Anybody but Ron Paul

Jon Huntsman announced his withdrawal from the Republican race for the presidential nomination today. He was the one candidate that I could get excited about. I like Jon Huntsman for the following reasons...

• He was not flashy. I think that a candidate that has less charisma will tend to be more systematic about problem solving on behalf of our country. He will work on meaningful things that are boring, but make a large impact on our lives. Huntsman prioritizing of simplifying the tax code is a good example of this.
• Huntsman was the son of a manufacturer. I believe that one of the best ways to get our economy back is to focus on manufacturing again. Manufacturing is positioned to make a huge come back in the United States with the advancement of robotics. We must have a leader who is forward thinking enough to see this and make room for this change. 
• Huntsman was a member of the Obama administration. This shows that he could  he could put partisan bickering aside to get the business of America done. He was a moderate who adapted to change, instead of extreme ideological views that alienate middle America from both sides of the process. 
• Huntsman was familiar with our main competitor in bringing back manufacturing to the US. He was the ambassador to China. The strategy to "keep your friends close and your enemies closer" by Sun-tzu, a Chinese general & military strategist (~400 BC), is great advice for our relationship with China.  
• Huntsman's strategy to keep banks from getting too big to fail is excellent. The banks are the most likely capitalists to expand our economy into the world bank. These are dangerous and unexplored waters. The European Union fortunately, went out ahead of us, and is suffering the consequences.
• The shrinking middle class is a bi-product of this global monopolization of markets.
  Just as our country was able to regulate capitalism in the past. I have faith that the right leader can regulate greed in such a way that incentive is maximized, and the wealth is spread around. 
• The moral issues of our day is the last reason on this list. It is not last because it is least important. It is last because this point forms the springboard for the rest of this post. Problems like abortion, and the flip side Euthanasia, marriage and cohabitation, runaway government spending and Keynesian economics are threatening to un-glue our institutions. When we redefine institutions too rapidly this short term selfishness can un-moor our vales in ways that wreck many peoples lives.

I am alarmed at the growth of libertarian ideology in our country. The philosophy of Ayan Rand is one that is both selfish and short sighted. There have always been people who would jump at ideas like get rid of the IRS, and to interpret Social Darwinism as the guiding principal of our country. It is bait that will cause many of us to squirm in the long term. It is what Joaquin Posada likes to call Marshmallow thinking. People who jump at short term gains do not wait for the long term benefits. They fall subject to fickle market pressures. The market does not always make sense. To base our governing principals on the fickle nature of the stock market is like eating your desert before your dinner. There may be a momentary satisfaction, but in the end the result is a stomach ache. Over a prolonged period of time this behavior could even lead to more serious stomach bypass surgery.

Ron Paul is the candidate who best defines this ideology. Dr. Paul's prescription of libertarian ideology may provide short term benefits to the younger population of our country for a short time. However, like most medicine what makes it effective is that it is a poison. The poison of libertarian philosophy will kill our babies and seniors, inebriate our youth, and make us irresponsible citizens who will not come to the aid of our neighbor. Is the priority of getting our fiscal house in order worth all the baggage that is likely to accompany it?

I think that it is possible to act fiscally responsible within our current democracy. We must back common sense bipartisan approaches like Simpson Bowles. We must choose to cut our deficit and welcome the Austrian school of economics. John Maynard Keynes has seen his day. It is time for the pendulum to swing back toward fiscal conservation. Libertarian philosophy is not the answer. It opens up far too many questions in the long term that none of us would find acceptable.

My prediction of the Republican nomination for 2012

 If the candidates were players in a game of RISK,  then it may go down like this. Bachman rolls a six and takes Iowa. She later takes Minnesota. Romney rolls a ten and takes New Hampshire. Gingerich rolls a ten, and takes South Carolina. Ron Paul rolls a four and drops out. Santorum rolls a six and takes Pennsylvania. In the end Michelle Bachman loses because she can not forge enough alliances, Ron Paul loses public support over his isolation policies; Romney is not likeable, Santorum extreme, Gingerich bombastic, only Huntsman remains as the last man standing. Perhaps the most moderate true conservative of the bunch. The similarities between this political season and global economic expansion are not perfect, but they are interesting. As a candidate attempts to isolate they are destined to fail. The most inclusive and expansive thinkers are the candidates that rise to the top. 

My previous post was about how the world economy is like a giant game of RISK. In the paragraph above I have applied this analogy to the 2012 presidential nomination process. Please read the post,

RISK, recovery, and the future of the nation state 

 Happy New Year!

