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Obama and the American System: Who Built What?

How the Romney campaign is losing the argument over infrastructure investment

Does President Obama need lessons in being an American? Or are some of his detractors, in challenging his Americanism, simply uninformed?

On Tuesday, former New Hampshire governor John Sununu, a leading surrogate for Mitt Romney, told reporters on a Romney-campaign-instigated conference call, “I wish this president would learn how to be an American.” Oh my, we might ask, what about Obama was Sununu referring to?

On Friday, Obama was campaigning in Roanoke, Virginia, and said: “If you’ve got a business, you didn’t build that. Somebody else made that happen.” The whole economy, the President continued, added up to “this unbelievable American system that we have that allowed you to thrive.” Yet that was not, of course, the entirety of what the President said.

But for short-term political purposes, his enemies were happy to truncate Obama’s quote, stopping at “somebody else made that happen,” thereby attacking him as some sort of anti-business socialist. That’s politics, of course. But in the political game, both sides get to play–and Obama’s supporters, joined by gatekeepers and umpires in the media, rallied to Obama’s defense, spooling out the totality of what the President had said last week.  And yet, as we shall see, a mulling over of the larger historical context and resonance of just two of Obama’s words–“American system”–might be in order, especially for politicos on the attack.

Meanwhile, Obama’s words were enough to send some on the right into polemical overdrive. On Saturday, the Friedrich Hayek Center tweeted out, “Obama is directly equating ‘this American system’ with roads and bridges, rather than the rule of law & the free market.” And on Monday, the Heritage Foundation blogged: “Obama pushed his policy goals of infrastructure (aka stimulus) spending and ‘government research’ as part of a collectivist utopia ‘doing things together.’ It’s simply stunning that he would tell Americans, ‘If you’ve got a business—you didn’t build that.’”

In such a political environment–in which intellectual guns of the right had accused Obama of not understanding the American system and of seeking to establish a “collectivist utopia”–it’s easier to see why Sununu would say, “I wish this president would learn how to be an American.” One  problem, of course, is that Sununu was speaking for the Romney campaign, and Romney needs to win the over swing voters in the middle, the folks who are generally turned off by over-the-top  talk.

Indeed, on that same Tuesday conference call, Sununu realized that he had gone too far and quickly took back those specific words: “What I thought I said but I guess I didn’t say is that the president has to learn the American formula for creating business,” he suggested, adding, “The American formula for creating business is not to have the government create business.” And Sununu later apologized more fully for his insult to Obama’s patriotism. Still, Sununu did not apologize for the overall attack on Obama’s economic understanding. And that’s unfortunate from Romney’s point of view, because it means that a significant line of attack against Obama is foregone.

So let’s take a closer look at what Obama said last week:

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive.

So we might pluck out the two fateful words from the preceding: “American system.”  And how did Obama define this “American system”? The President continued:

Somebody invested in roads and bridges. If you’ve got a business, you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own.  Government research created the Internet so that all the companies could make money off the Internet.

Consciously or unconsciously, accidentally or purposefully, Obama had tapped into a main cable of American history–the “American System.” Those two words, together, are not generally known anymore; indeed, they might frequently get mixed in with arguments about “Americanism” and “un-Americanism.” And the author of those two words, “American System,” Henry Clay of Kentucky (1777-1852), is also little known today, even though he was one of the most consequential figures in US history. Clay served as a Representative, a Senator, a Secretary of State; he also ran for president three times. During that time, he authored two historic Union-saving “compromises,” one in 1820 and another in 1850. Finally, he set forth the economic philosophy that shaped the US economy for much of its history, from the early 19th century well into the 20th century. And as we are seeing today, the economic ideas that Clay celebrated are still very much in the policy mix even now.

Like most Americans in the wake of the War of 1812, Clay could see that the fighting, overall, had not gone well for the US; the British Army had burned our capital, and the British Navy had swept the Atlantic Seaboard of American commerce. Only because Britain was preoccupied with Napoleon in Europe were Americans able to negotiate an honorable end to the fighting that left the antebellum status quo in place. So it was obvious that our young republic needed to strengthen itself; we needed, to borrow a phrase from the future, our own military-industrial complex.

