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Tuesday, August 31, 2010
I like Robert Samuelson a lot but even my favorites can sometimes miss an important element.... namely, the role consumer confidence plays in the economy.
Samuelson writes that the "saving mentality is hurting the economy's recovery". He says people are replenishing their savings (which I believe they are) and once they've done so, they'll start to spend again... and until they've done so, the economy will continue to stagger along. All of which is sort of right... and sort of wrong. People don't save for the sake of saving, they save money when they're worried that their paycheck (or business income for owners of businesses) won't be enough to cover upcoming expenses. This can be the case when they're worried about losing their paycheck altogether, or when they're worried that their paychecks are going to shrink due to higher taxes, or even when they're not worried about losing their paycheck but are worried about upcoming outlays such as college or higher medical expenses. And they'll do so as long as they are worried. Perhaps, as Samuelson suggests, there is a dollar threshold of savings at which point they'll conclude that they have enough set aside and they can return to the days of spending what they make... but my guess is that worried people stay worried and will continue to stash money and not spend it to the same extent they would if they weren't worried. If you remove the fear, you remove the need to save. And with that, you remove a major block to the economy getting going again. It's not just 'it's about the economy, stupid', it is 'it's all about fear'. Right now we have it... and things won't get better until we don't. Monday, August 30, 2010
Recognizing that they haven't asked and that Obama's interests may well diverge from that of the generic Democrat officeholder, here's what I would advise Obama and the Democrats to do over the next two months...
First, don't count on any substantive improvement in the economy. Given how low consumer and business confidence is right now, there isn't going to be any boost in hiring, lending or spending. And without a boost in one or more of those, there isn't going to be a drop in the unemployment rate or an improvement in any of the key indicators people use as a benchmark for economic growth. And there isn't anything Obama and the Democrats could do right now that would stimulate business activity or consumer confidence. Given how negative the public views Obama, his announcing a new policy or program would probably be viewed as just another anti-business, anti-growth initiative... and even if it weren't viewed as such (for instance, if he was to propose keeping the Bush tax cuts in full), coming so close to the election, a good number of people would discount it as pre-election posturing and not indicative of a real change in direction. And Obama isn't going to find much relief on non-economic grounds. Even if he were to bring peace to the world or if American troops found and killed Bin Laden (no trial) or if some natural disaster hit and he handled it relatively competently, this election is definitely about the economy and Obama's handling of it. In other words, Obama has to play with the cards he has. So what can he do? He can try to motivate the loony left to come out in great numbers... but that is going to be hard to do for while they'd prefer the Democrats to stay in control, they know that the most the GOP can hope to do is block some of Obama's initiatives, they aren't going to be able to roll anything back, and that makes the loony left much less concerned than if they thought they ran a risk of losing the White House. He can try to de-motivate the conservatives, to keep them from showing up. Yeah, I know that won't work, as they are extremely motivated to vote against everything Democratic, but he could try. Which leaves him trying to woo the mushy middle (as is always the case, elections are won or lost in the middle). And since the mushy middle isn't too fond of what he's done, he could try to make it less about him and more about something they think of as worse (the 'I suck, but the other guy sucks worse' approach to winning elections). And this seems to be what he is doing, what with his 'the other guy drove the car into the ditch' lines over the past weeks and months. The problem is that, even if it were true, the public isn't too happy with the way he's tried to get the car out of the ditch. They don't buy his (recent) arguments that it was always going to take a long time to get things moving again. They don't think his policies are working, they see the car as remaining stuck. They've seen him focused on things other than getting the car out of the ditch. ASIDE: a boss once told me that I was welcome to fix a given problem anyway I wanted... but if the problem wasn't fixed, I better have given it all my effort and, most importantly, tried to fix it the way the boss would have tried to fix it. I think the same thing holds true: the public was willing to give Obama some flexibility, but they not only don't think his way is working, they don't think he's given it all of his time and attention and their ideas for fixing the economy aren't the ones Obama is trying (they prefer less spending and more tax cuts, he is trying the exact opposite). And the public is frustrated enough that they're not as unwilling to listen to the guys who were fired not too long ago, all of which makes it hard for Obama to make the case that as bad as it is with him, the GOP would be worse. So what can he do? I got nothing.
