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Change: Elections 2008
For once I actually like 60% of the candidates running for President. It's a first - usually I'm left with a choice between two evils. For once they have discussed issues, although currently popularity has become the issue. And in the issue discussion we begin to see what kind of person the candidate is. We see their approach to problems, although the details are sketchy. Are they compassionate? Do they have realistic answers? Do they understand the issues? Do they understand politics and the world and how to lead? Do they know how to boost the economy?
Typically candidates promise everything... and accomplish little. One thing I have learned by experience is that in a given term (whether in business or politics), it is almost impossible for more than three or four major objectives to be reached. The candidate who is promising everything to everyone is schmoozing the crowd and if he attempts all he promises he will lack enough focus to be effective. And then things change. Bush 2, after September 11, let the war against terror define his presidency, which then became defined by the war in Iraq. Trillions of dollars later we are slightly more secure. We're heavily in debt, but not secure.
Bush also hoped to reform Social Security in the conservative Republican image. But the uncooperative spirit of the decades long Republican dominatrix, and the Iraq war failure, resulted in a flush of Republican miscreants, and this ushered in a field of Democrats who simply said no. The Bush plan was just more GPO scrap paper.
The US people entered this election period with the priorities of health coverage, ending the war in Iraq, and resolving the energy crisis. In recent months, the economy has overshadowed those priorities. Now popularity has risen to the fore. Things change. Even the subject of change has become a priority among many. Congress won't cooperate and can't get things done. Time for a change.
The issues that are high on everyone's priority list are well known to the candidates: Health care, economy, Irag war, and now change and personality. They will all eventually say that they are ready to take on these issues, even if their approach is useless. Everyone at a masquerade party looks like an archetypal figure - a fairy princess, a Frankenstein, a vampire - but everyone knows that they are the same old person underneath the mask. US voters always want to see detailed plans, but most candidates prefer to stay non-committal. But their approach is telling.
What about change? Months ago I stated that the interest in Obama signifies a significant move to the left - a major change. Obama is igniting the fires of idealism and collecting a major following among the youth and the frustrated. Perhaps Obama is the right person to lead change. But what does that take?
I've seen a lot of change. It often occurs as a knee-jerk reaction and happens with little planning. Unfortunately that kind of change usually fails. Something new is tried without the guidance of wisdom and leadership, it fails, and people get even more frustrated. Often it simply happens too fast because people don't understand how to control change and make it work. In the 1970s, Congress threw legislation, and sometimes money, at many problems. Sometimes the problems got worse because of it. But at least we learned from that experience.
We tried replacing much of the Congress in the 1980s with fresh idealistic faces who were ready to change the world. The new Congressmen beat their heads against the wall of the politics and power of those Congressmen who were well entrenched, until they gave up trying to create change. Change doesn't happen just because you put new people in place. But did they actually succeed in the long term? In the late '80s and early '90s, the well entrenched left, saying they didn't know how to do this new style of politics.
Change is possible. It takes leadership, it takes a mandate from the people, it takes wisdom to select the right type of change, and it takes the skill of someone who can guide the process and pace. Lacking any of those four qualities, change goes awry. Whether or not Obama has those qualities, or any of the other candidates, is something we need to find out.
The economy has become the number one issue. The wage race toward bottom is causing many not to be able to afford housing and products. We have a housing crisis. Wages are not keeping up, job creation is not keeping up, and people can't afford to purchase, or even stay in the homes they buy. Ill-advised lending practices probably were formulated on the belief that the economy would put money in people's pockets and all would be well. It isn't happening. At the same time, the divide has been growing for years between the wealthy and have-nots. Why?
Bush did everything possible to promote corporate earnings, in the belief that it would create a strong economy (Reaganomics). Well, the economy is strong, but here is what is happening. Corporations and investors are getting the money and it is staying in their tight circle. Investors earn money and reinvest it to earn even more. Wages stay the same. Companies buy each other, feathering investor's pockets and creating efficiencies (profits to investors and acquisitions). The money is moving, but not toward wage earners. So jobs don't pay well and people have less and less spending power. Oil has become a hysteria commodity and quadrupled in price in 5 years. The housing market collapsed and there are no projections for a rebound in the short term. Automobile sales are slow. Year end retail sales were lower than expectations. People fear that we are entering a recession. And the Fed may lower interest rates to... make more money available to corporations.
Will corporations make more jobs and raise wages? If the past 8 years are any example, no. Corporations and investors, stung by the corporate and investor excesses around the turn of the century, and now in the housing excesses, and because of increasing international competition, are very hesitant to burden themselves with the increased expenses of labor. The Fed economic stimulus ability, which is generally effective in that sector, has maxed out and exposed the limits of that method. People in the last half of 2007 borrowed money that they can't earn, running up credit card debt at high rates. People's money is going to interest, increased medical premiums (if their insurance isn't cancelled), oil, and the resulting higher cost of products. Those with the capacity to purchase homes (exceeds 2005 levels) are biding their time waiting on market conditions (prices dropping, better interest rates). Remember the "Tipping Point" theory that educates us on how small changes actually cause major changes when conditions are right on the brink? (See suggested reading at the end.) I believe what we are seeing is that a steadily growing portion of our people simply have no money to buy homes and products.
The economy is difficult to maintain and mostly misunderstood. Politicians historically used political ploys to try and influence the economy. The economy was a political football, and things like the money supply were manipulated for political reasons, usually bowing to pressure to keep constituents happy. It was a bad system. Then the reigns of economic control were given to "The Fed." Government was rendered powerless to affect the economy, and so began the political chant that "the government can do nothing about the economy." Well, that's a myth. First of all, ~20% of the US Gross Domestic Product (GDP) is spent by the US Government. That has major impact. The government influences where 20% of our production worth goes.
Every decision that the government makes influences our economy. When the government builds a bridge, the money goes to construction. When the government funds medical programs, the money goes to the medical community... Every government action puts money somewhere, and causes that sector to prosper or decline.
We are hearing nothing from the candidates about the economy - number 1 priority among the people, deafening silence from the candidates. Secret: stimulating only the wealthy and the corporate world makes that sector stronger, but doesn't give people purchasing power. It is a completely out of balance idea that will cave in on itself and we will all go down together. Secret: The power to lift the economy is in the resolution of the healthcare and energy crisis, through government action. More later in this article.
Why don't we hear from the candidates? As a government, the focus is not on ways to stimulate the economy, except through tax cuts, and the so called "trickle down effect." I don't expect to hear much from the candidates about the economy for four reasons. 1) The myth that the government can do nothing. 2) Most plans call for spending, which is widely criticized by opponents and critically assessed by the OMB. So creating a plan simply opens you up for criticism about "tax and spend." 3) Planning calls for knowledge about economics, and most candidates are not skilled in that area. 4) Tax cuts are not likely to help and would leave the government without enough funding to get things done. 5) Most new ideas envision unknown paths, so effective planning is difficult and meets staunch criticism. (The fifth reason was a bonus reason. I can count.)
Why do I say that the power to lift the economy is in the resolution of the healthcare and energy crisis. 1) Because these are acute problems that need resolved (and every problem is an opportunity). 2) There are effective ways to stimulate the economy through these sectors through government action that will benefit the economy.
The government does not have a good record of creating economic growth. Too many politicians have swallowed the poison that the government has no influence on the economy. So government action is too often influenced by (you guessed it, the rich and powerful special interest groups) into give-away programs to those who don't need it, like the oil companies. These commonly backfire. Just today I received an offer to increase my electric bill substantially so I can say I am using "green energy." The utility can guarantee that I'm "offsetting" energy use somewhere in the US, and they get Renewable Energy Credits (RECs). My first thought was the lack of accountability in a system that is so convoluted that everything happens completely out sight. Would I simply be paying for something the electric company was already doing? Why is the electric company not investing directly in green energy? Humph! I want to know that my money is being matched by theirs to build a renewable energy resource that will supply my electricity. Without their investment, they have no vested interest in success or efficiency. REC sounds like a money chase.
Why am I so distrustful? Unfortunately programs in which the government subsidizes part of the cost of the system only become a windfall for manufacturers, sellers, and installers, who simply pass the actual price to the customer and pocket the government subsidy or waste it on inefficient efforts. For example in the 1980s government subsidized solar companies were using local sales and installation people to cover entire states, and putting in $500.00 worth of material for $7000.00 forced air solar systems. The government paid half: $3500.00, leaving the buyer with a $3500.00 loan. These produced approximately 1000 - 2000 Watts of energy for less than 12 hours a day - they would never pay for themselves even at half the price. It was a government endorsed boondockle that probably set back the use of solar energy.
Government subsidies may be partially effective, but they are giveaways and subject to total inefficiency and waste. There is a better way. In the free market, because of competition, bidders have to be efficient, satisfy customers, and provide low prices. If you take that route, you avoid the insanity caused by give-away programs.
Renewable energy investment - creating a better economy
In the 1960s we envisioned solar power as one day being the main power source. Solar is very viable, but for one method, solar panels, research has not developed panels that are efficient enough. Solar cells convert sunlight directly into electricity, but efficiency is only around 12% and current research may bring it only to 18%. This means that it takes a much larger area covered with solar panels to get the results you want. But solar cells aren't the only viable method of converting energy. Passive solar methods that convert light directly to heat energy work well. And there are other methods for converting and storing solar energy.
