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Community Organizer Obama Confronts the Power Structure

March 2, 2009


We certainly are experiencing a "change" with George W. Bush back in Texas and Barack Obama in the White House. But... is the "change" what Obama supporters had in mind when they voted for him?

Of course many Obama supporters may not be interested in what happens in the Stock Market, since they, and Obama, appear to believe the denizens of Wall Street are the "shameful" group that has caused the economic problems we are now experiencing. On the other hand, those Wall Street denizens seem to have a wary view of Obama and his supporters. Today, because millions now own stocks, what happens on Wall Street impacts far more people than it once did.

For example, twenty five years ago, on February 27, 1984, a total of 99,140,000 shares were sold and the stock market closed at 1,179.96. Last Wednesday, 25 years later, a total of 7,483,640,000 shares were sold and the stock market closed at 7,270.89, down from 9,625.28 on Election Day.

When George W. Bush first entered the White House on January 20, 2001, the Stock Market had closed the day before at 10,587.59. On September 1, 2001 the market closed at 10,033.27 and fell, after 9/11 to 8,235.81 after the World Trade Center, considered worldwide to be the heart of America's financial power, was destroyed. The market managed to climb back in about six months to 10,635.25 in mid-March of 2002 and peaked on October 7, 2007 only 18 months ago at 14,164.53. .

Prior to the 2008 election, on September 20, the Stock Market closed at 10,850.66. Then, in October 2008 the polls began showing that Barack Obama would win the election, and by Election Day November 4th the market closed at 9,625.28. Since his election, it appears that every time he gives a speech, the market falls, closing last Wednesday at 7,270.89. People with 401Ks who thought they had a comfortable retirement income a year and a half ago have lost almost 50% of their retirement investments.

What kind of "change" will reverse this loss of assets in both stocks and housing? Can it really be reversed by adding huge amount of debt that we and our children will pay interest on for many years? How will the debt be paid? Where will the money come from if we have other disasters, such as the hurricane destruction of New Orleans or more devastating terrorist attacks like 9/11?

In past years we've handled public debt by printing money, and creating inflation. Homes built 25 years ago that sold for less than $20,000, often today are mortgaged for $200,000 or more. Certainly this is "change" but is probably not the change that the voters had in mind when they voted for Barack Obama. As even Democrats and ardent supporters have been pointing out following his speech to Congress, whatever happens now it's going to be President Obama's responsibility.

However, what he said in his speech and what he has done in his actions are quite contradictory so far. For example he said in his speech: "Well that day of reckoning has arrived, and the time to take charge of our future is here. Now is the time to act boldly and wisely - to not only revive this economy, but to build a new foundation for lasting prosperity. Now is the time to jump start job creation, re-start lending, and invest in areas like energy, health care, and education that will grow our economy, even as we make hard choices to bring our deficit down. That is what my economic agenda is designed to do, and that's what I'd like to talk to you about tonight. It's an agenda that begins with jobs."

While he seems to realize the future depends on HIS actions, not George W. Bush, and TALKS about investing in areas like energy and job creation, he has already cancelled without discussion contracts approved by the Bush administration to develop oil shale reserves in Utah. There actually is more available oil in oil shale in Utah than there is in oil wells in Saudi Arabia. Development and use of Utah, Colorado and Wyoming oil reserves could supply unlimited amounts of inexpensive oil which would help rebuild our economy.

The extraction of the oil, by using modern technology, perhaps even something like the South African Pebble Bed Modular Reactor (PBMR) could be a very fast, clean, safe and a cost-effective new industry that quickly creates numerous jobs. Yet, literally while TALKING about job creation in his speech, Obama's actual policy was to cancel Bush era Utah oil shale contracts that would have produced jobs and cheap gasoline.

Unfortunately, President Obama has no experience whatsoever in job creation or private industry and it is already becoming obvious. His only real work experience has been as a Chicago community organizer using tactics developed by Saul Alinsky who wrote "Rules for Radicals." Alinsky's goal was to teach " the Have-Nots how to take it away from the Haves" through "community organizing," a term he coined. The purpose of community organization is to "engage power structures effectively" i.e. to force a power structure, usually some level of government or business, to DO what the organized "Have-Not" group is demanding and can't or won't do themselves.

Obama explained in his book the generally unsuccessful efforts he made to organize tenants of the Altgeld Garden Public Housing project in south Chicago. He tried to develop more jobs and improve conditions in the 2000 unit project. The purpose of the organization was to put pressure on the managers of the project and the government officials responsible to improve the living conditions and create jobs. It didn't work.

So far, President Obama has been using community organization techniques in addressing the current problems he is facing as president. While he knows that community organization techniques are designed to create pressure on government officials - he doesn't seem to realize that he now IS the top government official the have-nots would need to pressure.

In his Blueprint for Change and his actions since being sworn in, Obama has chosen Wall Street and millions of people in the USA who now own stock as the "shameful" enemy, the Haves. On the other hand his many supporters, including those who have already lost nearly 50% of their 401k stock assets and may lost their homes, are seeing themselves as the have-nots and are expecting Obama to DO something that will recover their assets. Since Community Organizers need a villain to organize opposition to, this is an important issue.

Almost every successful business leader I know and those in the tax bracket Obama plans to raise taxes on is planning investment strategies to thwart Obama's plan. The simplest way to avoid the taxes is to cut back on work hours, trim costs and lay off the least productive workers to keep income from being confiscated by new taxes. The top earners already are paying 40% of their income in taxes. If, as he has promised, Obama increases their taxes, they will figure out ways to decrease their income to avoid more taxation. The result will be less, not more money going to the government.

So far, in the past five months, "stimulus bills" have been passed that authorize spending more than two TRILLION dollars. Yet, Obama and the Democrats tell us that 95% of us will have our taxes cut, the other 5% will have their taxes raised and by 2012 he will halve the deficit. This does not compute. Obama also seems to think doctors will willingly take on more patients through his socialized medicine plans, even if they would end up with less money due to his tax increases.

Most high-earning taxpayers tend to be independent, hard-working people who are careful money managers. They also usually manage to figure out legal ways around confiscatory taxes and there are now millions of people with 401K retirement plans or are retired seniors living off income from their stocks who feel they are now Have-Nots. And, there are more of them thinking up ways to avoid taxes than there are government officials thinking up ways to raise taxes. For example, Obama announced in his Blueprint for Change during the campaign that he plans to double the capital gains tax. In the past 5 months investors have sold billions in stock to pay the current lower tax on their capital gains.

It is going to be interesting to see how this all actually plays out in the real world of finance. The current "power structure" that a good community organizer would pressure to fix Wall Street, the mortgages market and the economy is Barack Obama. He may soon learn what it feels like to be the target of angry people demanding that he fix their problems.

Copyright ©2009 Mary Mostert

 


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