This story, purportedly on what Obama needs to do to win back support has lots of words and, not surprisingly, lots of misdiagnosing the problem...
Spoiler Alert: yes, this is going to come down to looking at confidence... and the extent to which Obama's policies and approaches have driven confidence down. Supposedly, "one of Obama's biggest challenges has been his reticence about defining a clear agenda and a set of governing principles". This thinking is built around the idea that all would be well if only Obama had done a better job of communicating what he is doing and trying to do. The problem with that is that it isn't true. For the sake of argument, let's stipulate that Obama hasn't done a good job of communicating. If this were the case, confidence would be driven up or down by a combination of (1) the substance of what Obama is doing and (2) what Obama's critics are saying about what Obama is doing. As business and consumer confidence is pretty low right now, we can infer that the public either hasn't liked the substance of what Obama has done or they've been swayed by Obama's critics (conversely, if confidence were higher, we could infer that the public liked what Obama is doing and/or was ignoring his critics). Given that, for the assertion to be true that Obama needed to start communicating to shore up confidence and, by extension, his ratings, one would have to conclude that the public would like what Obama has done and would ignore his critics if only he had spoken up. This argument doesn't give much credit to the public, as it leads to such silly statements such as 'the public would like Obamacare if only Obama explained it more'... or 'the public would have backed the bailout and stimulus spending if only explained it more'. No, the problem with Obama isn't that he hasn't done a good job of explaining his policies, it is that his policies make people nervous... and no amount of explaining is going to make people less nervous. Tuesday, August 24, 2010
While it might make for good theater, Boehner's call for Obama to fire Geithner and Summers misses the point entirely.
Obama hasn't chosen the economic policies he has because of the advice given to him by Geithner and Summers. It is ridiculous to think that, given different advice, Obama wouldn't have pursued his destructive economic policies. Geitner and Summers are merely offering Obama advice on HOW to do what we wants to do. At best, bringing in new advisers will result only in Obama wrecking the economy in a different way. Thursday, August 19, 2010
With the last 'combat' troops leaving Iraq (there will still be troops there, supposedly focused on training Iraqis), let's look at the before and after of Bush's not-so-excellent adventure...
Before, Hussein was in charge and the country was pretty screwed up. There wasn't much in the way of intra-Iraqi violence, at least not if you don't count the thousands Hussein killed each year. There was some governmental support for terrorism against Israel and America. And there was some level of concern among the Gulf countries that Hussein would again try something along the lines of his ill-fated invasion of Kuwait. And what did we get for our hundreds of billions of dollars and thousands of dead servicemen and thousands more of wounded soldiers? Well, Hussein and his sons are gone. There are a bunch of dead terrorists/insurgents. Nobody is worried about Iraq invading or intimidating its neighbors. And it's hard to tell for sure, but possible that the Iraqi government isn't funding or providing other forms of support to suicide bombers in Israel. One might be inclined to think the above justifies the costs... but, as they say on TV, 'there's more' to consider. But for our invading Iraq, most of the dead terrorists weren't a threat to America. Most of them were locals and ill-suited for anything more than running into an Iraqi market with a bomb strapped to their bodies or laying IEDs alongside Iraqi roads, they weren't applying for visas to come to America to wage holy war against us infidels. So while it's good that they are dead, America isn't any safer as a result. While nobody is worried right now about Iraq, people are sure worried about Iran which took advantage of Bush being occupied in Iraq to expand its support of terrorists and to embark on programs that scare its neighbors far more than Hussein did. It's a question that can never be definitively answered, but for Bush invading Iraq, it is possible that Iran wouldn't be in the position it is today. While the Iraqi government isn't torturing and killing its political opponents, at least not to the same extent Hussein did, there is still a lot of intra-Iraqi violence and there remains a huge question as to whether the Iraqis truly can live together in peace and harmony. And in looking at the positives resulting from Bush's invasion of Iraq, one must also look at whether those results could have been achieved with other, less expensive, methods. If we wanted to get rid of Hussein, we could have done so and without invading Iraq. Or, alternatively, we could have packed up and left as soon as he was captured. Either approach would have cost us a whole lot less in money and lives. The same holds true for finding out for sure whether Iraq had or was pursuing WMDs. We could have answered the question at a far lower cost. And we could have beefed up our protective umbrella of the Gulf States in order to provide them with the comfort of knowing they weren't going to wake up one morning and find Iraqi troops marching in the streets. All in all... my final answer it that going about it the way Bush did was a waste of money and men. He could have accomplished everything he did - and a whole lot more - if he had done things differently. Yeah, he 'won', but only if you view the conflict in isolation, without looking at alternatives and without looking at the terribly high costs. Oh, and by the way, there is one more cost that needs to be factored into the equation... and a cost that is - and will be - so high as to prove without a doubt that Bush's handling of Iraq was terrible, terrible, terrible.... and that is, but for Bush doing what he did, Obama would never have been elected President.
