Saturday, October 20, 2012

The triumph of spin

On the stump and in the recent debates, the president has been taking credit for things that are symptoms of a bad economy and touting them as major accomplishments.

Obama boasts that illegal immigration is the lowest it's been in decades, but he leaves out that, in the words of the Associated Press, "Much of the drop in illegal immigrants is due to the persistently weak U.S. economy, which has shrunk construction and service-sector jobs attractive to Mexican workers following the housing bust." Indeed, Census data shows that many Mexican immigrants, legal and illegal, are heading home because they think the opportunities will be better south of the border.

Obama boasted at the Fordham debate Wednesday night that his policies "lowered our oil imports to the lowest levels in 16 years." And it's true they're the lowest in 16 years.

One reason for that is an explosion in domestic oil production on private lands thanks to the technological breakthrough of hydraulic "fracking," an industry the Obama administration has been slowing down with increased regulations. This is the biggest driver of the decline in net oil imports, and President Obama has no business taking credit for it. Fossil fuel production on federal lands, notes economist Mark Perry, hit a nine-year low in 2011, and crude oil production dropped 14 percent on federal lands -- the biggest decrease in a decade.

And, to be fair, another reason for the decline is the longstanding trend of increasing energy-efficiency standards, which Obama supports. Energy expert Jeff Miller writes at the Energy Collective website, that a whopping 1 percent of the total reduction in petroleum consumption can be chalked up to such measures. (Increased efficiency standards for cars, a frequent talking point for Obama, accounts for precisely 0 percent of the decline, according to Miller).

And then, of course, there's the unemployment rate. When the statistically odd drop in the unemployment rate for September was announced earlier this month, the president raced around the country celebrating the fact that we'd finally dropped below 8 percent unemployment. And you can hardly blame him.

But the reality is that the unemployment rate is only as "low" as it is because millions of Americans have given up looking for work. If you give up looking for work, you're no longer counted as part of the labor market. In other words, if everyone just gave up hope of finding a job, the unemployment rate would be zero!

The actual state of the labor market is miserable. More than 12 million Americans are out of work, and that number becomes 23 million if you include people who've stopped looking or can't find full-time work. The labor participation rate is the lowest it's been since the recession of 1981.

A few months ago, I wrote a column on how there were some silver linings to the dark cloud of a lousy economy, on the grounds that bad times often encourage good habits. Americans have been paying down their debts, building up their savings and having their tattoos removed -- all thanks in part to the bad economy and the financial crisis of 2008.

But there's something distinctly creepy about looking at the symptoms of a lousy economy and preening how you meant to do that.



Show vs. Substance

It was Clausewitz, the military strategist, who famously defined war as politics by other means. Politics in turn could be defined as history determined by other means. For each present political choice tends to come with its own view of the past. It would be hard to find a better example of that tendency than Tuesday night's presidential debate, which was not only a clash of candidates but of pasts. Which explains the competing narratives on display as Barack Obama and Mitt Romney came out of their respective corners and started swinging, each presenting a different past. You pays your money, or rather you cast your vote, and you takes your choice.

Our once and, he surely hopes, future president had a lovely past to narrate -- the story of a great young president who, after the worst economic downturn of this still young century, the worst since the Great Depression, set America aright during the past four years, lifted the economy out of this Great Recession, and put us on this golden course we're enjoying now, getting better every day in every way as we proceed with this Great Recovery.

Now that's the way to write history, or at least rewrite it.

The president's is a beautiful story, grand and uplifting, sweeping and inspiring, complete with brave hero and happy ending. Welcome to the Land of Hope and Change, where history is made to order before your eyes. (Pay no attention to that man behind the curtain.) In the president's telling, the past four years acquire a roseate glow.

Sound familiar? Isn't that the way we all see it? If not, maybe the rest of us just experienced a different four years. That doesn't mean the president is lying -- he may just have a different perspective. Maybe he had a better four years than the rest of us.

It was left to the president's challenger to spoil the story by introducing a few of those dull, gray facts that can drain the color from even the brightest of fancies. Mitt Romney had more than a few such details to relate. The man is a glutton for data, spreadsheets, stats, graphs, percentages ... you'd think he was some kind of investor, mainly the successful kind, an expert at turnarounds and reorganizations who now wants to turn around the whole, gigantic enterprise and experiment called the United States of America.

