. Pundits observe that the president is trying to do too much; in fact the entire government and the Treasury in particular don’t have the “bandwidth” to run the economy as the Obama team envisions.
And this critical problem is at the core of the domestic policy vision which the Obama team has laid out. As David Brooks suggested in examining the response to the swine flu outbreak, command-and-control government responses are exactly what we do not need:
The correct response to these dynamic, decentralized, emergent problems is to create dynamic, decentralized, emergent authorities: chains of local officials, state agencies, national governments and international bodies that are as flexible as the problem itself. Swine flu isn’t only a health emergency. It’s a test for how we’re going to organize the 21st century. Subsidiarity works best.
But Obama shows no sign of recognizing the limits of government or seeing that his administration is already badly overwhelmed with new and complex tasks for which they are ill-suited to perform. No, we have only just begun.
Cap-and-trade is still alive despite the fears of Midwesterners that the result will be impoverishment for their residents. The president pushes on. Indiana Governor Mitch Daniels explained the folly of a grand scheme operated out of Washington:
Quite simply, it looks like imperialism. This bill would impose enormous taxes and restrictions on free commerce by wealthy but faltering powers — California, Massachusetts and New York — seeking to exploit politically weaker colonies in order to prop up their own decaying economies. Because proceeds from their new taxes, levied mostly on us, will be spent on their social programs while negatively impacting our economy, we Hoosiers decline to submit meekly.
The Waxman-Markey legislation would more than double electricity bills in Indiana. Years of reform in taxation, regulation and infrastructure-building would be largely erased at a stroke. In recent years, Indiana has led the nation in capturing international investment, repatriating dollars spent on foreign goods or oil and employing Americans with them. Waxman-Markey seems designed to reverse that flow. “Closed: Gone to China” signs would cover Indiana’s stores and factories.
And health care “reform” — a top-to-bottom reworking of 16% of our economy — portends a system of infinite complexity and mind-numbing bureaucracy as the millions of individual health care decisions made by states, doctors, drug companies, employers, patients, hospitals, and private insurers are supplanted by a gigantic federal health care colossus that will come to decide what care is available to each of 300 million Americans.
Which brings us back to Geithner’s paralyzed Treasury Department. If a “genius” like him can’t handle the complex set of issues on his plate now, how are the mere mortals who inhabit the rest of government going to effectively take on all these new and agonizingly detailed responsibilities? Before the administration rounds up the votes to pass these new plans, perhaps they might take a breather, accomplish what they have already taken on, and then explain how they are going to micro-manage new areas of the economy.
And if Geithner is, as he was billed, the very best we could find then we should imagine how these policies will be run when mediocre or downright inept bureaucrats are in charge. There is a reason, after all, why command-and-control economies fail. After all not everyone is a Tim Geithner. Come to think of it, neither is Tim Geithner.