What will change the nation's over-dependence on oil? The growing energy crisis from the excessive use of oil is characterized by hysteria and market manipulation. Oil has become a "futures" commodity, so the price has little to do with supply and demand, responding instead to world political developments, and to supply maintenance issues that potentially could affect supply. It would be in Iran's best interest to keep the world on the edge of political turmoil, just to keep the price of oil up. Iran recognizes the value of their oil and is converting their nation's energy supply to nuclear power.
The price of oil is harming the US (and European) consumer money supply and the cost of goods. Purchasing a house for most people normally puts them right on the edge of financial viability, and they depend on controlling expenses and a rising income to make ends meet. It makes a severe impact on your ability to buy a house or other goods when your energy bill doubles or quadruples, and the price of other products rise because of the price of oil. Affordability isn't changing much. Corn alcohol looked like a good alternative, but as expected by many, the use of corn alcohol fuel is now making food more expensive. Alternatives, such as cellulose conversion look more appealing because of the supply of wood material from lumber production. We have brilliant scientists and plenty of raw material... but we're not having much progress on finding alternative fuels. The focus just isn't there.
Part of the problem is leadership and direction. We don't have a good energy policy. The other problem is the market and related market impact. Solar energy is plentiful, but US technology is more expensive than foreign. Development costs are high and the market demand just isn't there except in specialized applications. Markets benefit from knowing that things are going in a certain direction (meaning investment will pay off), and from demand (the market will pay, and there can be competitive gains from the efficiency of mass production). What can the government do?
The government has the opportunity to become a major market stimulus through efforts to resolve energy problems. For example, there could (should) be an initiative to "convert" all state lighting to solar by 2010, including highway and office lighting, all state operated vehicles by 2012, and 50% of all state heating and air conditioning. We have hundreds of thousands of miles of superhighway space that could support solar collectors or other green energy, so space is not lacking. All commercial and residential lighting could be targeted by 2015. What would be the result? Competitive market forces would step up to supply solar and other green energy. This would result in less demand for oil, lower oil prices, less oil consumption, reduce the greenhouse effect and other environmental impact, lower energy prices after startup costs, and make possible technology sales to other countries with development costs already covered so the US could be more competitive.
The government could stimulate production of a combination of passive solar (light shines in to light and heat the building), direct solar supply (solar panels and storage on site), remote solar energy production (solar panels in another location which use the electric grid), wind and geothermal collection, and remote energy storage (hydroelectric storage, other electromechanical storage, and batteries).
Is solar energy a workable concept? "About 660 homes and other buildings in San Francisco already have solar installations. Officials said they hope to bring the number up to 10,000 over the next decade by cutting property owners' out-of-pocket costs by half, if not more." - CNN
Is the natural physical power concept viable? In the 1980s, in a cold and windy city near Chicago, one successful area home builder was building homes that were so efficient that he guaranteed that heating and cooling costs would be no more than $1.00 per year. They were large beautiful homes, two story, above ground, and used a combination of passive solar and good insulation and sealing. If you are familiar with Chicago's ferocious wind and frigid winter temperatures, you understand that the concept is very viable. No solar panels were used - it was a strictly passive solar approach. A quick search of available technology shows that we know volumes about energy conservation and production - we just don't use it. Builders primarily build for low cost, quick construction, and quick sales, not energy efficiency. The government has to require or motivate such efforts because builders and buyers almost always go for the bottom dollar. That's one of the side effects of competition.
If the government places orders for their own use, they get the product at competitive prices (bids) and the product supply system will become established and more efficient. Other buyers will benefit from the government lead. You stimulate business and make it competitive primarily by doing business, not by subsidizing it unless that is the only way. Without leadership, the free market will continue to slowly create energy that maximizes utility profits without regard for the source. The government has to be an instigator of change.
Medical care - creating a better economy
Similar to the way in which the government can stimulate alternative energy production and resolve a major energy crisis, the medical care crisis can also be resolved by using this approach. Everyone is unhappy with the current status of medical care. The system is pricing itself out of business and losing customers who either drop insurance or forego care because they can't afford it. Those who pay for care have to pay for those who ride for free, through fee increases. Physicians are sick of the time consuming maze of insurance regulation of their practice, and they want some form of simplified universal coverage. The US medical system's ability to provide any kind of care is steadily decreasing.
Despite efforts to keep medical prices known and sane, if you have had medical procedures done in the last 20 years you know that 1) the hospital almost won't give you a price for the procedure - if you can even find someone to ask. You are just stuck with the bill. 2) The insurance company will make you go to a participating hospital in their network, which may not be where your physician practices. 3) The physician has to check with both the insurance company and the hospital to see which drugs are on their approved formulary, and how many physicians can assist, frustrating the physician and eating up a bunch of expensive time better used for other things.
If you don't have insurance... well you may not be able to afford the procedure, you may neglect care until the condition becomes more expensive to treat or it is too late, or you may be stuck with a horrible mountain of debt that will terrorize you for the rest of your life - it may simply not be worth it. The nursing profession doesn't pay enough to attract enough people, and registered nurses are frustrated with having to spend most of their time doing paperwork instead of caring for patients. We have a growing crisis in obesity, type II diabetes, and coronary artery disease. If this all adds up to premium health care for the US people, then we have a very solid belief in neglect, indirect abuse, torture and death.
I don't believe this is what the US people intend, but it is what we get. The powers that be insist on playing for maximum money in what is supposed to be a compassionate system. This country is founded not just on individual rights, as some promote, but on what we can do together for the common good.
What can the government do? There are several areas that the government can address to bring down the costs of medical care while helping to create a much more efficient system. The system is soon going to be flooded with the expensive burden of obesity related problems. More and more medical science is finding that early treatment for most conditions is the most effective and efficient treatment - it costs less because it prevents worsening of the conditions. Preventive medicine can save us billions and billions in the future, besides preventing untold suffering.
Hospitals are one of the most expensive places to get treatment. Treatment can be provided much more efficiently in medical centers and even in the home by visiting specialists.
New technology costs are the single most inflationary component in the annual double-digit rise in medical costs.
The physician's business model doesn't support what people need. Physicians run a business. They have to pay the cost of supplies they keep on hand and the personnel that do treatments, interviews, and keep the records and arrange visits and medications. Insurance companies waste physicians time and costs payers money. The cost of paperwork and calls alone account for ~10% of the cost of medical care. Preventive medicine currently can't be done by physicians. Physicians estimate that the burden of doing preventive medicine and chronic care would add nine hours onto their day. Forced by the insurance companies and market economics, the profession is based on the number of patients that they can move through their office, and they can treat only acute disease, not long term chronic disease or prevention. Every additional burden that they take on means adding staff and raising prices.
Individualized medicine will be the next major movement in medicine. It has to be. For example, physicians currently throw various medications at hypertensive patients until they find one that sticks. Physicians currently don't test for the cause of bacterial or viral infections, or many other conditions. Testing is expensive and the insurance companies discourage it. They wait to see if the condition worsens to justify doing tests.
Doctors literally have no clue why 80% of their hypertensive patients are hypertensive. The indicator of hypertension is high blood pressure, (bp over 140/90 and other risk factor assessments)). The body's control of bp is a very complicated system. All that physicians currently can do is throw medications at it to bring bp down. Every physician will throw out the same platitudes: watch your dietary salt, lose weight, and exercise. None of these will hurt anyone, but none of these may actually lower bp. If serum cholesterol is slightly high, as a matter of course they may prescribe a cholesterol reducing drug, as if statins (which affect the liver) are great for you. The jury is out - statins haven't been in use long enough for studies to show long-term impact (although a recent correlational study raised the possibility that statins may reduce the risk of cancer by 25%). But none of these things may affect the real cause of the hypertension, and the condition usually worsens.
Hypertensive patients seem to be automatically treated for coronary artery disease (CAD) and atherosclerosis (a build up of fat (plaque, which may include calcium) in the arteries), instead of arteriosclerosis (hardening of the arteries). The high rate of clogged arteries in the US seems to circumvent the need for further testing, forgetting that the population is aging, and the patient is often made to feel it is his fault for his lifestyle. If it is atheroslerosis, lifestyle changes fortunately can halt or even reverse the progression of the disease. But most people's bp naturally rises with age, and this is largely due to other natural processes having to do with the loss of artery flexibility and thickening of the artery walls, fluid retention in cells, kidney disease, sensors in the brain, neurotransmitter levels and receptors, and probably changes in balance in the renin/angiotensin system, not necessarily CAD and atherosclerosis.
The individualized aspect of medicine is cheated by the myth that the condition of hypertension is actually being treated and further tests are too expensive to do. There is of course much truth to that. But technology and the ability to treat are negatively impacted by this lack of knowledge. The fact is, research is ongoing and the medical community doesn't yet know that much about the causes and treatments. But why treat someone with medicine and lifestyle changes for disease states that aren't present? Despite the difficulty in treating the disease, it is possible to lower bp. A drug that decreases efferent sympathetic neuronal firing in arteries is often very effective, but the side effects of interfering with neurotransmitters can be really difficult to live with for some. How is the medical profession ever going to begin addressing the cause of hypertension if they never look at it? Drug companies are researching and treating the bp control mechanism, not the underlying disease state, and patients often end up on four medications, each of which can only lower bp by 5 to 15 points each. Correction is very expensive, while prevention may be very inexpensive. (It is important to note that CAD, atherosclerosis, and other conditions such as organ scarring and failure, may develop as a direct result of hypertension, so it is best to treat it with preventive medications.) Important note: This questioning should not be taken as medical advice - if the world depended on me for medical advice, half the world would probably be dead.
