Amid the surreal and boastful bonuses the Wall Street tycoons have been paying themselves after being rescued by the American taxpayer from their own reckless follies, there is an eerie silence from the Obama administration. That this “they can eat cake” mentality flourishes among the financial elites while the economic catastrophe they engineered through their unmitigated and reckless greed sends the U.S. unemployment rate into double digits is an immoral affront to basic human decency. Yet, except for an occasional sermon on corporate excess in a time of profound economic crisis, President Barack Obama has thus far failed to exercise decisive leadership and put a line in the sand on this defining question. To paraphrase a former Republican presidential candidate, where is the outrage?
In 1962 President John F. Kennedy was also confronted with corporate greed and excess. However, in sharp contrast with Obama, he demonstrated both moral outrage and decisive leadership. Does anyone remember when JFK took on the excess greed of the U.S. steel industry? It is instructive to look back nearly half a century ago.
In the second year of his administration, President Kennedy faced two wars, just as Obama reminds us constantly he is currently confronted with. True, only one was hot, in Southeast Asia, while the other conflict was referred to as the Cold War. Yet the Cold War posed a serious threat to the United States of nuclear extinction, a danger that came perilously close to reality later that year during the Cuban missile crisis. Prior to that, the danger of a military confrontation with the Soviet Union over Berlin was very real. All these factors required compulsory military service for hundreds of thousands of Americans, and vast expenditures on national defence. This was all occurring at a time of economic crisis, requiring the Kennedy administration to confront both recessionary and inflationary pressures. To prevent prices from spiralling out of control, the President sought the cooperation of both labor and management in key areas of the U.S. economy in order to keep the lid on prices. This was important both in terms of preserving the American standard of living at home, while promoting U.S. exports abroad. A major test case for the Kennedy administration was the U.S. steel industry, where large price increases, should they occur, would have a highly negative ripple effect throughout the U.S. economy.
President Kennedy personally intervened in the question over price hikes for steel. His first step was to obtain concessions from the steel unions. He was successful in winning agreement for a new union contract that would have no effect on steel prices, taking into account both wages and productivity. Kennedy expected management to now do its part. Instead, first U.S. Steel, the nation’s largest steel producer, followed by its competitors, announced a substantial rise in steel prices. This action, if left unchallenged, would clearly have unleashed a damaging bout of inflationary pressures throughout the economy.
JFK was outraged. He decided to take action, and bring his voice on the importance of the issue directly to the American people. He conducted a news conference, and in his opening statement he did not mince words. Kennedy said:
“Simultaneous and identical actions of United States Steel and other leading steel corporations increasing steel prices by some $6 a ton constitute a wholly unjustifiable and irresponsible defiance of the public interest. In this serious hour in our nation’s history when we are confronted with grave crises in Berlin and Southeast Asia, when we are devoting our energies to economic recovery and stability, when we are asking reservists to leave their homes and their families for months on end and servicemen to risk their lives–and four were killed in the last two days in Vietnam– and asking union members to hold down their wage requests at a time when restraint and sacrifice are being asked of every citizen, the American people will find it hard, as I do, to accept a situation in which a tiny handful of steel executives whose pursuit of private power and profit exceeds their sense of public responsibility can show such utter contempt for the interests of 185 million Americans. If this rise in the cost of steel is imitated by the rest of the industry, instead of rescinded, it would increase the cost of homes, autos, appliances, and most other items for every American family. It would increase the cost of machinery and tools to every American businessman and farmer. It would seriously handicap our efforts to prevent an inflationary spiral from eating up the pensions of our older citizens, and our new gains in purchasing power…The Steelworkers Union can be proud that it abided by its responsibilities in this agreement, and this Government also has responsibilities which we intend to meet. The Department of Justice and the Federal Trade Commission are examining the significance of this action in a free, competitive economy. The Department of Defence and other agencies are reviewing its impact on their policies of procurement. And I am informed that steps are underway by those members of the Congress who plan appropriate inquiries into how these price decisions are so quickly made and reached and what legislative safeguards may be needed to protect the public interest. Price and wage decisions in this country, except for a very limited restriction in the case of monopolies and national emergency strikes, are and ought to be freely and privately made. But the American people have a right to expect, in return for that freedom, a higher sense of business responsibility for the welfare of their country than has been shown in the last 2 days. Some time ago I asked each American to consider what he would do for his country and I asked the steel companies. In the last 24 hours we had their answer.”
The leadership Kennedy demonstrated back in 1962 shamed the senior executives of the steel industry, leading them to rescind their unwarranted price increase. Afterwards, JFK is said to have remarked, “my father told me businessmen were SOBs. I didn’t believe him, until now.”
In the past six months, President Obama has revealed his towering intellect, basic decency and sophisticated world view. However, we have yet to observe the toughness and passion required to take on the forces that drove the U.S. and global economy into a ditch. Except for periodic and overly-mild rebukes, we have witnessed excessive conciliation that is underserved. I hope I will be proven wrong, but despite initial hopes by many that President Obama would become the “Black Kennedy,” more and more I am reminded of what the late Senator Lloyd Bentsen once told Senator Quayle during the Vice Presidential debate back in 1988: “You’re no John Kennedy.”