Anyone who buys shares in the 'new' General Motors is dumb, dumb, dumb.
Contrary to the claims of GM management and their government overseers, GM hasn't fixed itself. While it has shed itself of a lot of debt and has lowered its cost structure, GM still has the same problems that drove it (yes, pun) into bankruptcy. They still have a hostile union, one that cares more about extracting pay and benefits for current workers than about the long term financial health of the company. They still don't make enough cars that people are willing to buy at a high enough price. They still have too many models, denying them the ability to recycle designs fast enough to keep buyers interested (cars sell best in the initial years after a re-design; the longer between design cycles, the bigger the falloff of what at one time may have been a nice selling car). And there is a big possibility that even after the IPO, the government will still be calling the shots... which means decisions will be made for political reasons and not for business reasons. The last thing anybody ought to do is invest in a company whose management is occupied by any issue other than making money. Wednesday, August 18, 2010
I'm thrilled that the state of Virginia has a surplus and did so without raising taxes, but I very much disagree with Governor McDonnell's plan to spend $82 million of that to give state employees a 3% bonus.
A bonus is, by definition, money paid over and above the salary one gets for doing one's job. In theory, a bonus should only be given to people who perform at a level above the base expectations of the job. So what is it that state employees have done to warrant a bonus? The lines at the DMV aren't moving any faster, the state police haven't made the roads any safer, the bureaucrats at the Transportation Department haven't made our commutes any easier, the administrators in the state education department haven't done anything special to help raise our kid's test scores. So why give them any more money? If anything, they're barely doing enough to justify their existing base salary, they haven't earned a bonus. Tuesday, August 17, 2010
Apparently, Gene Healy doesn't think people should walk and chew gum at the same time, what with his complaint that 'zoning issues in lower Manhattan' are 'on the front burner in Washington these days'.
According to Healy, the kerfuffle is nothing more than a 'bogus issue' that the GOP is using to distract the rank and file from our (supposed) reluctance to shrink government. So where is Healy's evidence of our reluctance to shrink government? A reluctance by Gingrich to specify programs he would cut? That's it? I guess it didn't occur to Healy that Gingrich might have realized that tactically, this wasn't the best time to produce the list of program cuts? I'm guessing that Healy, a Vice President of the libertarian Cato Institute, would prefer to have 100% of the conversation devoted to cutting the role and cost of government. But just as I can be concerned about more than one thing during the course to the day, so too could GOP leaders decide it was a good idea to stoke more than one fire of voter discontent with the Obama Administration. And I'm also not willing to concede that this is a 'bogus issue'. Just as important as are one's positions on 'the real issues' (whatever they are), a smart candidate knows it is critical to connect with the public. And a great way of doing that, if close to 2/3 of the public lines up on one side of an issue, is to make sure the public knows you are on the same side. And if your opponent goes and does something stupid, like take a position that seems to be put himself on the wrong side, then the smart candidate will ride that horse for all it is worth.
In The New Republic, John Judis goes on for four (internet) pages, all to argue that everything would be fine economically only if Obama had taken a more 'populist' approach in dealing with the financial crisis.
