On Monday, Barack Obama, fresh off his triumphant overseas trip to Afghanistan, Iraq, Israel, and Europe, turned to the homeland’s number-one concern: the faltering economy. He was in Washington to hold a meeting with his top economic advisers. Here’s how his campaign described what would happen:
Senator Obama will be joined by leading figures from business and labor, Democrats and Republicans to talk about the recent developments in the economy: job loss, financial markets, and the rising costs of oil, food and other commodities….Participants of the early afternoon meeting include: Warren Buffett, Former Chairman of the Federal Reserve Paul Volcker, Former Treasury Secretary Robert Rubin, AFL-CIO President John Sweeney, SEIU Secretary-Treasurer Anna Burger, Google Chairman and CEO Eric Schmidt and other economic leaders.
Most of the agenda is pretty obvious. And campaigns are supposed to do the obvious. But there’s one economic issue that Obama ought to consider raising with these economic leaders and with the voters: transparency. So much of the economy now takes place in dark corners, where traders and speculators develop, buy and sell financial instruments that are unregulated and, perhaps worse, barely understood, except by the small number of players who trade them. This is partly what brought on the subprime meltdown. (See my description of swaps here.) Even former Treasury Secretary Robert Rubin did not understand the financial products that led to the housing credit crisis.
So here’s a populist issue for Obama: the U.S. economy is too important to be placed in the hands of wheeler-dealers who in the shadows engage in transactions that have the potential to send waves of harm throughout the highly-interconnected financial world. Americans are entitled to feel insecure when they see that the economy can be so severely affected by a few big firms that go off the reservation, thanks to the imaginative machinations of a small number of traders. More transparency, more regulation–whatever the policy prescriptions are (and they will be technical and hard for most of us to understand), Obama could by addressing this issue gain a political advantage over John McCain, who tends to celebrate the workings of the markets.
These days there is very good reason for commoners to be suspicious of the markets. If Obama can speak to that, it could make for good policy and good politics.