The man rolls out facts and figures like a pocket calculator, flooding the conversation with them, as if he were out to transform the historical romance his opponent has just produced into a tragedy by the numbers:

"Well, what you're seeing in this country is 23 million people struggling to find a job. And a lot of them, as you say, Candy, have been out of work for a long, long, long time. ... We have fewer people working today than we had when the president took office. If the unemployment rate was 7.8 percent when he took office, it's 7.8 percent now. But if you calculated that unemployment rate, taking back the people who dropped out of the workforce, it would be 10.7 percent....

"There are 3.5 million more women living in poverty today than when the president took office. ... How about $4 trillion of deficits over the last four years, $5 trillion? ... Women have lost 580,000 jobs. That's the net of what's happened in the last four years. ... An economy with 50 percent of kids graduating from college that can't find a job, that's not what we have to have....

"President Obama was right, he said that that was outrageous, to have deficits as high as half a trillion dollars under the Bush years. He was right, but then he put in place deficits twice that size for every one of his four years. And his forecast for the next four years is more deficits almost that large. ... He said that by now we'd have unemployment at 5.4 percent. The difference between where it is and 5.4 percent is 9 million Americans without work. I wasn't the one that said 5.4 percent. This was the president's plan. Didn't get there."

"He said he would have by now put forward a plan to reform Medicare and Social Security, because he pointed out they're on the road to bankruptcy. He would reform them. He'd get that done. He hasn't even made a proposal on either one. He said in his first year he'd put out an immigration plan that would deal with our immigration challenges. Didn't even file it.

"This is a president who has not been able to do what he said he'd do. He said that he'd cut in half the deficit. He hasn't done that, either. In fact, he doubled it. He said that by now middle-income families would have a reduction in their health insurance premiums by $2,500 a year. It's gone up by $2,500 a year. ... When he took office, 32 million people were on food stamps. Today, 47 million people are on food stamps. How about the growth of the economy? It's growing more slowly this year than last year, and more slowly last year than the year before...."

Enough. Enough! The president's story was better. This one hurts. Give us Barack Obama's version of the past four years any time. What a pity it doesn't exist outside his theater of the mind, a mind so fine that an unpleasant fact never penetrates it. We the People could listen to this president all day -- if only we didn't have to live in an economy that seems strangely different from the one on his beautifully appointed stage.

But what evidence is there that Mitt Romney would do any better? Well, his record as a successful governor of Massachusetts does, and the successful turnarounds he oversaw at Bain Capital, as well as the success he made of a deeply troubled Olympics. But this is a whole, vast country -- with the biggest economy in the world. Turning around an ocean liner would be child's play compared to turning around the American economy. Why would Mr. Romney's plan turn out any better than the president's? Answer us that. And he did Tuesday night:

"You might say, 'Well, you got an example of when it worked better?' Yeah, in the Reagan Recession where unemployment hit 10.8 percent. Between that period -- the end of that recession and the equivalent of time to today, Ronald Reagan's recovery created twice as many jobs as this president's recovery."

The Gipper did it by making tough decisions, risking rather than courting the bubble Popularity, and setting the American economy on one of its longest, most sustained periods of growth in American history. Point made.

But can Mitt Romney do as well as Ronald Reagan at getting us out of our economic malaise? There's one way to find out: Give him the chance, the opportunity. That's really the theme of his campaign anyway: Opportunity. As in the Land Of. As for the incumbent, it's pretty clear what he offers. Sadly clear from the history of the last four years, the real one.

Who won Round Two of this year's presidential debates Tuesday night? The verdict isn't as clear as it was after Round One, when Mitt Romney was his usual businesslike self and Barack Obama seemed to be somewhere else. But this time the president was back at the top of his game, and it was good to see him there. Ah, if only the future of the country were a game.

It was a good, hard-fought match. And quite a contrast in styles. While the president jabbed and feinted, Mr. Romney gave his usual power-point presentation, as if preparing us for a quiz the next morning. (Oh, what fun!)

He went down his five-point list of what he'd do in the Oval Office: Ramp up energy production of all kinds. Expand trade, especially in this hemisphere. Crack down on the way China, the Communist one, has been cheating when it comes to trade. Balance the government's budget and, perhaps most of all, encourage small business instead of taxing and red-taping it to death.