Pat 

RISK, recovery, and the future of the nation state

Have you ever played the game of RISK? When I was a boy I used to sing the song, “R-I-S-K, easy to play”. Could the current economic debate in the US, and the worldwide recession be like playing the game of risk? The differences are important. In the classic RISK game you roll dice to win countries by crushing armies. In this current world recession the analogy works best in economic terms. When we roll box cars on the dice today we steam roll economies and crush their currencies instead of their military.

In this new game nation states are forced to merge their economies. This forced consolidation of economies is leading to a face off of key trading blocks. They way I see it; there are six players in the game today. This is also coincidentally the right number to finish the game of RISK. The players are Latin America; The US & Canada, Chindia, Political Islam, Eurasia, and Southeast Asia. Latin America rolls a twelve to start. Brazil reinvents its currency and lifts South America to emerge as a market player. The US rolls a three and loses some markets to China who buys their currency with the resulting unequal exchange rate. Chindia rolls a ten next and expands its markets into the US. Political Islam and Africa roll next and receive Arab spring, immigration, and population cards. These are three essential components to long term economic growth. Europe rolls snake eyes and Russia picks up some of her influence.  Southeast Asia rolls a three as austerity and isolation has not worked out.

In the next round Latin America rolls a six. Free trade with the US is sputtering due to suspicion and tariffs. The US rolls a six. This is pretty much a stalemate between China and the US-Canadian block. China however rolls a twelve to exploit Latin America, Africa and Political Islam. The Arabs begin to self determine governments and the resulting economic trade with neighboring countries increase economic stability. They pass on their turn to build their strength. Eurasia passes on their turn, and attempts to consolidate their currency. South East Asia and Japan roll a three and are collapsed by an economic and literal tidal wave.

In the next turn, Latin America rolls a ten and expands their influence. The Canadian-US block rolls next and attempts to invade China by exporting energy resources to them. They roll a seven and win a marginal edge in economic trading. China rolls a ten and slows it’s exploitation of Africa the middle east and Latin America. Political Islam rolls a twelve and Turkey squeezes Iraq from the left and Iran squeezes them from the left. Africa remains vulnerable to economic exploitation. In Africa there are rich raw materials and weak governments everywhere. Europe rolls a three as they decentralize their economy and release failing states in a period of economic austerity. South East Asia rolls last with a six as they reach out to other countries.

If the economic game of RISK works out like the political one, then perhaps we will all land on our feet. The answer to the global recession is to merge the trading blocks and make them bigger. It is feasible that these six economic trading blocks can be merged into three. Europe can merge with Russia, and Africa’s political Islam, The US with Latin America and India, the Chinese with South East Asia and Australia; The Japanese, The United Kingdom and Israel will decline unless they change isolation practices.

It’s all about expanding markets for efficiency. The greed of Wall Street bankers is based on the premise of finding the level water mark of capitalism. For this reason I disagreed with the Wall Street protesters in a former BLOG post. I agree with them that there are reasons to be upset about our lack of opportunities, and wealth. I disagree that it could have been prevented. Unfortunately the invisible hand of our capitalist economy now transcends far beyond our borders. We are interdependent, and the only solution to recover our wealth as a nation is to expand our economy. Closing off our borders only dooms us to the fate of the past experiences of Japan and The United Kingdom. Both of these nation states have had stagnant growth for the past ten years because of isolationism shrouded by austerity. The day of the nation state is coming to an end. The time of trading blocks among countries with vested interest has begun.

Who will win the game? I guess I have to make prediction since this is my BLOG post. The country who will win is the one who will make the best choices about rolling the dice in the most strategic and timely places. The argument is how to make this decision. It is my argument that the greed of market capitalism should steer the ship. When a government attempts to tinker with this then it can confuse the trading blocks and delay the consolidation of a world economy. A delay can never stop it. It is as inevitable as the success of the last 100 years of US prosperity. Keynesian tinkering can cause much more hardship than long term benefit. Short term marshmallow thinking should never replace the efficiency of an economy of scale where there is enough wealth for everyone.

Occupy Wall Street Protest or digging for apples?

The Occupy Wall Street protest selected the right issue, but chose the wrong culprit. The financial melt down which has shrunk our middle class is a real problem. However, they are protesting the wrong villain. The Wall Street bankers have not changed. They have just extended the reach of Adam Smith’s invisible hand into the wealth of a global economy. Perhaps, they should be lobbying to close the borders to make capitalism more manageable. Capitalist have not changed. The system has just grown to a new level of greed.

