THE UNITED STATES ECONOMY LEADS THE WORLD

 

If the economy is the fundamental issue in the presidential campaign, Obama has a critical ace in the hole which has not yet been played.  All of the negative campaign ads and Republican convention rhetoric about what is wrong with the economy belies an important fact that is impossible to deny.  The United States economy is healthier and doing better than anywhere else in the World.

This fact tends to be buried in the “economist speak” and technical indicators which the average voter and sound bite media would prefer not to investigate.  Those who would take the time would discover that the most recent Purchasing Management Index (PMI), maintained by the Institute for Supply Management (ISM) (among other studies) clearly shows our country outperforming every other developed economy in the world. (China fell to a nine month low; Germany is in contraction, the U.S. expanded)  Expect to hear this message at the Democratic convention and in the presidential debates.

Coming out of the worst economic disaster since the great depression, Obama’s policies, despite a dysfunctional Neanderthal Congress have left us in the sweet spot.  His unwillingness to succumb to the global austerity wave (championed by the Republicans and presently destroying Europe) and a wise Fed have permitted a monetary and fiscal policy that has kept us out of a double dip recession.  If necessary,   Bernanke will provide additional stimulus in the coming months and the governments and wealthy of the world will buy more treasuries at zero interest, to insure our economy stays on top of the industrialized world.

The United States is somewhat insulated from the most recent economic slowdown by its size and unlike the BRICS (Brazil, Russia, India and China) is not as tied to exports.  Germany’s economy is slowing down due to the euro crisis.   The slow but steady unwinding of our broken housing bubble has taken the necessary time to heal and is coming back to health.  Lastly, despite the Republican rants of over regulation and unfriendly business practices, our country is still considered by the international community as the best place in the world for investment and doing business.

Unfortunately, the middle class and working poor have gained little in economic standing over the past five years.   Voters should listen to the experts to learn why this is the case, which has little to do with Obama or Fed policy.   Many economists have referred to the “new normal” following the recession of 2008.  This structural rewiring of the economic landscape includes higher unemployment, lower inflation and wage growth, lower housing values, lower investment rates for retirement accounts and the need for restructuring of entitlements such as Medicare and Social Security.  The factors making up the new normal cannot be switched on or off by an election or new political party in the White House.  No single act or politician caused the new normal.  It is simply a worldwide fact of economic life following a disastrous recession.  Because of Obama’s well conceived policies, the United States is doing better than any other country to avoid the worst consequences of the new normal.  Better to crest the wave of the new normal with adept programs and stimulus than to wipe out and be one of the austerity competitors strewn across the beach.

 My view is that the Administration that has kept our economy on top of the industrialized world throughout the storm deserves the opportunity to fix the boat over the next four years as its policies begin to show tangible results.  Those who look to history will discover that Republicans have never been invested in or successful at providing the leadership necessary for such economic challenges.  Conservatives will simply throw the new normal into the same garbage bin with climate change, Darwinism and the Rise of China and claim it does not exist.

 

 

APOCALYPSE NOW

Apocalypse Now

Apocalyptic themes seem to dominate our popular culture.  I am referring to that body of work that is concerned with the end of civilization due to an existential catastrophe.  Any subject that threatens humankind is fair game for the next movie, summer best seller, video game or television series.   Large meteors hurtling toward earth, nuclear winter, anti matter, alien attacks, virus contagions and invasion by intelligent apes, robots, zombies or vampires have all entered the apocalypse genre in recent years.  But why are we so fascinated with these doomsday scenarios of death and redemption?

 

My view is that because we have no idea how we got here or what our purpose is, our ultimate demise gets all the attention.  It is interesting that all popular apocalypse stories (yes, I am a fan) can be broken into four component parts.  First there is the genesis of the problem, external or manmade; second, zero hour when all hell breaks loose; third, the immediate aftermath/ struggle; and finally redemption with hope for a brave new world.

 

One type of scenario is framed with a socialist worldview.  Formally hostile governments are able to avert disaster by calling on global cooperation.  Decisions are made for the greater good to blow up asteroids or defeat aliens.  The plot ends with global sharing and equality for all.