I, on the other hand, will take far less than four (internet) pages to argue that Judis is wrong, wrong, wrong... and for those of you paying attention, you already know my response. Nothing Judis argues for would have prompted businesses to start hiring and consumers to increase their spending... and without those two happening, as we have seen over the past year plus, there is no recovery. Coming down harder on Wall Street would have made Main Street start hiring? People with money in the bank would have been spending that money on cars and refrigerators and the like but for Obama's reluctance to further demonize Wall Street? Passing an even stronger financial reform bill would have led businesses to increase their capital expenditures? No way. The economy just doesn't work that way. The economy grows when businesses hire more people and sell more stuff, when consumers spend and buy more stuff. And the only way these two things happen is if both are relatively confident about the short, intermediate and, to a lesser degree, the long term future. Give people a reason to be optimistic (at a minimum, keep from continuing to scare them) and they'll naturally do what they're wired to do: buy more, spend more, try to grow and become more successful. It's human nature to want to improve one's current position in life. All that is needed is for government to stop scaring and discouraging us from being ourselves. Monday, August 16, 2010
The conservative case for what is called 'National Popular Vote' (in which states agree in advance to cast their electoral votes for the Presidential candidate who wins the most popular votes on Election Day) seems to be that, as a center-right country, there are more of us than them.
There might be... but it still a stupid idea. Supposedly, it will force candidates to stop ignoring states that are now viewed as either safe Democratic or Republican states (I didn't know people in these states were suffering from an alleged lack of attention). Since 'every vote counts', per the proposal's supporters, candidates will be forced to campaign everywhere hoping to boost their vote counts. Yes, and no. Candidates now spend their time where they think it will do the most good and that won't change under this proposal. While the individual states they campaign in might change from election to election, there will always be some number of states that are all but ignored... and in a lot of cases, the same states that get attention now will get it in the future and the states that get ignored will continue to get ignored. As things stand now, GOP candidates don't campaign in reliably red states and Democratic candidates don't campaign in reliably blue states for the simple reason that they have little to gain from the extra time; having locked up those electoral votes, they go to states where they have a chance of pulling into their column. Well... under this proposal, candidates will continue to ignore states where they think they have little to gain. And what states will fall into this category? Let's start with states in which the candidate already is getting a pretty high percentage of the vote. If, for example, a Democratic candidate is polling in the high 60s in Massachusetts, spending time there trying to pull another 100,000 votes out a increasingly small pool of undecided voters and non-voters is going to be harder than pulling the same number of votes from a much larger pool of possible votes (non-voters and voters who are leaning towards one's opponent). And states that don't have much in the way of voters to begin with will also be ignored, and for the same reasons as above. For example, the marginal value of a GOP candidate going to Montana is going to be far lower than the marginal value of another trip to Florida, where there are many more voters in the pot. And isn't that the way things stand now, candidates don't spend time going to states that are either reliable or too small to warrant a trip? But the biggest reason to be against the proposal is because it is a figurative middle finger to the voters in states that participate in this compact. Let's look at the four scenarios: voters in a given state vote for (1) the candidate who wins both the national popular vote and a majority of electors under the existing system, or (2) the candidate who wins the national vote but not a majority of electors under the existing system, or (3) the candidate who wins neither the national vote or a majority of electors under the existing system, or (4) the candidate who doesn't win the national popular vote but would have won a majority of electors under the existing system. Under the first scenario, the compact is unneeded, as the candidate the voters voted for is elected President. The second scenario is the one driving much of the impetus to adopt this proposal, as supposedly it is a terrible crime against democracy to have a President who didn't receive the most votes from the public. Never mind that it has only happened twice in our nation's history (and the last time, as bad as Bush II was, it did keep Gore out of the White House). And under this scenario, there is no uproar - at least in this state - as the voters in a participating state get the President they wanted even though they wouldn't have under the old system. Under the third scenario, while the outcome doesn't change as the voters in a participating state don't get the President they voted for, they wouldn't have gotten the result they wanted under the existing scenario. But forcing this state to have its electors vote for the candidate the voters of that state didn't want is a bit like pouring salt in the wound, to some extent voters for the losing candidate ought to be entitled to the 'Don't Blame Us, We Voted For The Other Guy' bumper stickers. It is the fourth scenario that is going to cause the huge problems, where not only are the electoral votes of a participating state awarded to the candidate who a majority of people in that state DIDN'T WANT, but for this system, they would have gotten the President they wanted! Just how well is that going to go over in any state falling into this category? Yes, the candidate they wanted didn't get a majority of the votes nationally, but so what, the voters in this state could have had the President they wanted! Can you imagine the public uproar? Where are the governor and the state legislators going to hide when the voters come demanding to know just who was responsible for such an abomination? Imagine the constitutional crisis when states in this position move to withdraw from the compact or otherwise order their electors to vote for the candidate receiving the most votes in that state. Sunday, August 15, 2010
Not that anyone who has been paying attention needs reminding, but the problem isn't, as Bob Herbert writes, that Obama didn't make employment a top priority, it is that Obama has no clue and thus did things that were actually counter-productive to people getting jobs.
