Monday, January 12, 2009

Nation's first MBA president proves a bust for economy

"Economy Made Few gains in Bush Years" is a headline from today's Washington Post. According to the story by Neil Irwin and Dan Eggan, the nation's first president with an MBA (from Harvard, to boot!) "has presided over the weakest eight-year span for the U.S. economy in decades."

The story is filled with gloomy statements that define the Bush era as "as a time of little progress on the nation's thorniest fiscal challenges," and as a period that showed "...the most tepid growth over any eight-year span since data collection began seven decades ago."

The Bush team, with characteristic bravado, claimed pride in their economic accomplishments. Here's what Edward P. Lazear, chairman of Bush's Council of Economic Advisers, is quoted in the article as having recently said:

"It does look like a great eight years, aside from the last quarter, unfortunately. In the long term, things look good. The reason things look good is this economy will rebound, and it will rebound strongly. . . . We expect things to turn around, and I would say early in President Obama's administration."

The Post article counters Lazear's rose-tinted optimism with some dismal statistics:

"The federal government had a modest budget surplus when Bush took office in 2001, but ran a deficit – funding itself to a significant degree with borrowed money – of 4.9 percent of gross domestic product in 2004 and 4 percent in 2005, even as the economy was growing at a healthy pace."

One wonders how many case studies on the economic power of debt Bush studied when completing his Harvard MBA. Not only did he rely on debt to fund the government "even as the economy was growing at a healthy pace," he leaves office throwing billions of dollars of borrowed money at Wall Street firms that paid their executives astonishingly large sums of money to bundle up bad debt into little-understood devices known as credit default swaps and the like.

The crash caused by the nation's dependence on debt in all sectors - manufacturing, governmental, financial and personal, is devastating. People are likening the crash of 2008 to that of the Great Depression. More than a million people have lost jobs in the last few months. During the 2008 holiday season, it was harder to get a seasonal job at Best Buy than it was to become a freshman at Harvard.

And as the nation leaped into the acquisitional frenzy it couldn't afford, it was a Harvard M.B.A. man who held the reins.

In the wrap-up interviews Bush has been doing lately, he appears comfortable with how he feels historians will view his legacy. And his legacy is indeed something for historians to ponder.

The future, however, is something that concerns all Americans. Bush now moves off the world stage, but his presence will be felt for many years to come. The debt he leaves is astronomical, and we will be feeling the weight of it far into the future.

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