 

The more likely story line follows an individualistic, libertarian point of view.  Governments and organized science cause the problem.  Our powerful institutions can do nothing right following zero hour.  Urban folk are the first to bite the dust.  The survivalists in the woods become the heroes, living off the land and learning to adapt.  They admire the immediate aftermath with less pollution, more wildlife and little noise.  After the struggle is resolved there are fewer, happier people and no one pays taxes.

 

The truth is that apart from popular fiction, apocalyptic events have profoundly shaped our past and may well determine our future.  Most scientists believe that the impact of an asteroid or comet bombardment 65 million years ago lead to the extinction of the dinosaurs and the eclipse of mammals.  The last ice age permitted migration of humans out of Asia into North America.  The black plague hastened the end of feudalism in Europe. Of more recent vintage, the Spanish flu epidemic directly lead to advances in the biological sciences.

 

Religion and myth were certainly responsible for the earliest apocalyptic literature.  Many tribal cultures including the formulators of the Old Testament saw calamitous events as the wrath of God “thinning the herd” following unacceptable behavior. Early myths across the populated world chronicled a great flood as purifying the earth so that a better world could follow.  (This ancient thought was sadly still in play after the recent destruction of New Orleans following hurricane Katrina)

 

The Book of Revelation continued the apocalyptic tradition in the New Testament.  The Roman landscape was not a healthy or pleasant place for a Christian in 100 A.D.  Better to hasten the end of the world with a final conflagration between good and evil and move on to a better place.  Over the past 2000 years many self proclaimed prophets have predicted the end of days, only to have the sun come up the next morning.

 

Apocalyptic themes also dominate the environmental sciences in the here and now. The four horsemen of this all too real scenario are climate change, famine, state failure, and migration.  None of these topics are sexy enough to have spawned best sellers, video games or television programs.  They have gained no religious credibility because there is no biblical reference to back them up.

 

These real dangers to mankind are open to dispute and slow to unwind.  Scientific prophets talk in terms of decades if not centuries.  Popular apocalypse themes require instant gratification, with a billion casualties in the first episode.  Moreover, the nearly impossible always trumps the highly plausible in both religious and entertainment circles.

 

In the end (no pun intended) we all want to believe that mankind can survive whatever the elements or the bestselling authors or the politicians can throw at us.  Personally, I would feel safer if more attention were focused on what the scientific prophets are telling us.  They may not have a blockbuster movie or the bible to back them up (Al Gore doesn’t count), but there was some awful strange weather this summer and the polar bears look a little thin.

 

The adaptability of the human race should prevail so long as environmental science and common sense are permitted to determine our future. Unless that is, the newest and largest particle accelerator creates a black hole and snuffs us out in a millisecond and the story starts over ….”In the beginning”.

 

 

 

AUGUST NIGHTS

This August is turning into a pleasant surprise. Scrunched between a scorching July and the inevitable back to school rush and football addiction has been glorious weather that makes one want to sleep on the porch.  With Congress in recess, business slow and light traffic as many go on vacation, it may be the best time to literally smell the roses.

Unexpected cool mornings, hot afternoons and pleasant evenings do not seem like normal August fare.  Many days are something to hold on to, particularly when the light is fading and the hot misty air fights a cooling breeze for your attention.  When the skin is still salty from the earlier bright sun but it feels like a sweater might soon be in order.

My only passing thought of the coming election is the raucous blue jays fighting the more conservative (red) cardinals for the limited supply of peanuts provided for their pleasure.  No sign of bipartisanship anywhere.  Only the libertarian squirrels seem interested in stowing away any bounty for the winter.

While the days are growing shorter, the light holds almost to nine.  A double feature with no intermission compared to a December evening.  The pink in the sky seems to linger forever, like it wants to be painted on canvas before the night takes over.

I sometimes feel guilty for accomplishing little and enjoying the slow August pace.  Then I remember that they have been doing the same thing in the Southern Mediterranean for thousands of years.  Maybe all that Washington needs is a central piazza with a fountain that magically appears each August.  Outdoor communal enjoyment before everyone hustles back inside for homework and Monday Night Football.