In the areas of bacteriology and virology, doctors are more and more frequently misdiagnosing deadly diseases, such as Lime Disease. We live in a world where exposure to all bacteria and viruses is high. Population density, travel, and lack of sanitary practices makes contact with dangerous bacteria and viruses likely. The deadly "flesh eating disease" is commonly found on many public environmental surfaces such as doors. It is simply that there is no break in the skin for the infection to start, that saves people.
A rare cold virus, adenovirus 14, is turning into killer pneumonia. It isn't being recognized early enough for what it is. So far, outbreaks have been localized, but in Oregon 1035 people contracted the disease in 2007, and 21% who contract it don't survive. It isn't just the very young, old, and infirm that the virus kills, it is otherwise healthy individuals. The virus is everywhere in the local areas it infects, and spreads through environmental surfaces and the air. The flue shot does not protect against it. The symptoms are the same as for every other cold - nothing really distinguishes it to make it is easy to recognize. Without testing, the virus is misdiagnosed and it kills. Since people commonly don't treat colds through a physician, and they go to work, school, and other public places with the cold, contagion is inevitable.
Another type of disease is gaining ground - the hospital born mutant superbugs, such as MRSA (methicillin resistant staphylococcus aureus). Diseases in hospitals and other medical facilities (or care centers for the aged and infirm), have greater opportunity to mutate and spread. They do not respond to antibiotics, and can cause death. Hospitals typically recognize the particular forms of disease commonly occurring in their environment. (Potent mixtures of several antibiotics have been successful in treating some variations of this bug.)
These are just some of the current health challenges that will eventually demand that individual testing take place for most medical conditions. The current medical philosophy of evidence based (it works) therapy will have to give way to individually definitive medicine that is first preventive, and then reactive to disease sates. Neither the insurance companies nor physicians are set up to support this, and will be a major obstacle to getting it done, even if they want it. Another obstacle is laboratory testing. Currently it may take days to get lab results because a lab that is prepared to do specialized testing may be thousands of miles away.
The government can stimulate new medical approaches, and spark into life companies that are economically successful and save us money. Chronic conditions, which affect many uninsured people at higher rates, are most effectively treated in clinics that specialize in such treatment. Preventive care can be nurtured through centers that specialize in preventive care, addressing collective audiences instead of individuals. (This is a daunting task - it is very difficult to persuade people to take care of themselves even with effective education.) A collective medical care plan that provides reductions or increases in premiums based on life-style choices can help motivate people. Including chronic and preventive care in a medical care system would limit future costs.
The government can stimulate the tech economy and bring down rapidly rising medical costs by bringing market forces into this arena. Requiring more frequent and more definitive tests would cut the costs of treatment, and reduce the costly progression of disease. Hospitals now sometimes request unnecessary tests just to pay for their equipment. Testing needs to cease being a dirty word. People need to know what the cause of their disease is so that it can be treated effectively and so the medical community can see its challenges and address them. If more testing is done, economies of scale and market competition will bring down the costs of medical equipment and tests. It's a win-win for testing facilities, equipment and reagent manufacturers, physicians, people, and costs.
Another major area needing drastic revision is in the area of insurance and record keeping. Ten percent of a medical staff, usually highly skilled people are spending their time debating with insurance companies and creating endless paper records and requests. Records need to be centralized for easy access by authorized personnel (HIPAA compliant), and easy to create through computers and hand-held devices. There should not be an endless number of procedures and medications restricted by each insurer and hospital formulary. Choice is great, but the administrative load caused by this variability is ridiculous.
One potential approach that incorporates all of these areas is to bid for corporate provision (such as doctor's groups) for community medical centers that specialize in prevention, treatment of chronic disease, record keeping, patient education (explaining medical procedures and the medical insurance and Medicare/Medicaid systems and what they cover), patient advocacy, insurance administration, and laboratory testing. This would be a central point for getting people insured, making sure that they get quality and effective care and aren't neglected or scammed, getting them referred to the right doctors or hospitals, and taking care of tests. No doubt many existing independent labs, chronic care facilities, and medical professionals would like to inhabit such a different and challenging facility. The facility would have the critical mass necessary to obtain technology and to do effective medicine efficiently. It would be a much sounder place to incorporate some kind of approach to universal health care.
The US has been a world leader for centuries. Our Constitution has been a template for most of the countries that have adopted a democratic style government based on freedom. Our culture infects almost every other country, usually for good. Our educational system, faulty as it is, has helped create preeminent people and leaders in science, arts, and ethics. Our push toward greatness has put people into outer space, led moral agreements like the Geneva Convention, helped millions of people in need around the world, and held out a beacon of hope for liberty for people and governments around the world. Where has our leadership role gone?
Every culture stands by what it believes in. For example, the French, having learned a hard lesson from their efforts in Vietnam and Algeria, the residue of colonialism, felt it was better to use diplomacy in such situations as influencing Sadam Hussein in Iraq. The French took a pounding for that. The US, felt it was better to intervene militarily (apparently this was the original and only Bush strategy). The US took a pounding around the world for that. Somewhere between the two positions something right might have been worked out. Might have.
President G. W. Bush pushed ahead with an Iraq strategy that wasn't thought through and seems to have included no real diplomacy of any kind (except gunboat diplomacy, which is threatening people with a stick, and which has notably been historically regarded as a failure). Hussein was recalcitrant and thumbed his nose at the world... but past world efforts had influenced him as shown in that he had eliminated his weapons of mass destruction years before the invasion. Bush failed to recognize the bluster of the Persian world for what it is. Misunderstanding other cultures and how to work with them is not the sign of a great leader. At least rescuing the Iraqi people and the region from a cruel dictator and establishing a non-threatening democracy was a noble and worthwhile cause, however misdirected.
Leadership is always a tenuous thing. The US does not have a corner on any endeavor. Science around the world is progressing at a rapid rate and the US has already lost the preeminent position in a number of areas. In the arts, competition keeps US artists on the cutting edge, but fewer people gain artistic opportunities because the arts have been largely removed from the public schools. On a recent trip to France, I noticed that French advertising has become minimalistic, lacking the polish of US Madison Avenue. Not to be too critical: Minimalism isn't necessarily a bad thing, but the polished stuff makes more of an impression. I know this from personal experience in creating advertising and watching people react to my and other's sketches of ads - if it doesn't look good, people reject it. Say what you want, but people vote with their feet. Anyway, I know the French will rebound.
The US contains 50 States that cover more area than all of the countries in Europe together. For the US to be losing a leadership position is a sad sign. But what has sent us down this road is the unwillingness of Bush to cooperate with European leaders on things as broad as the handling of Iraq, the Kyoto Accords on the environment, and research on stem cells. In the face of a protracted war in Iraq, stem cell research rivals or is ahead of the US around the world, and we have a global warming crisis. In hindsight, Bush might have listened to other leaders. But he chose to stand alone, making himself as popular around the world as former French President de Gaulle, who had similar characteristics. As a result, the US has had a major loss of standing in the world, as well as taking an economic pounding. The exchange rate between the dollar and Euro should be 1 to 1. But today if you spend 150.00 in Europe, you get $100.00 worth of goods, and other countries (India) are turning their backs on the dollar as a weak currency. Other countries are raising questions about the advisability of investing in the US.
Leadership is not a popularity contest, but it doesn't mean standing alone like some self appointed paragon of virtue. Leadership involves persuading people with sound arguments and reason, and working in a spirit of cooperation to get things done, while upholding great ideals. Our leadership is in the dumps for good reason. We need a leader who will bring it back.
The political paradigm
Thankfully I am hearing less meaningless political statements about "tax and spend liberals." Bush, a Republican, has outspent just about every President and Congress with war expenses that could have sent us all to college or provided health care for all of us. He made his choices.
Are we liberals, conservatives, or what? We are mostly moderates with leanings one way or another. I made a chart recently that tries to indicate where we are, and the extremes. On the far left are the liberals, in the middle the moderates which include progressives and conservatives, and on the far right the totalitarians.
At the far left is the mythical liberal. Liberals kind of died out after the 1970s due to political policy failures. God bless them, liberals are wonderful idealists and humanitarians, but not realists, who seem to think that throwing money at problems (usually helping handouts) will make problems disappear. They tend to raise taxes to cover the cost of ineffective policies. They tend to think that government has the solution to every problem, so they create large bureaucracies within government to administer gigantic give-away programs. Government becomes bloated under liberals, there are a lot of runaway entitlement programs that the government can't control, and people become very dependent on the government for their general welfare. No one can afford this type of government.
I don't know of anyone currently in Congress who is a truly a liberal, despite some "liberal" organizations giving some congressmen high approval ratings, probably just for being humanitarians.
In the middle, somewhat left, are the progressive moderates. Progressives find new and positive solutions to problems - or they try to. They tend to be visionary, or at least motivated more by idealism than others. Their solutions tend to be difficult to delineate because they are discovering new paths to solutions. So a lot of us say, "Huh? Well what would something like that cost?" But without the progressives, no progress would be made and old problems would fester and worsen forever.
Currently the Democrats seem to harbor more of the progressive Congressmen, and the public seems to be very tired of several intransigent problems and are swinging to the left, becoming more progressive.
