Toshio Matsuda, Commentator & Intl Economist

Straight from the Shoulder No.483

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An written invitation to the national convention of the Democratic Party (convened from August 25~28 in Denver, Colorado) arrived at my think tank in Washington D.C. Although it was sent by a prominent figure in that party, I was unable to attend the event due to prior work commitments in Hawaii. In that connection, for some time now I have been sending this, my English version of Straight from the Shoulder, to key figures in the political and financial sectors of the United States. Recently, furthermore, I have received requests from a wide range of readers for my views on the U.S. presidential election. In an attempt to respond to these inquiries, I have continued to state my basic opinion that the presidential potential of Democratic Party nominee Barack Obama is, in effect, zero.

Prior to any discussion of foreign, economic or other policy matters, there is first the question of whether or not Obama possesses the character and background needed to serve as the President of the United States. We are not talking about the selection of the president of this or that company. Rather, this is the choice of the most powerful leader in a country that wields the greatest impact on global political and economic affairs. Obama has not served in the Senate for very long, he has no experience with war, and he is also handicapped by his status as an ethnic minority. From the Japanese perspective, he does not project much of a sense of kanroku (a term that may be translated as “commanding presence”). In my view, he is doing little more than riding the image of “Change” built up through the media by the sharp members of his campaign staff. When all is said and done, I can only conclude that Barack Obama is an extreme political “lightweight” in most every sense of the word.

At the Democratic convention in Denver, at which Obama was officially selected as his party’s nominee, there was also an announcement of the Democratic Party’s policy platform. In view of that, I want to examine some of the important points in that manifesto.

The Democratic Party fundamentally supports “big government.” It also favors strengthened regulations for the distribution of wealth, tightened market controls, expanded support for labor union organizations, national health insurance and major increases in the country’s welfare budget. For the problems in the Middle East, the party advocates a “responsible withdrawal from Iraq.”

Allow me to begin with “big government,” a concept that runs directly contrary to the flow of the times. In the age of globalization, in which national borders have vanished on the economic front, “small government” is the preferred approach. This is reflected in the old adage: “Government exists for the sake of the people (including companies); the people do not exist for the sake of the government.” The bigger that government grows, in other words, the smaller the people find themselves in proportion to that growth.

Strengthened market regulation also goes against the grain of the times. From time to time, the market will fall into states of excessive speculation. However, it is a mistake to use such occasions as a pretext for enforcing legal regulation. The market is equipped with a “self-adjustment function,” which guarantees that it will regulate itself when going overboard. This can be understood by examining the case of crude oil. There was a global uproar when the price of crude climbed close to $150 per barrel. Yet, in little time at all, the price has slipped back down to the $110/barrel range.

Tightened market regulation has already prompted capital to take flight from American shores, serving largely to shrink financial assets and escalate the tone of recession. Obama does not appear to be truly aware of the reality that the U.S. economy is constantly dependent upon foreign capital.

His policy of expanding labor unions may play out well among Americans with annual incomes of around $50,000, a segment that accounts for a healthy number of voters. However, it is engine of the U.S. economy that must backup the political scene. The policy of bolstering labor unions at a time when the U.S. Big 3 Automakers of Ford, General Motors and Chrysler are slimming their ranks and otherwise struggling to somehow survive is akin pouring water over up a man who is already struggling just to tread water.

Lavishing money on the welfare budget is also a step sure to be welcomed by low-bracket income earners. During recessions, however, it is vital for both the government and the people to eliminate waste and mutually endure the hard times. Generously funding the welfare coffers at such times makes me wonder if Obama is in his right mind.

While all of policies smack of a man who has in fact lost his senses, meanwhile, by far the worst is the idea of raising taxes on persons who earn $250,000 a year ? a group that comprises the true engine of the U.S. economy. To repeat, such a measure promises to slam the brakes on the driving force of the U.S. economy, which is currently on the threshold of sliding into recession.

On the Middle East, as I noted, Obama advocates the “responsible withdrawal of U.S. troops from Iraq.” Young Obama, however, should understand, however, that at a time when the flight of foreign capital from America is unfolding at a historic pace and the nation is falling into an economc downturn, the only reliable means of once again concentrating such overseas money in the U.S. is war.

I find the entire policy platform of the Democratic Party to be a rather cruel joke. The idea of an effective Obama presidency is about a feasible as the sun rising in the western skies.

In conclusion, I can only say that the approval rating currently enjoyed by Obama as a candidate is itself a disgrace for the United States.