Let's start with Obama's belief (one shared by most on the left) that government can 'create' jobs. Other than government jobs themselves, government can not create jobs. Private employers create jobs. The best government can do is to promote economic, regulatory and social policies that lead to businesses being confident enough to add to their work force. And that is what didn't happen. Instead of minimizing the economic troubles, which would have resulted in a whole lot fewer people losing their jobs, Obama trumpeted and exaggerated the problems, first to win election and then to justify his policies. He followed that up with condemning and scapegoating the entire free market when, at worst, the problems should have been attributed to certain segments and slices. According to Obama, pretty much every employer was guilty of screwing people and causing the economic disruption. Every Wall Street firm was guilty, when in fact, it was only certain desks at certain firms that caused the problems. It seemed Obama felt every employer was guilty of abusing their workers and screwing their customers. So instead of targeting enforcement and regulatory changes on the margins, where the problems were, Obama subjected the entire private economy to new rules, regulations, costs and uncertainty. And, to no surprise, the private economy responded by cutting staff and holding off on new hiring and making new investments. And consumers, at least those not employed by the government, held off making new purchases... all because Obama had scared the living daylights out of them. And because Obama doesn't know what he doesn't know, he is guaranteed to do more of the same. He'll argue for more government spending, he'll push for more regulations and restrictions on business, he'll argue for more and higher taxes. It's like pouring gasoline on a fire, you get a bigger fire. And in this case, a bigger fire is more economic problems. Thursday, August 12, 2010
Amazing that I agree on anything with John Kerry (who, as James Taranto keeps reminding us, is "the haughty, French-looking former junior senator from Massachusetts who by the way served in Vietnam", but Kerry is right that it would be a mistake trying to amend the 14th Amendment to deny automatic citizenship to children of illegal aliens born in the United States.
In fact, for the GOP to spend ANY effort on this would be as grave a mistake as Obama spending political capital pushing through Obamacare in the midst of serious economic problems... and for the exact same reasons. To some conservatives, ending automatic 'Born in the USA' citizenship may be just as important and a principled fight as enacting socialized medical care was to liberals... but to the vast swarth of independent voters whose votes are so critical this fall, and please repeat after me, IT JUST AIN'T THAT IMPORTANT! What is important to these voters is enacting policies that restore investor, business and consumer confidence and getting the American economy moving forward again. That is what people care about right now and a huge chunk of votes this fall will be made by people whose first - for some, the only - concern is about the economy. The public wants to see their representatives spending time on the most important issues. Everything else is secondary. And the party that goes off on some extraneous fight such as immigration sends a signal that they're just not to be trusted with the responsibility of getting the economy moving again. After all, if you're not smart enough to focus your time on the most important issue, why should the public have any confidence that what you do on the economy would be any good? The Democrats made a huge mistake with the public when they spent pretty much most of the past year fighting for and enacting Obamacare. It is critical that the Republicans not do the same. To build on James Carville's wise words 'it's the economy, stupid... it ain't immigration'.
