Obama Needs a New Deal for His Second Term

Commentaries on economics and technology.
Jan. 20 2013 8:00 AM

Obama Needs a New Deal

“Hope” and “change” are so 2008.  Obama needs a better way to describe his second-term vision.

President Obama
President Obama starts his second term on Monday.

Photo by Chip Somodevilla/Getty Images

As Barack Obama begins his second term, he needs a simple way to express his vision and policies for the economy:  a metaphor around which support for his policies might crystallize, thereby boosting his administration’s political effectiveness. So, what makes a successful metaphor work?

The 2008 Obama campaign used the slogan “Change we can believe in.” But “change” is not a metaphor for a new government: It does not stand for any policies. Nor does “Hope” or “Yes we can!”

The 2012 Obama campaign used the one-word slogan “Forward!” Once again, it signifies nothing about policies or their underlying philosophy. Every politician, whether liberal or conservative, wants to move forward, not backward.

Advertisement

Obama’s slogans are examples of “dead metaphors”: They are not part of an overall conceptual scheme.

By contrast, in the 1930s, President Franklin Roosevelt used a metaphor that remains very much alive today. The idea of a “new deal” was conceived during his first presidential election campaign in 1932, though at the time he was still very vague about what the term stood for.

Apparently, Roosevelt, or his speechwriters, borrowed it from A New Deal, a book by Stuart Chase that was published in 1932 and adapted the same year into a cover story for the New Republic. Chase described his new deal in general terms as “the drastic and progressive revision of the economic structure, avoiding an utter break with the past.” And, while the book’s specific policy proposals bear little resemblance to Roosevelt’s subsequent actions, the title had an intrinsic appeal that he must have recognized.

The New Deal created an image of a commercial transaction, like the buyout of a company or an incentive package for executives—something that contracting parties bargain over and agree to. It is not imposed. By calling it a “deal,” Roosevelt made clear that the plan was not anti-business: It sounded like an offer to work, to participate, to seize an opportunity. And, because deals can be good or bad, fair or exploitative, the word “new” provided metaphoric depth, suggesting that Roosevelt’s deal was better, fairer, and more attractive.

The metaphor, overwhelmingly endorsed by voters, stood for Roosevelt’s mandate to fix the ailing economy along lines that were innovative but still essentially capitalist. Some of his administration’s initiatives, such as the creation of the Securities and Exchange Commission, seemed anti-business to some at the time but have long since been accepted as a boon to competition and dynamism by hemming in unfair or manipulative behavior.

Formulating a good metaphor for Obama’s second term is itself a task for intuitive creative thought that entails rethinking what he will propose in his second term. A good metaphor might embody the idea of an “inclusive economy.” The word “inclusive” resonates strongly: Americans do not want more government per se; rather, they want the government to get more people involved in the market economy. Opinion polls show that, above all, what Americans want are jobs— the beginning of inclusion.

The parallel to Chase’s book today is the 2012 bestseller Why Nations Fail by the economist Daron Acemoglu and the political scientist James Robinson. Acemoglu and Robinson argue that in the broad sweep of history, political orders that include everyone in the economic process are more likely to succeed in the long term.

The time seems ripe for that idea, and it fits with the triumph of inclusiveness symbolized by Obama himself. But another step in metaphor-building is needed to encapsulate the idea of economic inclusion.

The biggest successes of Obama’s first term concerned economic inclusion. The Affordable Care Act (“Obamacare”) is providing more people with access to health care—and bringing more people to privately-issued insurance —than ever before in the United States. The Dodd-Frank financial reforms created the Consumer Financial Protection Bureau, so that privately issued financial products would serve the public better, and created incentives for derivatives to be traded on public markets. And he signed the JOBS Act, proposed by his Republican opponents, which aims to create crowdfunding Web sites that allow small investors to participate in start-up ventures.

We have not reached the pinnacle of economic inclusion. There are hundreds of other possibilities, including improved investor education and financial advice, more flexible mortgages, better kinds of securitization, more insurance for a broader array of life’s risks, and better management of career risks. Much more progress toward comprehensive public futures and derivatives markets would help, as would policies to encourage the emerging world to participate more in the US economy. (Indeed, the inclusion metaphor is essentially global in spirit; had Obama used it in the past, his economic policies might have been less protectionist.)

The right metaphor would spin some of these ideas, or others like them, into a vision for America’s future that, like the New Deal, would gain coherence as it is transformed into reality. On January 29, Obama will give the first State of the Union address of his new term. He should be thinking about how to express—vividly and compellingly—the principles that have guided his choices so far, and that set a path for America’s future.

Robert Shiller, professor of economics at Yale University and chief economist at MacroMarkets LLC, is co-author, with George Akerlof, of Animal Spirits: How Human Psychology Drives the Economy and Why It Matters for Global Capitalism.