SOMEBODY ELSE MADE THAT HAPPEN

"If you’ve got a business -- you didn’t build that. Somebody else made that happen," Obama said in July in Roanoke, Va.  Only in America could this statement elicit responses in this Newspaper and elsewhere like:  “We're entrepreneurs. We're risk-takers. We put everything on the line.  This president is looking at small business owners as the next pocket to grab out of."

Small business owners simply have not earned a special seat in our grand experiment of American capitalism in economics or as a constitutional republic in political organization.  These businesses exist because of what came before.  The rest of the world cannot get off the boat fast enough to invest capital in a country where small business and entrepreneurs are given an economic climate and political/ social freedom that exists nowhere else.  This is why many of our first generation entrepreneurs are immigrants.

Try and start a restaurant in India, Russia, an Arab country or Asia.  The hurdles are so enormous including no ownership of land, layers of bureaucracy, bribes and lack of legal systems or regulations that almost all small businesses survive only in the underground economy.  Unless, of course, your cousin is the local elected official or runs the local bank, in which case you are a large business.

Try and start a retail store in a small Africa town.  The roads are none existent to get product in or out.  You will be solely responsible for providing power and communication.  The local social system will view you as a show off, not the back bone of the community.

Take your savings and borrow more to develop a farming operation or mine in the third world.  If you have any success you will be nationalized and persecuted.

Before small business owners begin to view themselves as modern day pioneers and economic martyrs they need to take a history lesson.  The American experience in general and the federal government in particular have enabled small business to flourish.  Regulations against monopolies, subsidies, preferential tax treatment, and protectionist trade policy have all played a part.  Each business owner should be overcome with gratitude that: “Somebody else made that happen.”

MID SUMMER ELECTION FOCUS

One would assume, as the summer winds down, that thoughtful independent voters who have not yet focused on the presidential election or decided on a candidate, will begin to do so in the coming weeks.  Hopefully, as each voter completes their due diligence, they will avoid political commercials, cable news shows and political gossip from friends and family living on the ideological fringes.

 For the undecided voter, picking a president should not be an emotional response (like cheering for the Steelers) or one based on faulty or biased advertising (like buying breakfast cereal). To aid rational decision making, there are numerous unbiased journalists who will be giving assessments of the candidates.  Moreover, several one on one debates will be held before the election.

The candidates, both candidates, deserve measured consideration of their respective records and positions.  Behind the nastiness there are real issues.  I will leave it to others to explain the Romney position.  My view is that Barack Obama deserves to be reelected President, not because he has been an unqualified success, but because given the hand he was dealt, he has been a just, practical and dependable leader.

Obama’s policies, early and often, staved off total economic catastrophe and have avoided Europe’s fate.  He has advocated a sensible plan for increasing revenue and decreasing federal spending.  He has largely disengaged the United States from Iraq and set a firm time table for leaving Afghanistan.  He has kept terrorism at bay, both at home and internationally.  He has shifted our military strategic concerns to the Far East.  Significant progress has been made regarding gay rights and immigration. Most important, the President has passed landmark legislation that finally addressed one of the country’s greatest social problems: healthcare.

 I would argue that Obama’s policies, like those of many other great but beleaguered presidents will pass through three stages before being recognized as the right thing to do.  First, such policies are ridiculed by the political opposition; second, they are opposed by other branches of government; third, given the test of time, they are regarded as brilliant statesmanship. 

Is the economy improving? Very slowly and certainly not on an election friendly timetable for the President.  It is also true that all the troops will not be home by November.  Those who sought to defeat Lincoln at the end of his first term argued he had not yet won the Civil War. Sometimes great presidents and good timing are not destined to dovetail on Election Day. Too many factors are beyond the control of even the most powerful leader in the world.   This is no reason to reject a great president who will only get better. 

POLITICAL DRAGONS ARE DANGEROUS BUSINESS

One must admire Rep. Jesse White’s tenacity.  He is like an energized hobbit, nipping at the heels of the Commonwealth’s dragons. Unfortunately, the dragons pay him little attention or respect.

