Recently, Volcker has spoken out strongly against the excessive leverage and opacity plaguing capital markets and that precipitated the current market crisis. Reduce leverage in capital markets, increase market transparency, improve security disclosure and capital markets will begin to stabilize and trade efficiently. While Volcker hasn’t proposed a lot of new regulation in his position statements, the regulatory changes he has suggested do go to the heart of the crisis and should prevent future debacles. There are four basic principles of good market regulation: full and timely disclosure by issuers of securities, market transparency, limits on risk taking (margin limits and a skin-in-the-game requirement), legal protection of investor rights. Volcker is advocating stronger action on three of the four principles.

While Summers is light on regulation (a deficiency remedied by Volcker), Summers has spoken out publicly on the poor structural conditions in the US economy caused by years of underinvestment in physical infrastructure (roads, ports, broadband,…), human capital (education, accessible health care, …) and intellectual capital (R&D). Summers has connected the current need for a large fiscal stimulus with the need to make the US economy more competitive and structurally stronger. Summers has also made the connection between the poor balance sheet of the US middle class and the poor structural health of the US economy.

If Volcker and Summers act on their convictions, Progressives should in the end be pleased by their appointments.

That’s fine by me, as far as economics goes. This is a very capitalistic country and it will remain that way, despite all the current interventions by the federal government. Clearly the country has prospered from such an outlook. (Though I think a universal, single payer health insurance system would be incredibly helpful for the country, and would clearly help many American corporations compete in the world.)

What troubles me is that Obama will likely continue the same foreign and military policies that this country has espoused over the last 60 years. Not only are those policies detrimental to the U.S. and the world, they rob precious resources and productivity from the American economy.