Michael Barone goes on about why the "private-sector economy has not responded as administration economists expected"... but here is the reason and in less than 20 words:
The American public simply didn't believe Obama when he claimed his policies were going to make things better. If they had believed Obama, businesses would have stopped laying off workers and consumers would have continued to spend. Banks would have continued to lend. Housing prices would have stopped falling. But not only did we not believe Obama that things were going to get better, we figured things were actually going to get worse. So businesses continued to reduce staffing, in anticipation of continued drops in revenues and not being able to afford their current payrolls. Consumers continued to hold off spending, worried about higher taxes and the possibility of losing one's job. Businesses didn't lay out money for expansion and equipment, figuring they'd rather be safe and hold on to their cash. Housing prices continued to drift as would-be home buyers held off worried about even further drops in home values. And banks didn't extend loans, figuring that getting 3 percent from the government was better than taking a risk on a 5%+ loan to a local business. As I have been harping on for a while, the specifics of the economic policies matter less than whether the public believes those policies will improve things. Some actions are more readily accepted by the public than others (cuts in tax rates, targeted investment credits, etc.), and in these cases, a President has an easier time selling the public that those policies and steps will lead to economic recovery. Other policies are a tougher sell (tax hikes, expanding government and forecasting trillion dollar deficits as far as one can see) and thus require a President who is pretty persuasive to sell the public that those policies will jump start the economy. It isn't that raising taxes in a recession is sure fire recipe for disaster, nor is cutting tax rates an automatic and guaranteed way of igniting the economy, the key to whether a particular policies achieves its goal depends mightily on whether the public believes in what the President is selling. If they do, they'll act accordingly and things will start to improve. And if they don't, well, they'll not only pull back but they'll also be so much more reluctant to accept whatever other policy prescriptions the President is selling (this goes a long way to explain why the public is opposed to Obamacare; had the economy been doing better, Obama would have had more credibility with the public, but with the economy still in the toilet, Obama just didn't have the credibility to get people to believe his claims). Obama's problem (actually, but one of his problems) isn't just that he went with the hard sell policies but that he wasn't very good convincing the American public to believe in his economic message. While he had the skill at convincing 53% of the voting public (a small subset of the public as a whole) to vote for him, this didn't translate to an ability to convince the public as a whole that he knew what he was doing economically. And why? Well, a possible reason is that the 53% of voters who voted for him aren't the ones who drive the economy (or, at least, get the economy going). Obama didn't win a majority of small business owners. Obama didn't get a majority of the white middle class who have homes with equity and savings. He didn't score that well with seniors who have discretionary spending. He got a majority of people who don't make a bunch of money and who couldn't be counted on to increase their spending (for the simple reason that they already spend everything they make). In other words, the people the economy most needed to believe in a President's economic policies were predisposed to not believe in Obama's message. A small business owner who voted for McCain (or who sat at home, disgusted with both candidates) because he didn't like Obama's economic policies wasn't going to start hiring new employees after the election. Middle class workers who voted for McCain for the same reason weren't going to start spending money after Obama was inaugurated; they thought things weren't going to go well and they pretty much ensured that things wouldn't go well. Bank loan officers worried about Obama's crackdown on lending wasn't going to expose himself by pushing new loans to small businesses and consumers. And as things have continued to slide, Obama has doubled down on trying to sell us that his policies are working. Instead of changing his approach in hopes that we'd buy in, he's spending his time trying to show us we are wrong. Not a smart thing to do and not something that is likely to get us to buy in. Wednesday, August 11, 2010
According to a WSJ poll and an article entitled 'Obama Meets Expectations', 58% of respondents said that Obama "has done just about what they expected", 29% of respondents said he's done worse than expected and 12% said he's done better than expected.
And what a useless survey. Measuring whether Obama is meeting expectations is meaningless without putting it into the context of what those expectations were in the first place. If, for example, you were among the 46% of voters who voted for McCain, in large part because you expected Obama would be a terrible President, then, yes, he's been living up to expectations. In fact, if you expected to the world to come to an immediate end upon his taking office, the fact that it hasn't would put you among the group who say he's done even better than expected. Or, coming at it from the other side of the ideological aisle, if you voted for him, expecting him to ram liberal programs down our throats, then you too would say he was performing up to expectations. As for those who fall into the 'worse' than expectation column, some would be comprised of those who expected an even greater government takeover of the economy and are thus unhappy that Obama hasn't done that, while others would be those who weren't looking forward to Obama but were nonetheless expecting that he wouldn't have been as bad as he has been. So why commission such a poll in the first place? Monday, August 09, 2010
While there certainly are a lot of taxes incurred in hiring someone (or, for that matter, keeping them on the payroll), that isn't the real and complete reason this (or any) employer isn't hiring.