In the middle and somewhat to the right, are the conservative moderates. Conservatives prefer the status quo on most things. "If it ain't broke, don't fix it." They are sometimes regressive in that they curtail runaway programs and they slow the pace of change. Big government frightens them, as it probably should. Their issues tend to be well delineated because the paths they tread are well known. They are very hesitant to take on new issues. The idea of increasing the burden of government is a show-stopper for them. They tend to be incratic in that they are not informed from outside, but only from inside by what has been already tried and formulated. If it weren't for conservatives, we would never strip away the excesses present in many programs or end anything that is ineffective. Without conservatives, the pace of change would be so rapid that none of us could adjust.
One conservative candidate, in debate, recently speared another about his alleged changes. He is a true conservative, holding his positions right to the last. Apparently conservatives are born knowing what they know and never vary from that. I wince every time a candidate makes this accusation. Most of us learn from experience. President Reagan changed from being a Democrat to a Republican. I like this particular conservative a lot, but it raised the question of whether he is right for presidential office if he doesn't learn from experience and change.
On the far right are the totalitarians. For the totalitarian their mode tends to be "My way or no way." They believe in their particular view, and have no flexibility. They use a heavy handed veto, refuse to cooperate, won't bend on certain issues, and try to dictate policy. They tend to see issues as black and white with no depth to them. They tend to have less of a social focus, and appeal more to principles that they believe in and promote. We all tend to be a little totalitarian at times, but true totalitarians are noted by their uncooperativeness, single-minded and unrealistic solutions, and stubbornness.
For example, when one current candidate said that he would send all 12 million illegal aliens back to their countries, I knew that understanding the situations, and a compassionate and realistic answer were beyond his grasp and that some sense of unbreakable principle clouded his judgment. The compassion taught by religion and our culture was not in him. Given his background, I knew then that he would just be another G. W. Bush in office.
The nature of change in politics
We embrace change and then pull back. The pendulum swings one way and then another. We test, we advance, we evaluate, we slow down and adjust to the new. Progressive, regressive. It may be presented as a see-saw and waffling when couched in political rhetoric, but this is the time honored way of moving forward.
Political observers have recently noted that once a politician and an idea take hold, such as Reagan and Reagonomics, very little new gets initiated by that party for decades. Politicians mostly just ride the wave and try to duplicate the past. Eventually the limits of the approach are recognized and the promoters become stale and ineffective.
Reagonomics was a revolution in economic thinking. It helped put an end to socialistic ideas that are noble but ineffective, and the resulting bloated governments and bureaucracies that result, which make us all less financially sound rather than truly helping anyone. Margaret Thatcher in England, and others, embraced the idea and much of economic policy was changed to a healthier model and improved economies. Inflation, which is highly destructive, became controlled. Unemployment ceased to be a major problem in Western countries, typically running less than 4% (instead of the historical and unremitting ~30% in many countries).
Reagonomics is not the final economic theory. Capitalism has tendencies that tend to marginalize many. Currently the US is struggling with a widening economic gap between those who are very wealthy and those who are struggling. Around 1% of the population earns 21% of the income, while 25% don't know how they are going to make ends meet. It is thought by many that what we are now seeing is a "race to the bottom," in which competitive pressure will drive down wages for most people. 47 million citizens (16% of us) can't afford to get into the health care system. Ethnic minorities, especially blacks, fill our prisons at a much higher rate than whites, and this is correlated with economics in black areas. (Note: a correlation does not mean cause, but many widely feel that economic conditions is a significant cause.) The fact is highly significant that if the people don't get wages, they can't buy products to support the economy. There is a reason the US economy is currently faltering.
Good economic policy is the key to social improvement. What we see in the last eight years is Republicans coasting on worn out ideas. The idea of "small government" has let our government slip into ineffective government that can't keep our infrastructure (and the public) safe, can't properly screen the border because of too few agents, can't properly screen incoming food, toys, and other consumer goods because of too few FDA employees, and lets social problems fester without a resolution.... In fact, people are being assisted much less today than they were in the 1990s.
To date, no candidate has stepped forward with any economic plan, yet the economy is a key issue and the key to future progress. We need a candidate who both understands economics and understands how to make the economy better without killing the goose.
The political party is not the issue. Spending typically increases more under Republican administrations (who typically say they want to conserve our cash) than under the Democrats. Plus, the Bush administration, by doing a very poor job of planning and executing the Iraq war and peace effort, have cost us billions and put our economy in peril. We now have a lot to overcome.
Would the candidate who knows how to lead change, how to get a mandate from the people, how to select the right change, how to control the progress of change so it doesn't destroy us or fail, please step forward? Ah, yes, here they come in lock step. Didn't I know.
Change is becoming an uneasy word as jitters about the economy force people toward more conservative ground. Ironically it is the ultra-conservative policy that has gotten us into this fine mess:
Who can get us out of this mess?
John McCain is one of America's favorites. He has the strength of character to turn away from strict party control and do what is best for the nation. He has the proven power to bring people with wide views to a consensus with unique and even visionary solutions. He has a conservative edge to him that is less likely to adopt policies that are over the top and to let things get out of control. He can control the reigns of the major changes that are likely. He is a seasoned politician with excellent foreign relations experience. He is the one Republican who is likely to be able to work with a Democratic dominated congress. He understands war and is unlikely to keep us in military conflict. It would be hard to lose with McCain.
But does McCain have a chance? The Democrats are highly likely to sweep the congress this election, and gain major majorities. In that sweep, a Republican candidate is unlikely to win the Presidency. Change is badly needed, and even in conservative times, people are not likely to stay with the failures of the status-quo.
Hillary Clinton is another of America's favorites. She has as even more detractors among conservatives than McCain does. The ultra-conservative vote is probably a bit of a wash in the overall vote between McCain, Clinton, and Obama, although McCain is likely to garner somewhat more of their votes simply because he is Republican. Whether Clinton is new blood or not, she has that air of "same old politics" and every time her campaign slips into negativity, she shows that side of her experience and the public turns away. In the past, negative politics won elections. For once electioneering is seeing the bad side of mud slinging - it doesn't really work in anyone's favor this time, in fact it works against people. People want real change, not more of the same. There is no proof the Clintons have accepted this new reality and tearing each other down is likely to lose all Democratic chances at the presidency and keep more Republicans in the Congress.
Clinton offers the badly needed change in direction that the country needs. She is likely to reverse the ultra-conservative policies that are driving our economy into the ground, and drive the quest for things that the nation is badly in need of, such as universal health coverage. Unfortunately she doesn't seem to offer any needed changes in foreign policy, such as the ability to communicate with those countries who oppose us. Until we hear otherwise, she is offering more of the same, except to get us out of Iraq. If she can stay away from the habits of the past, in dirty politics and foreign policy, it would be hard to lose with Clinton at the helm.
Barak Obama has won the hearts of many, becoming America's darling if not the favorite, and he also offers the badly needed change in direction that the country needs. He lacks the bad habits that Clinton has. He offers a fresh but unproven approach to things domestic as well as foreign. Both he and Clinton are likely to have a fresh batch of congressmen to work with who can be molded into a voting block with the momentum to get new things done. With enough experienced legislators remaining in Congress, Obama is unlikely to get legislation passed that will ultimately be harmful. Most Congressmen today know that you have to fund what you pass, you can't create give-away programs without ultimately hurting everyone, you can't bloat the bureaucracy without creating a runaway train, and you have to back up proposals with experience from past projects. Hopefully they won't lose sight of these.
Obama offers a vision of the future that people can seize and hang onto, and hopefully Clinton won't destroy that vision with negative campaigning in a selfish grasp for what is good for only the Clintons. That would be unconscionable and would likely lose her the election even if she got the nomination.
I'm enjoying the humor of Ann Coulter and Rush Limbaugh, the ultra-conservative Republican entertainment committee. In the proto-typical style of the "my way or no way" authoritarians, they have actually decided to punish McCain for not being as conservative as they are, by encouraging voters to vote for Clinton. They hope that a democratic government will prove itself unworthy, and prove them right. It's interesting how the reality of the move towards the Democrats is getting interpreted as something they are wishing for. What a spin. What superb reasoning!
In a maniacal attempt to keep the Democratic nomination contest open for as long as possible, they are encouraging Republicans to vote in the Democratic primary to skew the results. What is even more interesting is the coverage given these two by the mainstream news services, as if they were actually anything more than light entertainment. I don't actually listen to these two unless they are somehow shoved in my face, and it's always a laugh.
What these two are doing, if they are accomplishing anything at all, is creating the opportunity for much more publicity for the Democratic candidates and their agenda. The longer this contest goes on, the more face time the candidates get in the news. Nothing beats publicity. Right now there are at least two news channels doing the "all politics all the time" routine, and what do they focus on? Controversy. Where is the controversy? Obama and Clinton. McCain is simply out of the news.
Great work, Coulter and Limbaugh. By the 2012 election I expect to see your names listed in the Democratic party. (Watch out, Democrats, the court jesters are coming. They have been drinking poison and hoping the Democrats will die. Joke's on them.) Well, this is publicity for them, too, albeit limited, but poking a little fun at them was fun.
