What Kind of Capitalist is Obama

New York Times columnist, David Brooks, recently wrote a column about the two types of capitalism seen today.

On the one side are those who believe in democratic capitalism — ranging from the United States to Denmark to Japan. People in this camp generally believe that businesses are there to create wealth and raise living standards while governments are there to regulate when necessary and enforce a level playing field. Both government officials like President Obama and the private sector workers like the BP executives fall neatly into this camp.

On the other side are those that reject democratic capitalism, believing it leads to chaos, bubbles, exploitations and crashes. Instead, they embrace state capitalism. People in this camp run Russia, China, Saudi Arabia, Iran, Venezuela and many other countries.

My question is if President Obama falls as neatly into the first camp as Brooks thinks.

As president of the world's leading democratic capitalist nation, Obama is in that camp by definition but is that where his heart lies? After all, Brooks has mistaken Obama's motives before, projecting his own onto the President.

Obama has made several speeches against the current economy with its boom and bust cycles. He has vowed to make fundimental changes to eliminate these cycles. He and his fellow Democrats have blamed the Bush administration for allowing bubbles.

Progressives in general and Obama in particular are in favor of redistributionist policies. They are more concerned with the disparity between the rich and the poor than with rising living standards for everyone. Their view of the government goes far beyond ensuring a level paying field.

Quoting Ian Bremmer, Brooks continues:

Bremmer points out that under state capitalism, authoritarian governments use markets "to create wealth that can be directed as political officials see fit." The ultimate motive, he continues, "is not economic (maximizing growth) but political (maximizing the state's power and the leadership's chances of survival)." Under state capitalism, market enterprises exist to earn money to finance the ruling class.

That's pretty close to the Chicago way of politics - use of political power to reward supporters. There is a reason that Wall Street gives more to the Democrats than to the Republicans even though the Republicans are supposed to be their natural allies.

Brooks goes on to talk about large national energy companies. We do not have anything like that but we could. There has been a lot of pressure for Obama to seize BP. Obama has resisted that but he did take over GM last year, bypassing bankruptcy laws and splitting ownership between unions (heavy Obama supporters) and the government. He also let the banks know that he owned them for taking TARP funds, even if it was forced on them.

While Obama is a long was from exercising the type of control that Brooks describes, many of his supporters would be thrilled to see this happen. On several occasions, Thomas Friedman has openly wished that our government had the same power as China to implement policies. Woody Allen joined him in wishing that Obama could become a dictator long enough to solve our problems.

Countries like these look better from the outside than the inside. Outsiders see things happen and assume that it is all for the common good. Those on the inside see favoritism and corruption. One lesson from the Gulf oil spill is that the closer regulators get to the industry that they are supposed to monitor the less likely they will do their job properly.