theblackrationalist

Archive for the ‘Economics’ Category

The five things Obama should be thinking right now.

In Culture, Economics, Lifestyle, Politics on November 3, 2010 at 11:41 pm


“You can’t be a half way gangster Nucky, not anymore” – Jimmy to Nucky Thompson in HBO’s “Boardwalk Empire”.

This quote from one of HBO’s newest dramas amazingly describes the state of the Obama administration. “Shellacked” by the GOP in last night’s election (Obama’s words, not mine), the American people have sent a message of dissatisfaction with the current administration; or perhaps the message is that they are dissatisfied with Washington collectively and said “what the hell, let them back in”. Regardless, what is clear is that they didn’t get the message that Obama has been trying to convey to them in recent months.

“The economy is getting better” (Several months of job growth excluding seasonal Census workers and GDP growth)

The stimulus worked” (TARP repaid, stimulus, many economists believe Obama avoided a Depression)

“Healthcare Reform is good” (Verdict is still out overall but lifetime caps and additional coverage for children/young adults can’t be bad right?)

Obama had a wonderful toolbox full of great, rational “features” of his administration to run with. Tangible things that most reasonable people would conclude has helped the overall masses. The Obama brand has indeed began to deliver on the change it promised in 2008. However, he continues to forget that the general public doesn’t see features, only explicitly, painfully oversimplified benefits. The wonderful, rational features the Obama Administration has championed have been so effectively drowned out by the emotional rhetoric of his detractors. Despite having a perfect platform to counter with, Obama has thus far had no answer.

For the first two years of Obama’s administration, the Republican party has pretty much made no qualms about the fact that they had little to no intention of playing ball with any of his signature initiatives. Bipartisanship is a pipe dream in that environment. The benefits of balance of power are only realized if both sides are aiming towards the same goal. That clearly was not the case. The stage was set for the Democrats to effectively “position” the GOP as the party of “No” but it just didn’t stick. Instead, the GOP managed to position Obama as a brazen, overspending socialist born who knows where, who worships who knows what, hell-bent on bringing about changes that most would benefit from but don’t want because it attacks their aspirations and ideological values. Long sentence I know, but you get the point. Just months after the disaster a lack of regulation and intervention amongst the markets brought, the GOP has managed to convince the general public that the market forces should be left alone and that they will some how magically solve all of our problems without articulating exactly how. You have to give them credit and at the same time ask, “how did this happen?”.

Well, we can’t blame it all on American’s general lack of understanding basic economic principles and receptivity to propaganda. Some blame must be placed upon Mr. Obama himself; a “let’s meet in the middle” type of guy almost to a fault. Us progressives are lusting to get a glimpse of the youthful Obama displayed in the headline image of this blog that conveys a subtle but pronounced tone of rebellion and hint of  “I don’t give a fuck, I’m a do me” bravado. That time has come. The game IS indeed the game and it’s time for Obama to put his school of Chicago Politics to use. Here are five things I hope he’s thinking right now.

The GOP will be held accountable both privately and publicly.

If Obama is to be reelected in 2012, he will have to spend the last half of this term governing through the eyes of the American people.  Every attempt of the other side to block progress must be publicly called out and displayed. He must successfully drive home the message that the other side is a lot more interested in playing politics than working on behalf of the people. The message should be consistent, clear and relentless.

I have to make the things that I have done “real” to the American people.

Let’s face it, we walk among the dumb, deaf and blind. Things must be simple, clear and concise. Messages must be explicit and to the point. This is a challenge for someone as smart as Obama but he must learn the art of simplicity if he wants his messages to stick. He must explicitly show how the things that he is doing, will have positive effects on people.

I have to make the things that the GOP has done “real” to the American people.

It’s obvious we have short memories. We need to be reminded of the things that occurred as little as two years ago that put us where we are today. Obama must consistently remind the public of the pain of two years ago as well as the cause to draw contrast of the progress made (as well as it’s cause). “I inherited…”should be stricken from his language. It must be brought to life in a more tangible way than words and driven home repeatedly.