Given the length of the campaign, Obama and Clinton have a unique opportunity to get their message in front of the American people. That message is constructive change that radically differs from what has gone on for over 8 years, and meets the challenges that are before us. Obama's challenge is to remain above the mud slinging and spell things out so that we can see presidential competence in him. Clinton's challenge is to avoid a mud slide that will wreck the democratic train. Let the best agenda win, not the one who can sling mud the hardest.
This race is shaping up to be as difficult to win as American Idol this year. Great offerings, great talent, and highly competitive. It is difficult to see any player go away. Despite our problems, the future actually looks hopeful.
The chant, "Change, change, change," goes on. As I previously mentioned in this article, "Change is possible. It takes leadership, it takes a mandate from the people, it takes wisdom to select the right type of change, and it takes the skill of someone who can guide the process and pace. Lacking any of those four qualities, change goes awry. Whether or not Obama has those qualities, or any of the other candidates, is something we need to find out."
With the economy faltering, people are conserving, and conservatism doesn't embrace change.
I'm neither Republican, nor Democrat, nor have other leanings. I have strong opinions and resist simplistic doctrines. I don't mind saying that I have helped put most of the Republican and Democratic presidents in office for the last 40 years. For both Bush Presidents, I realized that they had limitations that were too great for a second term and tried to vote them out. Neither had an effective domestic policy, and Bush 2 didn't even have an effective foreign policy. I vote for effective government and effective leaders who take us in the right direction.
The question now is, who can be an effective leader and bring us effective government that will resolve our critical problems. During the next four years five tough issues have to be effectively resolved. This will be a lot to ask of any president.
Money is the lifeblood of our economic well-being. Without money, we can't afford to fix problems. So the first three problems that must be fixed are economic problems. The Iraq war is a drain that threatens to capsize the boat. The energy crisis is a drain that takes food right out of people's mouths both in the US and around the world.
Iraq War - War on Terrorism
The Republicans swear that the troop surge worked in Iraq. Democrats swear that it didn't. It's all semantics. The surge actually accomplished a decrease in violence. Prior to the surge, two things were happening in Iraq. Violence was escalating as groups within Iraq fought each other for control, and the Iraqi government could not meet any of the benchmarks set for it. Without an effective government, the military would not be loyal and step up and secure the country. The surge was supposed to fix security and allow the government to come together.
Failed leadership never put the number of troops into Iraq that it took to secure the country. People don't get along with each other and make decisions when things are in chaos and everyone is struggling to take control. So the surge actually fixed the security problem.
As long as someone else is spending billions to defend you, should you bother? No. The Iraqis had no reason to do so - they could volley for control forever with impunity. But two things happened. First, the Iraqis realized that Al Qaeda was worse than the rule of Saddam Hussein - it would subject all of them to daily tyranny and killings. They organized against Al Qaeda. Second, the sign on the wall in big letters and bright lights said that the American people weren't going to tolerate Iraqi failure to lead themselves and were simply going to leave the country to them and their chaos.
So the Iraqis have at least begun to cooperate with US and allied efforts to help them. The government is doing better, but the government still has not been able to make enough effective decisions.
So did the surge work? It stopped the escalating violence. Did the threat to pull troops out work? The Iraqis seem to be going in a positive direction, but not as quickly as desired. Defense Secretary Robert Gates (Sept. 2008) says they are not there yet. "...success will only be achieved by a joint effort, with Iraqis taking the lead." (Defense Link.) The Iraqi military is taking over more and more of the security tasks and areas. When troops leave, the Iraqis are more likely to resolve their differences out of necessity. While General Patraeus and Secretary Gates have called the progress in Iraq "durable, but fragile," Gates has called the US presence in that region "enduring." The plan is to be there for a long time.
President Bush, in an obvious manipulation to get his way, deferred any troop reductions until after he leaves office, while paying lip service to the people's desires and election needs by saying 8,000 troops will come out in February. Thus, the new leader will have to reduce troops over a longer time period. True to his obstinate character to the end, unfortunately he remains unresponsive to the immediate critical need for more troops in Afghanistan, where the major terrorist problem lies. This hotbed (Afghanistan and Pakistan remote tribal areas) are exporting terrorism to places such as Yemen and Algeria, where they have easier reach to Europe and ultimately the US. It's a rapidly growing problem. Yemen and Algeria have never been friendly to the West, not to us nor the French, and these are difficult areas to reach and influence. The cancer is spreading to areas that can't be treated from outside. Bush has consistently ignored the real threat while wrestling for years with a failed strategy in Iraq to achieve an enduring presence in the region.
Unfortunately the US presence in the region is simply a marriage of convenience, and as soon as the benefit ends, the US is likely as not to be persona non grata. The Iraqis have been taught to hate us, they do, and they want us out. Anything good that we have done for them is irrelevant. Such relationships come at great cost, such as tolerance for Saudi policy toward the roots of terrorism within its own borders, and institutionalized hatred of the US in the region, to gain the military benefit of cooperation and presence. Patraeus is correct: the gains are fragile... and they will remain so. Military involvement, whether necessary or not, always creates pain, suffering, and bad will - they will hate us. Economic and cultural cooperation are likely to be much more winning strategies than military strategies.
The US military troops and current leadership have done an excellent job in Iraq and Afghanistan. They have accomplished a task worth doing. They are to be saluted and appreciated. But which leader, McCain or Obama, is likely to be more effective in getting us out of Iraq?
McCain has a military background (a patriot tested to the limits of endurance). He has the strength of character to stand up for what he believes, and has earned the reputation of "Maverick," a title of fierce independence that he wears proudly. But does he have the right solution for Iraq? McCain has continuously supported the Bush policy on Iraq as Bush stubbornly refused intelligent advice from all quarters and went his own destructive way. McCain intends to continue that same policy. The policy is to invest billions, bankrupting the US, for minimal gain, while ignoring more important critical objectives in the Middle East.
I don't believe that McCain is unaware of the tasks facing us. The question is, is his commitment to the Bush policy, and the influence of other Republicans and military leaders in Iraq, overwhelming to the point that he can't move forward effectively? We would be idiots to throw away our investment in Iraq now. But the military emphasis has to change drastically if this world is going to be safe from terrorism.
Obama seems to have this in perspective. He doesn't have the baggage of continuous wrong decisions to uphold and defend. He is unlikely to throw away our investment in Iraq, but he is very likely to rapidly shift the emphasis to the more critical and urgent problem areas to stop the greater threat to world peace and our own security.
To campaign effectively regarding Iraq, McCain needs to show us is that he actually has this issue in scope, understanding the depth and breadth of the greater worldwide problems of terrorism, hatred of the West, economic disparity, and tribal dictatorships, and has an effective strategy for containing or changing these, and not just be preoccupied with punching in Iraq as Bush has done. He needs to show that he has an exit strategy for Iraq, not just a formula for keeping us mired down ("enduring" at great economic and military manpower expense) in the region. The steady march has to be toward limited and declining involvement.
To campaign effectively regarding Iraq, Obama needs to get beyond the Republican double-talk that "The surge worked and the Democrats were wrong." It was a decision that came way too late, has not spurred the Iraqi government to reach its benchmarks, and is still not addressing the real problems. He needs to emphasize what the real problems are and how our involvement in Iraq at this level is destroying our ability to effectively confront terrorism. He needs to give a strong indication that he can develop effective strategies for thwarting terrorism in difficult to reach places where it thrives and strikes at us. And indicate how we do that without getting into another Iraq style war. The Iraq war was, and still is, marred by horrible leadership.
The difference between McCain and Obama on Iraq is not so much the end goals, it is the effective strategy for reaching those goals. It's a bit simplistic, but it bears truth: You don't teach a bird to fly by keeping it in the nest, even though that is the natural tendency - to protect. You throw it out of the nest. The baby bird struggles to find a way to survive, and before it hits the ground it learns to fly. Survival is an instinct, and necessity bears enormous rewards. McCain stresses continued support. Obama stresses the necessity of learning to fly. Probably some of both are needed to ensure success.
It didn't escape my notice that as the election draws closer, oil prices started dropping. I'm sure some people would like for energy prices to be off the table as a political issue, so that the Republicans are more likely to win. It may have been the threat from both campaigns and Congress of investigations and legislation on excessive speculation. I'm torn between citing market manipulation as a cause, and saying the bubble has popped. It is entirely up to investors where they invest - perhaps the herd had motivation to run the other way. Did some bullish investor turn sheepish and scream "Baaaaa."
The official sounding cause is that US demand for oil has decreased as people become more energy efficient by limiting driving and purchasing more fuel efficient vehicles. While I am not a conspiracy theorist, nor have I a "glass half full" perspective, I have reason to be skeptical. The commodity speculation atmosphere of the oil market, with the high prices when there were no shortages, leads me to remain skeptical of any simplistic causes. Dropping oil prices because of falling demand is just too convenient: it doesn't jive with the high demand - low supply rationale, that was false, and the speculation bubble. Could it be that a cartel of investors drove the price up?
The next administration should investigate fully, and provide regulation where needed to ensure the economic stability of the US and world. Of course, OPEC cartel voted this month (Sept. 2008) to enforce its already self-imposed production limits, thereby ensuring a continued artificially high price for crude. Venezuela and the Saudis love our money, and lining their pockets, they just hate the end result of Western economics: Improved living conditions for all, which could be a threat to tribal dictatorships and pure socialistic ambitions. Anyway, speaking of cartels, Al Qaeda manipulated the stock market to make money during its Sept. 11 attack on the US. Exactly who are the big investors in oil over the last two years? Do they have a common link?