Given my many biases (free markets and a free press in a free country, just to start with), I imagine I'd be mighty critical of the president's agenda for the next four years. But I can't be, not in good conscience. Given the evidence of Tuesday night's debate, he doesn't have one.

Oh, yes, who won the bout? That's easy: Candy Crowley. Of course, she had an unusual advantage. She was supposed to have been the referee.



Banks Punished For Central Bank and Political Errors

In recent decades politicians have increasingly followed the Keynesian prescription of economic growth through continued government borrowing and the creation of undreamt of amounts of fiat money by central banks. To facilitate this process, the larger commercial banks have acted as the central banks' de facto distribution system, and as a result have grown ever larger while accepting progressively greater risks.

In 2008, potential catastrophe loomed as the entire international financial system was challenged with collapse. But, as the 'darlings' of the central banks, the "too big to fail" banks were saved  by taxpayer bailouts so that they could continue to play their role in the stimulus engine. But as a result of these distortions, the environment for those banks outside of the exclusive "too big to fail club" has been increasingly challenging. In the United States, the financial services industry is changing radically and many fear that the days of U.S. dominance will be coming to an end.

Public ire resulting from the 2008 financial crisis largely missed politicians and central bankers and landed squarely on "Wall Street." As a result, bankers have become easy political targets. Increased regulation of the banking sector has become the rallying cry for the political left.

In addition to direct assaults on the banks, the ill-designed 2010 Dodd-Frank financial overhaul law has raised considerably the cost of entry to small entrepreneurial financial companies. Already, it is forcing the business of smaller financial companies offshore to the benefit of other countries.

Daniel Tarullo, an influential executive at the Federal Reserve Board, has suggested curbing bank growth by demanding a limit on the non-deposit liabilities of banks. Too often, short-term debt comprises the majority of these liabilities and is a source of potential vulnerability in a credit crunch. Meanwhile, some politicians have urged higher capital requirements in order to curb increasing bank size. Even ex-bankers such as Sandy Weil who led the lobbying effort to abolish the Glass-Steagle Act are now calling for its effective restoration. As a result, many corporations are deciding to leave the banking sector.

Companies for whom banking services provide an added benefit to their non-bank clients are fearful of the threat of increased capital requirements and of new, as yet to be clarified, Federal Reserve banking regulations. As such, it is a classic example of how excessive and uncertain regulations are hurting American business and employment. A specific example is that of tax preparation firm H&R Block. Years ago the company launched a service that provides some banking services to its customers. Recently they re-evaluated that strategy and have engaged advisors Goldman Sachs to help them "evaluate strategic alternatives." In other words, they are looking to shed the unit.

Those large banks that remain, firmly entrenched and supported by government guarantees, see little reason to provide cost effective services for retail clients. Most people with bank accounts in the United States will likely agree that in recent years banking fees have gone up while the level of service has gone down. This has resulted in private enterprise proposing innovative solutions. Recent moves by retail giant Walmart provides one example.

The Federal Deposit Insurance Commission (FDIC) pointed out some weeks ago, some 51 million Americans are "under banked". Worse, about 17 million are "unbanked". This implies a massive potential need for banking services for individuals at the lower end of the socio-economic spectrum. Many such Americans do a great deal of their shopping at Walmart, which purveys a wide variety of merchandise at extremely low prices.

To provide a service to these potential customers, Walmart has announced an agreement with American Express to issue a prepaid debit card entitled 'Bluebird'. This will enable less well-off consumers to purchase products from Walmart without surrendering their paychecks to a bank, thereby exposing themselves to high banking fees, or to put their purchases on conventional credit cards, which are notorious for high fees. As the service involves no extension of credit, Bluebird should provide cost effective service to the poor while involving no financial risk to either Walmart of American Express.

While Walmart's efforts may be timely and successful, the move will not reverse the fading glory of the U.S financial services sector. In order to perpetuate its system of massive money distribution, the Fed has insured that American banking will become as competitive domestically and globally as American manufacturing, which is to say, not at all.




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The Big Lie of the late 20th century was that Nazism was Rightist.  It was in fact typical of the Leftism of its day.  It was only to the Right of  Stalin's Communism.  The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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