I agree with Mr. White’s recent commentary that the last minute selective ban on drilling in the South Newark Basin (the Philadelphia bedroom counties) was political chicanery of the highest order.  However, his own attempts to selectively carve out Washington County from the court mandated, constitutional and long overdue tax reassessment process was also pure political theater.  One might question how a small county elected official could author and introduce an unconstitutional selective ban regarding county assessments on the one hand and fight vehemently against a selective drilling ban on the other, but hey…a constituent vote is a vote, even if you are 0 for 2 on the legislation.

The bottom line is political power or rather the lack thereof in the local shire.  Pennsylvania’s political dragons, located along the eastern corridor, are not big on social media and spend most of their time, resting in their lairs.  When the time comes for action, usually in the wee hours of the morning, a short flight over the capital and a snort of flame gets the job done. Clearly the dragons do not want Harrisburg addressing county reassessment problems in the hinterlands of Washington County.  More clearly, these ancient power brokers do not want oil rigs obstructing the view from their mountaintops.

The Court (judicial) wizards, while often slow to act, have traditionally been an effective balance against the dragons.  They understand the fundamental justice of equality in taxation and fair play when the dragons must run for office.  Sometimes a dragon or two actually end up in the dungeon.  Mr. White would do well to align himself behind the shield of law offered by the Court wizards.

 Political dragons have long memories.  The hobbits of the world should beware.  If you are not going to slay a sleeping dragon, make sure you do not become the next meal.  Otherwise, bide your time, move your way up the food chain and hope for a bigger sword.  It might help to be legally and ethically consistent along the way.  Sometimes the good in doing the right thing good does win out over the evil of political expendiency.

YOUNG PROFESSIONALS UNITE !

Our country has an insidious and growing upward mobility problem not garnishing a great deal of attention.  Generational inequality is affecting our young professionals and is making their lives a mess.  The group is too busy working to complain a lot.  Because they are our best and brightest achievers, they do not receive a great deal of sympathy.  I am not discussing the unemployed in their 20s, which is a different issue.  My focus is the well educated professionals in their early 30s, who are reaching their career goals after years of academic rigor.

 While many of these young professional and business graduates have earned a degree and landed a job, the American dream of starting a family and buying a home is often elusive if not out of reach.  The recession has insured that starting salaries and yearly raises are low by historical standards.  Student loans are eating up a larger share of income.  Low mortgage rates are offset by onerous borrowing requirements.  Moreover, child care costs are a large impediment to working and having children.

When my contemporaries were “starting out” in the 70’s, tuition and student loans were low and the first marriage, home and child were no brainers.  The culture told us that as baby boomers, we were entitled to become masters of the universe.  The cooperative economic stars aligned to make it so.  The fact that at the end of our management tenure we drove the bus over a cliff, with billions of surplus assets on board, has not stopped us from insisting on our “just” rewards.

 The economists report that in today’s America, as many as 100 million Americans live in households that are earning less than their parents did at a similar age. In 1980, a year at college or professional school cost in the range of 12 per cent of median family income.  Today the cost is 26 per cent. Pell grants cover an increasingly smaller portion of the cost.

Apart from education, our political and economic systems have dedicated a majority of public resources to those receiving AARP magazines.  There are a lot of us baby boomers, we vote and no politician is about to challenge us.  What is clear is that there are fewer and fewer resources to address systemic non elderly needs.

I believe there are three paths to attack this intergenerational inequality our young people (professional and otherwise) are facing.  First, they need to organize.  “Occupy Wall Street” does not speak to the problem.  Help Us “Un-Occupy Your Basement and Give You Grandchildren” does.  Forming AAYP (American Association of Young People) with a magazine, 30 million members and a few lobbyists would help.

Second, we baby boomers must give up our selfish view on entitlements.  If we want our social contract to be passed to the next generation, we must recognize we will not live forever, even with double hip and knee replacements.  The universe no longer revolves around us.  We need to support rational cuts to retirement benefits, higher taxes on unearned income and reasonable health care end of life policies.  It is time to give back and get out of the way.

Third, our political leaders must adopt modern civilized positions on the cost of education and child care.  The world’s most advanced democratic societies provide both at little or no cost.  After all, our young people are not asking for it all like we did.  They simply want our boomer generation to tidy up its mess and to give back what our parents gave to keep the American dream alive.