I'm all in favor of energy conservation as a mechanism for limiting the use of oil. I'm also solidly for alternative energy sources. I think that T. Boone Pickens has a solid energy plan that is as good as any currently available. In fact, nearly everyone is for energy conservation, so why isn't it getting done?
One of the phenomenons in a capitalist system is that everyone wants to conserve their own cash, so they go for the bottom dollar on everything. Manufacturers have to cater to this bottom dollar drive. So can manufacturers build energy efficient vehicles and buildings and expect them to sell? No. So far only expensive oil is making anything like that possible. Otherwise, people go for gas guzzling SUVs, and buy homes that have energy holes that should be plugged. (The International Building Code, followed in the US, does require certain amounts of insulation and tight construction, but that's about as far as it goes.)
So what does it take to make things happen? Generally Republicans would like to leave the answers to problems to the economic system - the suppliers and buyers. That doesn't happen - they really don't resolve problems unless things get completely out of control and prices skyrocket. T. Boone Pickens didn't step forward with a plan three years ago when energy prices were much less - no, not until they became a crisis. In the past many politicians have tried to throw money at problems. Most politicians know that throwing money at things doesn't work.
So what does work? Leadership and stimulating the private sector.
Leadership means creating an energy policy that consistently encourages manufacturers and buyers to conserve energy, and encouraging the private sector to consistently create alternative energy sources.
Stimulating the private sector means creating a demand for their products. They will invest in development and manufacture if they think the market is going to be consistent and growing. So you take a segment of the energy market and let them bid on supplying the energy from alternative sources. You can even limit the range of sources to the ones you want developed.
So you can take a problem (high energy prices ruining the economy and taking food from people's mouths), and turn it into a boon for the economy (new job source, new revenue streams). The economy and everyone is benefitted. (Earlier in this article, possible markets and sources were outlined in brief.) The same solutions will also help the environmental problems that we face. It's a win, win, win.
So who has the better policies on energy, McCain or Obama?
McCain has a thorough plan, and I like a lot of his thrust, but interestingly the focus of McCain's plan is on subsidizing, prizes, tax credits, in short just throwing money to the private sector and hoping something comes of it. Hopefully this private sector activity will create new markets and result in jobs. Well, the private sector is always pleased to get research money and tax credits for doing things. In the past they squandered millions on solar energy (covered earlier in this article). Unfortunately throwing money at them doesn't guarantee actual solutions to problems.
The Obama plan is also very thorough, and I like most aspects of it. It does speak more specifically about job creation, but it is short on details ("...private efforts to build a clean energy future.") It also is peppered with tax credits, but overall it leans a little more toward assistance to purchasers than McCain's plan, which stimulates the markets.
I prefer to think that the Obama plan is more even handed about stimulating the market by helping to create demand, but a lot of implementation is subject to entanglements in Congress, just as the McCain plan would be. The really good thing is that both have hammered out an energy plan.
To campaign effectively on this issue, I need for them to tell me that they are not going to simply throw money at the problem, but that they are going to guide the demand for products (partly by offering market segments that create a demand for their product) and go for the most promising range of energy technologies, while evenhandedly giving credits to both manufacturers and purchasers to stimulate manufacturing cost reduction and consumer demand.
Let's see, if fewer people are working, there is less tax revenue, which means the government can assist less and people can buy fewer products, so there is less need for workers to make the products, so there are more layoffs, which means there is less money for buying things... Which comes first, the labor or the purchase? It's a spiral - one thing affects another.
When economic theory turned to supply side, the Republicans thought they had found the holy grail of economic theory. Let manufacturers have more money and they will hire more people. For a couple of decades, it worked, and everyone became more prosperous. I appreciate the Chicago School, but it isn't the last word in economic theory.
All that the Republicans have done for decades is parrot that singular philosophy, and in the last eight years it hasn't worked at all. In 2008 the unemployment rate, after several years of slow growth, lack of new job creation, and job loss, rose above the 5% mark, wages continue behind inflation, and prices continue to rise. This despite a growing economy and good industry profits. But now industry profits are beginning to seriously lag, and the housing market is going through a slow burn requiring rescue after rescue for both mortgage lenders and borrowers. The economy is in the worst shape since the Great Depression, and all the same signs are there. Thankfully we have much more economic safety now so a crash is unlikely.
It isn't that favoring industry is a bad thing, or that they have too much money. The problem is that if there are too few good paying jobs, the purchasing source dries up. You have to balance the equation and make sure both sides have money. If you don't it's a downward spiral that perpetuates itself.
Which candidate has the more effective economic plan, Obama or McCain?
Both candidates have comprehensive plans. But as you read through Obama's plan you see job creation repeated over and over. Both candidates cover the same basic economic topics, such as lowering energy costs, health insurance, cutting taxes, and trade, and the plans are very good - I like the features. But the approach of both is different. McCain seems to have looked at various needs and elected to do many of them. But Obama seems like he "gets it." We have to focus on putting people back to work and putting money in their pockets. If people spend, it will create the demand that revs up industry.
I don't know if McCain can campaign effectively on this issue. I don't think that it is his area of expertise, and I think he is too ensnared by Republican economic philosophy. But I like McCain and he is welcome to surprise me.
Healthcare coverage for ~ 45 million citizens who can't access the system
I won't repeat what I previously wrote in the 2008 State of the Onion, except that our healthcare system is rated by the UN and respected industry rating agencies as not very good compared to others. The fact is, it costs too much for the services it provides, and too many people can't get access to the system. The percentage of people who can't access the system is steadily growing as costs soar far beyond inflation and far beyond wage growth. It is a system for the privileged, and as the divide between haves and have-nots continues its relentless growth, the number of not-privileged are growing. There is simply too much money going to too few, and this is one of the signs that accompanied the Great Depression.
Other Western countries at least manage to get everyone covered so that people don't suffer or die for lack of medical care. So which candidate has the best system?
They both have very good plans. There are things that I don't like. There are things that I do like. For example, for Obama, healthcare should not be on the backs of businesses - it takes away their competitive advantage in the global economy (other countries don't strap the cost of healthcare onto business - it is on things like gasoline purchases, but in reality either way it drives up the cost). So Obama's tax credit for small business for medical will help since this is where it has the most competitive impact. McCain uses competition to bring down the costs of healthcare. This is good. Competition is effective until business finds a way to nullify it, which it eventually does - business strives incessantly for market certainty, and tries to minimize competition.
I'm not sure that McCain's tax credit will help or convince those who are in the most difficult economic situations to get health insurance - their two or three thousand above the tax credit needed to purchase insurance is money that is needed for daily necessities. That is a difficult problem even in European countries where insurance is mandatory. It's a tough problem, but people should have some investment in their needs or they abuse the system. Obama makes insurance mandatory at least for children.
I get the feeling that Obama's plan was a little more thought through and is more thorough, while McCain’s is more a list of several good ideas that were thrown together, although it may just be the brevity of the list. My apologies to McCain if the brevity of his Web site, which is usually good, is simply for ease of reading and belies the thoroughness of his plans.
For Obama to campaign effectively on this issue, I need to know that he has better plans for funding healthcare in the future and a realistic mechanism to get everyone ensured.
For McCain to campaign on this issue, I need to know that this is a comprehensive health care reform plan, and not a hodge-podge of good ideas that may actually do more harm to the system than good. And I need to know that he has some kind of assistance in mind for those who can't afford insurance even with a tax break.
I have always liked John McCain, as have most people. He doesn't cave in to the political party pressure in Washington, and it is very difficult for politicians to survive who don't cave in. They usually find it impossible to pass legislation. McCain not only survived, he is also very much about reaching across the aisle to the other party to work together, and as a result, he gets legislation passed. There is no doubt that John McCain is a leader. He is heroic in his stature. But leaders also must have the right ideas.
I reserved judgment on Obama until I had seen more. He has the unique capability of garnering support at the grass-roots level. He has the ability to move crowds with passionate and well reasoned rhetoric. He seems to have the compassion that puts him in touch with the people, and carries their cause into the depths of his insight into problems and solutions. He is Lincolnesque in his stature. But a leader also must have the right ideas.
To some extent, I have to consider political heritage. Political parties have specific philosophies, or ideologies, that they adhere to, and these are seen in the party platforms together with the individual candidate's views. Politicians at some level have to please their party people and their constituents. John McCain is perhaps more progressive than most Republicans, and he is changing, "Change," but it is still a conservative party. John McCain can get Republicans to line up with him, and some Democrats, and pass legislation that is conservative in nature. Is conservatism what the US needs at this time in history?
Barack Obama is more progressive, which fits well in the Democratic Party. Progressives look for new solutions to problems, while conservatives tend to look for what is tried and true. Obama can reach out to both sides and get support for legislation. Are progressive solutions what we need at this time in history?
We are at a landmark crossroads in history for politics. People today have the ability, as I have never seen in elections from all the way back to the 1950s, to change the course that our nation is taking. We have the ability to install a Congress and president that actually lead and decisively confront the critical challenges that we have before us.
We also have the ability to cower in the corner and stay the course. I have seen mostly political paralysis since the 1970s. The divisions among constituents, the conflicts in Congress, and the special interest groups, have prevented real solutions to problems from getting into legislation.