And Clay was well-positioned to do something; he was Speaker of the House for the 14th Congress and a close ally of President James Madison. Clay revived the industrial-development ideas of Alexander Hamilton, by then dead for more than a decade, and, as a result, what Clay called the American System was born. The key ideas were the development of infrastructure for industry and economic development, to be financed by higher tariffs. In addition, Clay established the Second Bank of the United States–a sort of proto-Federal Reserve–to take the place of the First Bank, which had lapsed in 1811.

This was the American System, described by the late Robert C. Byrd–a US Senator for half a century and a semi-pro historian–as “one of the most historically significant examples of a government-sponsored program to harmonize and balance the nation’s agriculture, commerce, and industry.” Byrd, of course, saw himself as a latter-day champion of the American System, and while plenty of his fellow citizens disagreed strongly with him and his ways–dismissing him as simply a pork-barrel pol–it would have been foolish, and counter-productive to challenge his Americanism. For better or for worse, the American System is as American as apple pie.

So when Obama spoke in Roanoke about the value of government efforts to create the infrastructural predicate for jobs and wealth, he was speaking for what might be called the liberal wing of the American System.  Indeed, the politically minded will recall that Massachusetts Democratic Senate candidate Elizabeth Warren made made much the same argument in 2011. The Obama/Warren argument chooses to prioritize the social context ahead of the entrepreneur; as Warren said last year, “There is nobody in this country who got rich on his own. Nobody.”  Warren is a liberal, but she is hardly a socialist, as she said in the same speech:

Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

To take Warren at her word, she is arguing for a mixed economy–free enterprise and high taxes. In other words, not socialism, but, most likely, more of the same of what Massachusetts has had for the past few decades–which has left the Bay State with the third-highest per capita income in the nation. (And of course, even if Warren were a socialist, that would hardly make her un-American; the author of our Pledge of Allegiance, Francis Bellamy, was a socialist.)

In contrast to Obama and Warren, the conservative wing of the American System would flip the sequence, prioritizing the entrepreneur ahead of the infrastructure.   And that’s exactly how Mitt Romney himself put it on Tuesday:

The idea that Steve Jobs didn’t build Apple, that Henry Ford didn’t build Ford Motors, that Papa John didn’t build Papa Johns, that Ray Kroc didn’t build McDonalds, that Bill Gates didn’t build Microsoft … to say something like that is not just foolishness, it’s insulting to every entrepreneur, every innovator in America and it’s wrong.

That’s a strong argument, linking Romney and his campaign to hero-entrepreneurs who proved, big time, that business can work for the public benefit. Of course, Obama and Warren would say that none of those entrepreneurs would have succeeded without a functioning economic order, including infrastructure. And so a legitimate debate is joined, as to which comes first, the entrepreneur or the infrastructure.

The best answer, of course–in the spirit of Hamilton and Clay–is that we need both: entrepreneurship and infrastructure. And yet that’s the two-pronged argument that Romney never makes. Why? Perhaps because so many of his supporters and allies, such as the Hayek Center and Heritage Foundation, seem either not to have heard of the American System, or else think that it is part of a plan for “collectivist utopia.”

Indeed, the Romney campaign, overall, would be on much stronger ground today if it were saying, for example:

Of course infrastructure is important.  And that’s one more reason to vote against Obama, because he doesn’t understand how to build the infrastructure that American business needs to bring goods to market. In fact, the President is so naive that he squandered $800 billion on a non-stimulating stimulus plan in 2009. Only in 2010 did he finally figure out that, thanks to his no-growth green friends and all their red tape, “there’s no such thing as shovel-ready projects.” Well, there would be lots of shovel-ready projects, private as well as public, under a Romney administration!

If Romney were describing a 21st-century updating of the American System–putting business first, and seeking to use the government to aid business in creating jobs and, yes, profits–he would be in a stronger position. But Romney and his allies can’t campaign on the American System if they don’t seem to know what it was, what it did, and what it could be–in the right hands.

James P. Pinkerton is a contributor to the Fox News Channel and a TAC contributing editor. Follow him on Twitter.



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