Obama Ran a Capitalist Campaign
Release 4.23 November 2008
[Originally published in
The Wall Street Journal on November 7, 2008]
by Bret Swanson*
View as PDF
If Barack Obama ran for president by calling for a heavier hand of government, he also won by running one of the most entrepreneurial campaigns in history.
Will he now grasp the lesson his campaign offers as he crafts policies aimed at reigniting the national economy? Amid a recession, two wars, and a global financial crisis, will he come to see that unleashing the entrepreneur is the best way to raise the revenue he needs for his lofty priorities?
Like every entrepreneur, Mr. Obama's rise was improbable. An unusually-named, African-American first-term senator defeated two of the most powerful incumbent political brands, the Clintons and John McCain. Like many upstarts, he won by changing the rules of the game.
Mr. Obama, following FDR's mastery of radio and JFK's success on TV, is the first candidate to fully exploit the Web. The community organizer seemed to realize that new social networking and video technologies were perfect for politics. It didn't hurt that Facebook co-founder Chris Hughes worked for the campaign. "What ultimately transformed the presidential race," Joshua Green of The Atlantic wrote in June, "was not the money that poured in from Silicon Valley but the technology and the ethos."
The results of Mr. Obama's decentralized Web effort were staggering: 8,000 Web-based affinity groups, 50,000 local events, 1.5 million Web volunteers, and 3.1 million donors who contributed almost $700 million. Republicans, Charlie Cook reported on Nov. 3, believe their large but impersonal centralized databases could not match the tacit knowledge, individual initiative and agility of Mr. Obama's diffuse social networks.
Such creativity could bubble up because Mr. Obama was stable at the top. Not just anyone could recruit an army of volunteers and let them run free, establishing their own networks, offices and events. Because Mr. McCain lurched from one message and tactic to the next with dramatic frequency, his supporters froze. They spent more time defending or deciphering his shifting policies and tactics than they did organizing and persuading. Mr. Obama's even temper and relentlessly consistent message, on the other hand, encouraged supporters to take risks without the worry of being blindsided.
The key question now is how will Mr. Obama govern? Will he stick with the policies he ran on or adopt the approach that he won with?
The only way a president can maximize economic growth is to unleash diffuse networks of entrepreneurs. As economist Bob Litan of the Kauffman Foundation says, "Government can't compel growth." But Mr. Obama's plans -- "card check" legislation to allow workers to unionize a workplace without a secret ballot election; curbing free trade; a government-led "green economy"; and higher tax rates on capital and entrepreneurs -- do not reflect his campaign's deep trust in individuals.
A thought experiment, Mr. President-elect: What if as your campaign raised more and more money it was taxed away and given to Mr. McCain to level the field? Or think of this: What if you were not allowed to opt out of the public financing scheme that left Mr. McCain with a paltry $84 million, about a quarter of your autumn total?
Opting out of monopolistic, closed or centralized systems is often the path to innovation. Sometimes we opt out through the relaxation of regulations. More often, technology allows us to leap, obliterate or ignore the obstacles altogether.
So on education, why doesn't Mr. Obama take Charles Murray's advice? Instead of spending ever more billions to send ever more students to get often-meaningless, four-year college degrees, we should disaggregate the higher education market using the Web and skill-specific short courses and accreditation exams.
Clayton Christensen of Harvard Business School makes a similar argument for K-12 education, where we mindlessly follow a century-old way of doing business. Get rid of this manufacturing era, "value chain" model -- where we take inputs (students), add value (sometimes), and spit them out the other end -- in favor of a "user network" model where unique students with distinct learning styles plug in to smart software and tutoring tools that deliver a customized education.
On health care, let's face facts. We are not going to "solve" the entitlements crisis by gouging American producers to pay for the current Medicare/Medicaid abomination. Much better to transcend the issue with medical innovations and an entrepreneurial, consumer-driven market where more physicians go into medical technology, more nurses replace doctors, more technologies replace doctor visits, and, with properly-aligned incentives and real prices, more citizens take better care of their own health and thus their pocket books. The only way to escape current predictions of scarcity is the unforeseen abundance that entrepreneurship can bring.
Finally, Mr. President-elect, here's a secret: Insist on a strong and stable dollar. It worked wonders for presidents Reagan and Clinton. A weak dollar killed Messrs. Nixon, Ford, Carter and Bush 43. In the same way that Mr. Obama's millions of entrepreneurial volunteers took comfort in their leader's calm, steady, disciplined approach, entrepreneurs need the predictability and discipline of a stable currency to unleash their unpredictable innovations.
Mr. Obama should throw away his tax-regulate-and-centralize white papers. Instead, he should follow his campaign playbook and trust the networked masses. The best way to harness their power is to undo the reins.