What I saw for the last 8 years is just plain scary and very troubling. During the last 8 years, the new Republicans stubbornly blocked any attempts to work with Democrats, and they forcefully pushed through their own legislation, with no hint of bipartisanship. Their legacy has been mean-spirited. They rolled back compassionate legislation so that the needy don't get the help they need. They took as many restraints off of business as possible so that the public was left unprotected and taken unfair advantage of. They ignored the environment to the point of ignoring crisis in multiple arenas. They ignored science advisors and the will of the American people to insert their own agendas. They turned goodwill toward the US completely around so that we have strong negative feelings toward us around the world. They moved recklessly ahead with an attack against Saddam Hussein on flimsy evidence that did not get the due diligence and thorough critique expected of government officials, and moved blindly forward without a plan for occupying, resettling, rebuilding, or exiting, as if precision targeted missles were all that were required. Ironically the terrorist attacks took 3000 lives, and the misplaced Iraq war has lasted longer than the Civil War and WWII, and cost over 4000 lives. They refused to consider more troops or other effective options, squandering billions, costing lives, and tearing down the economy. They lost perspective on the war on terror, changing the game plan to Iraq and obscure goals. They reduced the size of government offices to the point of being so ineffective that they could not protect the people in medicine, job safety, economics, or any other arena. It isn't just time for a change - it is time to stop outlandish political behavior and put in people who are competent to lead. McCain talks about not making the same mistakes his party has made. It's not a few mistakes, it's a major attitude problem of "Republican and conservatism right, everyone else wrong."
I appreciate caution. There are times to be conservative, to retrench, to shore up the supports, to curtail programs that aren't working, to wait until the nation is stronger before trying new things. New things need supporting evidence from experience. Conservative times are necessary. But excess conservatism, as we have been experiencing, simply means more of less. It means weakening our necessary institutions to the point that they are useless. It means stinginess that builds corporate profits while running our economy into the ground through job loss and low wages. It means stopping compassionate services or removing them from reach except by the privileged. It means weakening our nation with fewer educational opportunities. It means allowing the medical community and colleges to price themselves progressively out of reach. It means ignoring the fundamentals of economics for the gain of a few, to the point that the foundations are destroyed and we can all lose. For these Republicans it means building up the upper class to the point that there is no middle class and the bottom class can't survive - it is dehumanizing - it is creating a Sixteenth Century society for autocrats. And the end result will be economic ruin for us all, as we have an entire world of experience in history to prove it.
More conservatism means continuing the downward spiral because we have lost confidence in ourselves, our economic institutions, and our government, and it means becoming more dispassionate to human suffering. Getting out of this requires an attitude change. It has already started at the grassroots level by many. It has to transform Washington and politics.
As an illustration of what is happening: Bubbles in the stock market run on hype. They are simply speculation fueled by fear that something might happen and that drives up the costs of stock. We don't actually have a housing crisis, we had overzealous people making loans and others jacking up housing prices. We don't actually have an oil crisis - there is no shortage anywhere. Bubbles are hysteria that develop when mechanisms in the economy are not keeping us on course.
The stock market overall doesn't run on hype. Company stock mostly runs on confidence based on realistic expectations of what a company can do. The overall price of stock has always gone up.
For the last eight years we have been riding a bubble of conservative hype. It represents our fear that something bad will happen. It rides a wave of bad news that we get preoccupied with, that was driven by the dot.com crisis, the terrorist attack in 2001, the deflated economy and bad projections, low stock market indexes, the housing crisis, foreign competition, war deficits, the oil crises.... There is never a shortage of bad news, even in the best of times. We are hunkering down for the duration, and as a result we are making bad things happen: the conservative Congress bent on tearing things down, and the conservative business/stock environment focused on getting more without expanding jobs. We have to restore confidence in ourselves and see bad news as nothing but another challenge. As Roosevelt said, "We have nothing to fear but fear itself." A life run by fear is destined to a world of trouble.
It isn't my place to tell anyone who to vote for - everyone has to make his own decision. But as for me, I may vote conservative sometime in the future, but for now the conservative cadre and ideology is out. The fundamental thing that needs to happen now is to put leaders in office who can restore confidence in our nations institutions and ourselves, and face our challenges confidently and innovatively.
Unfortunately I was correct in my ongoing multi-year analysis of the economy. The conservative economic policies have driven us right to the brink of global economic disaster. All of the same markers were there that heralded the Great Depression, but the economic czars were blinded by absolute free market ideology. I wasn't expecting it to get this bad, and had hoped that preventive action would prevent this from happening. Thankfully we have much better safeguards in place now, and much smarter people at the helm who can quickly cope with disaster, as I mentioned in previous articles.
Last week President Bush sent his economic czars to Congress to request "immediate" action with a "clean bill" to save Wall Street from a dire emergency, and thus save Main Street and the world. "Immediate and clean," we know from experience, are Bush code words for, "I want it done my way." As usual Bush declares the world in peril to get his way.
While Bush has publicly held the opinion that the free market should not get government bailouts when things go awry, Bush has always publicly and privately been best pals forever with Wall Street. Any suggestion that CEO salaries should be held accountable was quickly dismissed by the Treasury Secretary in the interest of getting a quick and clean bill through Congress. What we have to suspect is that Bush is ensuring a lifeline for his rich Wall Street cronies, who typically walk away from Wall Street failures immensely richer.
Do we need immediate action? I wasn't in the meetings that the economic czars had with Congress, so I don't know what secret information was peddled, and Congress isn't telling. It's all very hush hush in the name of not creating a rush on deposits. People were pulling their money out of investments long considered safe, and retirement plans were in peril. It is, after all, mostly our money that Wall Street gambles with. Wall Street rallied, as did world economic markets, on the news of a coming bailout. But do we need rushed action, and do we need to look the other way as CEOs walk away with some share of our money?
I doubt it, even if I don't doubt the depth or urgency of the crisis. What I doubt is the need for $700 billion in action that is rushed, which could end up being the capstone Bush blunder, or well orchestrated manipulation, of his administration. No one ever knows for sure and distrust is in your face. This government bailout will add massive debt to the American people. $700 Billion amounts to $2,333.00 for every single person in the US, before interest. Add that to the approximate $700 Billion going out of the US for oil, and the approximate $700 Billion going out for the war in Iraq. That's $7000.00 for every person in the US, an enormous change in the economic status of every individual in the US during the Bush administration. That the sponsors of this crisis should walk away with money in their pockets is ridiculous and repugnant.
If you want to know how CEOs of major institutions amass enormous wealth while the people who work for them scrape for a living, read the very good book, The Battle for the Soul of Capitalism, by John C. Bogle, a financial institution insider and former CEO. The enormously high salaries that they get, regardless of their actual performance, is highly inflated by a paper chase that encourages the artificial inflation of a company's worth through driving up stock prices. Driving up stock prices? Does that sound familiar?
As soon as Congress hands Wall Street a bailout, all leverage is lost. That bailout should come with many strings attached. First, The CEOs and CFOs should be held responsible and accountable for their excesses. Responsible means that they personally have to throw their money into the pot. Accountable means that they have to answer for their excesses. Some have already lost a lot of money, but most are still rich for the rest of their lives.
Before Congress passes a bailout, it should come not as preapproved spending, but as a resolution to bail out designated companies, and to require any company getting bailed out, for their CEO, CFO, and other directors to put all money and options back that they gained through guiding their company, plus an additional financial penalty of 20% of their net worth. That's the responsible part. Then, for accountability, they should be required to testify before Congress about how their company works internally, how they manipulate stock prices, and how this mess all happened. No disclosure, no bailout; crash and burn; possible prosecution.
Additionally, this bailout should not be free. "il-liquid assets" should be exchanged for shares in the company. If the public anties up the money, then they should be well rewarded for their risk, just as any normal financial institution requires when it makes risky loans.
Il-liquid means that assets can't be converted to cash. (Cash is a liquid asset.) They can't be converted to cash because their status is "in default," or they have questionable value. Vacated homes (and defaulted mortgages) were often given loans on inflated prices that have fallen, and have often been stripped and damaged. The "paper" is "bad."
The economic czars should not be given free-wheeling ability to hand out money. They come from the same economic policy mold as Bush. It has only half a brain - supply side - when it comes to understanding the economy. The Bush government has been riddled with unapproved actions done with no oversight on Bush authority alone, and it has too often led to disaster. Suspicion and doubt hang over this administration like a stalled hurricane pouring endless rain. Shame on us if we go stand in the rain again.
The Bush plan is again way too one-sided. It favors, you guessed it, Wall street and the wealthy, with nothing to offer those who are suffering the most: people who were hoodwinked into bad mortgages, swindled by artificially rising then falling market prices, and are losing their homes. Instead of a bailout to Wall Street, I would favor attacking the "il-liquid asset" problem by renewing these loans by knocking down the prices to realistic levels, and giving people interest rates that they can afford, and giving the new loans federal guarantees. That won't cost us $700 Billion, it will prop up the worthless paper on Wall Street, and keep people in their homes so that they continue being economic contributors, not economic losers.
The Bush plan may be an expensive short-term fix for Wall Street while not fixing the real problem. Due diligence needs to be done on this plan, and real alternatives considered.
The Bush administration has been characterized by a failure to do due diligence on problems, a one-sided approach to problems, favoritism toward the wealthy coupled with no regard for those not wealthy, and a rush to do things Bush's way. I have to say stop. Think. Pass a resolution to help Wall street, but scrutinize and negotiate by Congressional committees every request from every company for a bailout. Spurred by the need to secure assets, many companies right now are trying to change their status so that they qualify for the bailout, while subjecting themselves to greater regulation. I want my $2333.00 + to be well spent, not squandered like money down an oil hole.