That is not something to protest about. The evil nature of man is taught in the bible as the doctrine of original sin. Another Adam fell to this temptation in the Garden of Eden, and ever since men have been grabbing for the biggest apple in the barrel. This motivation drives our capitalistic system. The system was built around a cast of characters that compete with one another in a high stakes game of poker. When bankers try to maximize profits they are just working within the system to do what they are suppose to do. The Occupy Wall Street crowd is yelling fowl because the repeal of the Glass-Steagall Act of 1932 merged the banks with the investment brokers. This infusion of cash is real, but it is my opinion that the real cash did not come from domestic leveraging. Glass Steagell was removed because it had outlived its usefulness. The opportunities that deregulation opened made the global economy possible. The real cash and speculation was fueled by leveraging our domestic debt against the growth of the global economy. No one knew the limits so the bankers sold whatever they could in race to find the boundaries of the market.

If we were to change the system we would also need to change the very nature of man. So how do we stop history from repeating itself? It is in the interest of these bankers to protect the middle class. This allows for more transactions, more commissions, and more players in the game. Just as Glass Steagell once regulated banking after the stock market crash, we need regulations now to insure small and numerous transactions to protect our middle class without jeopardizing our credit markets. We do not need a new economic system. Our only hope for a new system would be an internal revolution of the heart. A new nature could allow for a more cooperative system. This is why my language of virtues BLOG culminates with the virtue of reverence in world history.

This cooperative system does not seem to work in other countries. I have traveled to China, Latin America, and Egypt. Capitalism seems to work best in governments where people participate in government. The Chinese economic revolution and Arab spring seems to validate this. These changes in the world economy are inevitable with the explosion of information available through social media. Very few countries can do what North Korea is currently doing in Libya. They are forbidding 200 citizens who were living there during Gadafi's Regime to return home. They are concerned about how information about the Arab spring will affect their people. The North Korean Government is very naïve, if they think they can hold this information back in this information age.

The world economy is here to stay because people desire the bigger apples at the bottom of the barrel. The desire to better ourselves is a pragmatic solution to a competitive, capitalistic economy. People become aware of other people’s conveniences and luxuries because of the information explosion available through cell phones. There is no way to stop this progress because the inherent benefits of technology are advantageous to the rich as well as the middle class. The wealthy need the middle class to use this technology to make even more money. When the middle class grows the rich make the maximum money. They are not what Joaquin Posada likes to call marshmallow eaters. This metaphor comes from the famous Standford research project where pre-schoolers were placed in a room by them selves and told not to eat a marshmallow. Adult marshmallow eaters will take a quick $5 profit instead of delaying gratification to make a $20 profit from their investment later. A short cut, quick buck, marshmallow minded strategy will not maximize profits. More profits can be generated by the wealthy selling their goods to an ever expanding affluent market than by squeezing every bit of money from the poor. It is important that government guards against short sighted capitalist by providing incentives or rules for them to sacrifice immediate gratification for larger profits over the long term.

My former boss, Bruce Josten at the US Chamber of Commerce used to tell me that most business owners desire a level playing field above anything else. What does a level playing field mean? A level playing field means that government manipulation of the capitalist system should have the same impact on all businesses. The good intentions of government many times can be confounded by layers of self serving bureaucracy, and blind spots of favoritism that corporate lawyers are trained to exploit. Perhaps this is where some of the fervor of the Occupy Wall Street crowd is deserved. These abuses are marginal compared to the growth of the global economy. Like Glass Steagel, blaming the financial crisis on corporate lawyers is not the root of the issue. The corporate lawyers are the wrong villain again. The real villain, human nature, can not be regulated or taxed. The real villain can only be changed by their own desires. A system of balanced competing parties can protect the middle class and an affluent economy here, and around the world. As long as those parties play by the rules.

There's Something Happening Here!

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This week Thomas Friedman wrote an editorial for the New York Times titled with this famous song by Buffalo Springfield. I could not stop myself from tuning my groove shark account to that famous song. Sadly, I am old enough to remember when it actually played on the radio. Paranoia strikes deep, my be a prophecy that is coming to age in the Wall Street protests, unemployment, default, and what Friedman calls "The Big Shift". Friedman is probably most famous for writing the book, "The World is Flat". This book along with the, you-tube video, "Did You Know" does a decent job of diagnosing the current world hysteria to the speed of change spurred by technology.

