Belmont Club

Getting what you want

Abe Greenwald describes some of the “buyer’s remorse” a few Obama supporters may be feeling now they can see his policies and personnel lineup take shape. Disappointments among supporters are inevitable, especially when expectations have been pitched so high. Some of this “remorse” will come from getting things we don’t want any more, under changed conditions. For example, Kathleen Pender of the SF Chronicle describes how Barack Obama’s campaign tax promises ought to wait until better times.

On the campaign trail, Barack Obama proposed more than a dozen tax changes that would affect individuals. The net effect would be to raise taxes on higher-income people and reduce them for low- and middle-income ones. Most of the ideas were floated before credit markets froze and the economy faltered. By the time the Obamas and their new puppy settle into the White House, things could be even worse. Pundits say this could force Obama to shelve his tax plans while he focuses on the economy.

The time-lag factor affects everything. Much of Obama’s foreign policy toward Iraq was formed when it was widely perceived as a disaster and Afghanistan was seen as the ‘winnable’ war, and we are now in a situation where the two theaters may have changed places. Although it remains to be seen whether BHO will adapt to circumstances or stick to a fixed plan no matter what the consequences, unforeseen explain why a candidate must often act contrary to his promises. “Change” is a fact of life, not a plan that a politician can necessarily impose.

In a way electing a politician resembles entering into a futures contract. Political supporters who “buy into” a promise may or may not get delivery; that is dependent on how sincerely a candidate offered his promises and whether they could ever be carried out to begin with. Sometimes what a political coalition bargains for turns out to be the last thing they need. Neville Chamberlain’s policy of appeasement was popular before bubble burst; what the public wanted turned out to be the last thing they needed.

PS: A reader sends this link to his own site on derivatives. He writes, “In the spirit of full disclosure, I’m a derivatives lawyer, and as such I have a financial interest in the public’s perception of derivatives. However, I have made a point of being thoroughly rational in my blog, to the point of exhaustion.” I’m including the link for readers who are interested in the subject.