PS: The goal of government oversight and regulation of financial markets is to keep the playing field level so that all companies can compete and those in the market don't get hurt by excesses. It requires continuous oversight because greed driven people are always looking for new ways to cheat the system. Investment firms that have over-leveraged their assets are now seeking reclassification so that they are regulated and have better asset leverage rules. Even those in the Bush administration now understand the need for regulation. That's a major accomplishment, but what a price to pay for ideologically blinded ignorance. Anyone mindlessly spouting ideology should not be put in the White House. The economy is a complex system that requires balance, not a one-sided mirror that only reflects the supply. If candidates don't know what they are doing on major issues, they shouldn't go there.
PS2: The high roller mentality of Wall Street firms has got to stop because it damages investors and ultimately damages investment firms. Only a few walk away richer in the end. Atlantic City is the place for gambling. Short selling, repackaging risky assets, and other practices have to be gotten under control. Investing means making a long-term loan to a company that pays dividends, and in the long-term stock prices increase. The market mentality of investors pushing companies for short-term growth to make a dollar on stock, day trading, and merging competitive businesses just to eliminate jobs and drive up prices (which only sometimes is warranted), so they can get more liquid assets is ruining business. The US is losing the ability of companies to research and build from scratch - this is a major loss that will knock us out of future competition. Congress needs to put in place regulations that will prevent these gambling style practices, and especially subject all mortgage loans to the same uniform standards regardless of their source.
Can an unbalanced economic rescue plan work?
The stock market and others are concerned about a government bailout of the financial markets causing inflation by increasing debt, which erodes everything. The US economy is already dangerously close to inflationary forces that can spiral out of control.
The public and Congress were astounded at the lack of control requested by the presenters, and by the lack of accountability toward those who created the problem by gambling with other people's money in ever more risky schemes to build wealth. In China, these folks would likely be kneeling before an empty ditch, and in old Japan would fall on their swords. I'm not suggesting anything dire - the police left the door open and turned their heads away (loose regulation and monitoring). But the idea that they should walk away with prizes while the taxpayers absorb the risk is mind boggling and unethical and an injustice that should not be tolerated. That they would possibly even include credit card companies, who rape their customers with 20% or higher interest for any excuse, is an insult.
The primary injustice that should not be tolerated is a rescue of financial markets that caused the housing meltdown, while people are losing their homes. This is an injustice and immoral. Every religious group in the US, and everyone who cares, should stand up and be counted on this issue.
During testimony of the Federal financial leaders before Congress (I listened to hours of it), I could clearly see the result of years of supply side economic thinking and the Bush administration emphasis. (Not to denigrate supply side theory - it is correct, but the overemphasis is one-sided to the point of creating problems.)
I appreciate very much what Treasury Secretary Henry Paulson, Fed Chairman Ben Bernanke, and SEC Chairman Christopher Cox had to say. I believe they were right on the money about the need to restore liquidity to the markets, the need to restore confidence in the financial system, and the urgency that requires quick action.
What I didn't see is a sense of balance in their thinking that showed any regard for homeowners who are suffering mortgage defaults and the continuing effect on the economy, and who may be saddled with bailout costs and rising inflation. Perhaps in the $700 Billion request is the thinking that the taxpayer will continue absorbing il-liquid assets throughout 2009. Why not stop the bleeding to save the patient and eliminate all of this suffering?
Why? First because the financial leaders come from a financial atmosphere of Wall Street captains and academics, who only know supply side economics. They only look at money supply. They mostly know the wealthy people in financial circles. They know that there are congressionally mandated efforts to help mortgage holders, they feel bad about suffering Americans, but they have nothing to say about it. It was obviously an empty space in their heads.
The concern of financial leaders is simply restoring liquidity and confidence. They have a sketch of a plan for that, and it will probably work. The other contingencies are up to Congress. It is up to Congress to represent the interests of the people. First on the list should be stopping the bleeding so that the problem doesn't continue.
Right now, I can see the treasury auctioning off bundles of subprime mortgages (defaults or high risk) on properties that it doesn't want to fix up or maintain, early in 2009, for .20 on the dollar. By the end of 2009, buying back those resorted and rebundled mortgages from greedy financial managers who suck the plumbs out, make money, and leave the rest again to the taxpayer, creating double financial jeopardy.
What is happening to mortgages? People were given mortgages on property for which they didn't qualify, and others had adjustable rates go up to the point that they couldn't afford the payments. When you get 60 to 90 days behind on payments, the loan goes into default and the mortgage company, by self-imposed financial rules, takes the real estate and evicts the people. Bankruptcy can prevent eviction for months, but at this time judges can't do anything realistic about making payments more affordable.
So homes that were overpriced, have fallen in value, people can't make the payments, and the bank takes the home. On the way out, some of these homes get raided for valuable fixtures and damaged. The banks then have paper (mortgages) that aren't worth as much as the loan amount. They are then considered risky and "subprime." They are mandated to fix these mortgages, but they can only think within the business rules they already have. So unfortunately they fix very few of these defaulting mortgages.
Why doesn't the financial institution hold onto the bad mortgages until better times? The properties require continued maintenance, some require fixing up to raise their value, and they require financial oversight. This is expensive - why invest in a dead horse? And with those properties staying on the books, they have less cash from which to make or leverage loans. So the financial institution has less business, or is out of business.
Liquidity in the system is very important to the economy. The cash supply to credit card companies allows them to make loans for goods and services, keeping retail alive. The cash supply to financial institutions allows them to make loans for automobiles and real estate, keeping those markets flowing. Even many businesses use the loan mechanism to guarantee the availability of employee salary and benefit payments, even during business downturns, so that people get paid regularly. Credit plays a major daily role for all of us in our economic system.
Just as important is the role of liquidity (basically cash), in the investment market. Most people have 401K retirement plans and other investments that are central to their own financial security. But with the loss of confidence happening in the stock market, people began pulling money out of these investments. Since most financial institutions are leveraged (have loaned 3 times to over 30 times the amount of money on deposit), withdrawing funds from these markets as liquid assets (cash), cripples their ability to operate. So it is in everyone's interest to fix the liquidity problem.
Who is going to be paying what for this financial mess?
The federal money managers have only one place to turn. The treasury. In the end, that means you and me taxpayer.
Approximately 30% of subprime loans actually crash and burn. On a $200,000.00 mortgage loan, if the value falls 25%, and damage and maintenance absorbs another 25%, and interest on that 200K for a year eats another 5%, this means the real estate has a value of 45% for 30% of the loans, so the financial institution loses 16% on its subprime loan package. Some bundled packages may be worth much less if someone was tricked into buying them. But the financial institution has to get them sold or their business is frozen by lack of capital. So they sell them for much less. It is a bad way to get loans off the books, but there is no better system right now.
The deceptive lending practices by financial institutions, and deceptive repackaging, have created the problem. They should eat a lot of the cost, not the taxpayer. But liquidity has to be restored.
What if the federal government took those mortgage loans that were in default, revalued the real estate because of the deceit and artificial "balloon," restructured the loans and interest rates so that they were affordable, and kept the people in their homes? I think the figure was 14 million more mortgages are expected to default, which is less than 2% of mortgages issued. If the government revalued the home at an average loss of 10% to the value of each home, and mortgages are around $250,000.00, the loss to taxpayers would be 350,000,000,000.00 (350 Billion). Over the next 15 to 30 years, those same mortgages would pay approximately 2 to 3 times their loan value back to the treasury (3,150,000,000,000.00), or the loans could be sold as prime loans after 5 years, still paying back (875,000 Billion in interest plus principal at a profit). Fannie May and Freddie Mac can do this if legislated so we save the cost of creating a new institution.
With this plan, the home owner wins as he stays in the house and pays for it. The taxpayer wins because instead of being saddled with high costs, they invest and then regain interest. The financial institutions win because they get the loss off of their books, responsibly eating perhaps 10% of the loans, and regain liquidity and a good balance sheet. The economy wins because it has liquidity and the bleeding stops and inflation stays low.
Otherwise who is going to pay? One percent 1% of the people in this country have 80% of the wealth. The more wealthy a person is, the less they pay of their share of taxes. If the bailout does cost 700 Billion, this works out to $2,333.00 for each person in the US. But it will actually be paid by those who filed the 130,728,360 tax returns. That works out to $5,354.61 + per tax return, which means you and me.
I don't think that the treasury has the responsibility for formulating anything but a plan for financial institutions. Congress would have to do this fix. The only thing I know of standing in the way is President Bush. It's against his ideology.*
* In his speech the evening of Wednesday, September 24, Bush tried to put mortgage foreclosures squarely on the backs of those homeowners. He indicated that it was all their fault for purchasing homes they could not afford or speculating that they would be able to purchase and resell at a higher price. No doubt some have done that, but it is a gross mischaracterization and one of the things standing in the way of helping people maintain their home ownership, just as it would be wrong to blame every financial institution of greed and market manipulation for every bad debt that it has acquired. Is it any fairer to bail out financial institutions that may have been guilty of greed and market manipulation? It is unjust and shameful thinking - it's ideology that simply acts without thinking and it stands in the way of good analysis and constructive thought and action.
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