I must re-embrace ideology and emotional arguments just as much as rational ones.

I hope Obama has realized that he is as much of a salesman as the guy who sold you your last appliance at Best Buy. And unfortunately, people buy from the right side of their brain as opposed to the left side at a substantial rate. Obama has to find ways to ladder up what he is trying to accomplish via his initiatives into an ideological concept that connects with the American people on an emotional level. The GOP/Tea Party are masters of this but if Obama is looking for a case study or inspiration as to how it should be done, he should grab David Axelrod and review their 2008 campaign strategies and briefs.

I have to create a crisis or rallying cry to energize my base.

Good leaders know that nothing inspires self-directed motivation amongst a group of people more than a crisis. A rallying cry. A reason to be energized. A simple, singular short-term goal to fight tooth and nail for. Obama should create this rallying cry as a way to mobilize his base to get back in his corner.

I think Obama has done a terrific job of getting things done. Whenever people say things like “he is doing too much” that is a good thing in terms of productivity. Health care reform, student loan reform, banking requirements for loans, fair pay legislation, his accomplishments are substantial. But again, people see and vote on big ticket, front page, large font issues. Ultimately, they are the audience.

“The game is the game” – Marlo Stanfield in HBO’s “The Wire”

Barry, it’s time to play.

Why the small business jobs bill won’t work

In Business, Culture, Economics, Politics on September 17, 2010 at 9:14 pm

The Senate passed the Small Business Jobs Bill which is aimed to stimulate job growth via the nations vast number of small businesses. The bill will flood $30 billion in funds to small business owners in the hopes they will use it to increase hiring to shave the near double digit unemployment rate. The bill however is not addressing the the biggest concern of most small business owners today; consumer’s unwillingness to spend (evidenced by increasing savings rates).

Aside from rising costs most significantly associated with health care, small businesses continuously cite a decreased demand as their biggest concern. With that said, how likely or even smart would it be for a small business owner to invest in resources to increase productivity (labor), when demand is simply not there? Businesses currently in survival mode don’t have the luxury of accumulating more debt in preparation for the upswing. They simply want to be around when that upswing occurs.

The only thing that will encourage sustainable hiring is a need to increase productivity. Demand generates a need for productivity. I think everyone agrees that sustainable job growth is our best route to economic recovery. I see essentially two paths to sustainable job growth to accomplish that. The question will be which will come first?

1. Bye Bye Boomers – Labor statistics estimate that nearly 80 million baby boomers will exit the workplace in the next decade. Generation X will then backfill those positions allowing the nations most unemployed Generation Y to finally enter the job market. Result = Increased Sustainable Demand.

2. Innovation Nation – Attempting to hold onto jobs that globalization has deemed unsustainable is an upstream battle that  the stream will ultimately win. The innovation of a new industry to create incremental jobs is needed. Result = Increased Sustainable Demand

Since income disparity has been a hot topic this week, here is a thought.

How about a progressive corporate tax based on the wage disparity between a company’s Top 1% and its average worker? It’s simple. If the people at the top of your organization make a disproportionately higher amount of income compared to your average worker, you will pay dearly in taxes. That would undoubtedly encourage corporations to increase long stagnate labor wages and provide considerable raises to many. A sustainable increase in personal income will create a sustainable increase in demand. Sustainable demand (not stimulus demand) is the only kind of demand that will get our economy out of the mud.

Now many who will read this suggestion will scream “Socialist!” Maybe. But to those who say “let the laws of the markets sort it out”, haven’t we learned what markets left unchecked leads to? The housing and financial market collapses were not simply the result of natural economic laws and forces. The only natural drivers of those market collapses were greed and reckless disregard. Those markets were abused and perverted by those willing and able to do so. At some point, moral hazard and human behavior has to be accounted for in our economic system. If we have yet to learn that, then perhaps this recession was not harsh enough to drive this point home and we are doomed to repeat our same mistakes.

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