It wouldn't matter how high taxes were... if the employer thought he would generate more revenue than what it would cost him in the combination of salary, taxes and benefits, then he would be hiring. And it wouldn't matter how low taxes were... if the employer doesn't think he would generate more in additional revenue than the costs, then he wouldn't be hiring. True, it takes more in additional revenue to cover higher costs, so it is possible that the employer figures adding an additional employee could generate higher revenue, but not enough to cover the full cost... but somehow I figure the employer isn't breaking down his analysis to that extent. He probably doesn't feel that confident that adding an additional employee would generate ANY marginal revenues, let alone enough to cover whatever level of taxes incurred in hiring new employees. And, play the broken record please, why does he feel that way? Because he doesn't have much faith that his customers are going to be spending anything more than they've been spending. And while he might think he could steal some sales from his competition, he realizes that would likely just offset the sales he is going to lose from existing customers who go out of business or for some other reason cut back on their spending. Given his lack of confidence, it is logical that he isn't going to do anything to add to his expenses. It makes no sense to add payroll costs if you don't think the revenue increase is going to be there. In other words, it ain't the taxes that is stifling hiring, it's the lack of confidence.
Not that they listen to me, but the GOP has a ready-made and soundbite friendly response to Obama's framing the upcoming elections as a choice "on whether to return to policies that brought the recession or continue with policies that are "getting us out of this mess".
Sorry, Mr President, but the reason the economy is a mess right now* is because neither businesses nor consumers have confidence in what you have done... and they have no confidence in what you are (still) trying to do. If they did, the economy would be in a whole lot better shape. How people feel about the future is far more critical than how they view the past. No matter what has happened in the past, if people are optimistic about the future, they'll spend and hire and invest. And if they're not optimistic, they're not going to hire and spend and invest. And the public doesn't think much of the Democrats' stimulus (neither version 1.0 or the proposed followup), they don't think much of Obama's alleged plan to forgive billions of dollars in mortgage debt, they don't think much of Obamacare or the financial reform law. They don't like what they (legitimately) see as an anti-business attitude. They don't like the Democrats' plans to raise taxes on millions upon millions of taxpayers (and they're not mollified by the attempt to spin it as either 'fairness' or as 'deficit reduction'). * the GOP can substitute specifics, such as high unemployment, lousy consumer confidence, flat housing values, etc., etc. for the generic 'bad economy'. Wednesday, August 04, 2010
During the 2008 presidential campaign, I scoffed at Obama supporters who claimed our supposed bad relations with other countries were due to Bush's 'attitude', and that Obama's new approach would make things all right...
To me, countries do what they think is in their best interests and if a country wasn't cooperating with us, it was because they simply didn't think it was in their interest to do so. If a country made that determination, no amount of sweet talking would make them change their minds... and if a country decided doing something was worthwhile, the way in which the United States talked to them was pretty close to irrelevant. For example, the companies that decided to not support the Iraq invasion did so because they didn't want to, it isn't as if they would have but for Bush's cowboy attitude. Put another way, while other countries might prefer an American president who is properly deferential, that ranks pretty low on their list of concerns... a country such as China, who wants us to keep our markets open to their exports, isn't going to stop exporting consumer goods to America because of how our President talks to them. But the lunacy is not just on the left, the right, at least the Wall Street Journal editorial page, suffers from the same affliction. To them, countries such as Russia and China have taken Obama's silence on human rights to clamp down on domestic dissension... and implying that if this wouldn't have happened if Obama had been more vocal in his support for democracy movements abroad. The problem with this analysis is that the other countries know that while we might care somewhat about human rights in, for example, China, that we care about that a whole lot less than we care about other issues on which we want China's support. Push comes to shove, we're going to ignore what China is doing to its people if that's the price of getting China's support for sanctions against Iran... just as our desire to keep oil flowing has led us to overlook the Saudi regime's support for terrorism. China and Russia all know that they are going to get American support for things we agree with. And they know they're not going to lose American support on an issue because of their clamping down on democracy activists. So given this reality, why bother talking about our concern for human rights? We know we're not going to let that trump other, more important issues. They know we're not going to do so... so why bother talking about it at all?
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