Barack Obama's Placebo Effect on the U.S. Economy

MedicineNet.com defines placebo effect as, “…a remarkable phenomenon in which a placebo -- a fake treatment, an inactive substance like sugar, distilled water, or saline solution -- can sometimes improve a patient's condition simply because the person has the expectation that it will be helpful. Expectation too plays a potent role in the placebo effect. The more a person believes they are going to benefit from a treatment, the more likely it is that they will experience a benefit.”

Much like a patient who has not responded to traditional medical treatment, the fate of the U.S. economy may depend on the inactive substance that is President Obama. A president’s constitutional powers are limited in dealing with economic downturns. Technically speaking, the chairman of the Federal Reserve has more control over the economy than the president does, but without the president’s “emotional leadership” the procedures employed by the Reserve will do little to promote healing in the economy.

Much has been made about the substance of Barrack Obama’s qualifications to be president of the United States, but his greatest asset in trying to bring this country back from the economic abyss may be his style. Obama projects confidence, credibility, and competence; intangibles that are important to the public emotion that is essential to a consumer-based economy. His best strategy, the one that gives our economy the greatest chance for recovery, is to implement small changes, but with great fanfare. Cancelling the contract for a new fleet of Marine One helicopters was, in terms of overall spending, a small cost-saving step; but one that sent the right message – all government spending is being reviewed. The Economic Recovery and Reinvestment Act is old-style government pork and wealth redistribution, re-branded for the younger attention-deficient consumers who fuel the economy, and who will probably re-elect Obama in 2012.

Obama’s continuing campaign themes of “Hope” and “Change” are reminiscent of Franklin Delano Roosevelt’s uplifting rhetoric of the 1930’s. Then as now there was little the government could do to turn the economy around; not that they didn’t try. The 1930’s saw an unprecedented surge in federal government growth, both fiscal and social that some historians view as “the cure” for the great depression, others as government malpractice that unnecessarily prolonged the struggle and continues to plague our economy today i.e. Social Security insolvency.

Today’s economy, much like a difficult to diagnose patient, is a bewildering array of complimentary, sometimes competing systems. As is the case with the patient, diagnosis may be impossible; hope for a cure may lie in the placebos offered by the president and the expectation of relief by the consumer.