Those of you who have read my World History BLOG know that I do not agree that technology does that. Technology is the great equalizer. It can help us to accomplish things in a shorter time. It can stop a bully or increase our income. Over time all technology can do this. It is just in the short term that these types of change cause fear. Ron Paul may see this fear as liberty, but I understand why some people are slow to see the benefits when they are overwhelmed in the short term. Today I was changing the settings on the micro wave to heat my lunch. One of my colleagues was taken back when it looked like I was programming the microwave. This may seem trivial, but her reaction was not unusual. When I tried to explain what I was doing she was not interested in hearing me. She like many have found that the short cuts of technology may  save time in the short term, but in the long term many have found this to make more work for them. When people learn a time saver from technology they have a tendency to pack more into their time and can feel overwhelmed. Ignorance can be bliss or more importantly less work.

Last night I watched the #GOP #Econ debate. I liked the new format of a round table, and I enjoyed the commercials from the Peter G. Peterson Foundation. I agree with Michael Smerconish, that perhaps they were the real winners of the debate. For those of you that did not see the debate, the ads showed children complaining how the deficit was going to affect them. I am the grandfather of five grandchildren. I am increasing worried about how our spending will affect their lives. I write this BLOG because I find it therapeutic to write my catharsis as I stop and ask; "hey, what's that sound, everybody look what's going round."

Mitt Romney was the other winner of the debate last night. When he said that he was trying to preserve the middle class he won me over. With out a vibrant middle class no country will stay great for long. Although "Mother Jones News" blasted him for the comment because he defined the middle class as people who make $200,000 I do not feel the same way. The heart of his message is sound. We do not need to concentrate on a flat tax, or elimination of the fed. We need to concentrate on protecting and expanding the middle class. Any policy that will do this is good and, medicine for our paranoia that runs deep. My only regret is that Jon Huntsman did not say it. I am still undecided on who I will vote for. I am not opposed to re-electing our president if he will preserve our middle class.

The middle class needs to be the cash cow that pays for our national security, and all the government services that we hold dear. If we can create tools with technology that expand the middle class, then we can preserve this great standard of living and export an economic system to others peaked in freedom, by balancing liberty with equality.

The kind of president I want.

Five years ago I traced the history of virtue through the civilizations of the world. My World History Blog can be found here. It inspired me to write this poem. Each of these leadership characteristics can be traced back through world history. Perhaps if our Chief of state emulated these values we would have better government.

Give me a president that does not grab the head lines.

Give me a president that makes unpopular, but prudent decisions.

Give me a president that does not have charisma, but is tolerant.

Give me a president that values vigilance over action.

Give me a president that desires discipline and delays gratification.

Give me a president that is ingenious

Give me a president that has faith when everyone else is afraid.

Give me a president that has the courage to sacrifice his party’s selfishness for the good of all.

Give me a president that values beauty and humor.

Give me a president that loves honor, and craves honesty.

Give me a president that speaks truth, but does not betray.

Give me a president that values duty over pleasure

Give me a president that plans out of sight with a multitude of counselors.

Give me a president that remains teachable and cooperative.

Give me a president who correctly balances liberty and equality to protect our freedom.

Give me a president who is fair, pious, and follows the rules.

Give me a president who love community and is practical

Give me a president who minds his countries business and does not poke his nose into others.

Give me a president who has a hand of steel in a velvet glove.

Give me a president who is fearless and witty

Give me a president who values freedom

Give me a president who is wise and decisive.

Give me a president who is not afraid to pray for help.

The Presidents Speech by ovations

President Obama's Speech was good. If it were reduced to one word, that word would be manufacturing. Manufacturing touches many needs in our country. It increases exports to South Korea, Panama and Columbia. It brings back manufacturing union jobs to the United States. I think that this strategy my have been his only option.

We have a crisis of education in our country because many workers can not perform complex tasks. If we had more workers who were dedicated to increasingly difficult tasks, then we would not have to appeal to manufacturing to bring us out of recession. I question whether we can turn back the clock, and compete in the global economy. A Latin American short term bump may be possible, but long lasting recovery will occur because of our work force embracing dynamic careers that are dependent on constant re-learning.

My favorite part of his speech was the shot that The President took at libertarians. I whole heartily agree with him on his Abraham Lincoln comments. Unfortunately, this position is not popular right now. Abraham Lincoln is the father of the modern Republican Party. The idea that we need to reach out and help those who are oppressed is something I agree with him on. Reaching out a hand to pull a fellow American up is not a slap at rugged individualism. It is part of the very fabric of our country.

Perhaps the best way to evaluate his speech is to consider the congressional ovations on his points. .

Here is my analysis.

Ovations

New trade agreements in Panama, South Korea, Columbia

Made in America Bring back manufacturing

Manufacturing is coming back to the US

GI Bill

Time for us to meet our responsibilities

People do not have the luxury of waiting 14 months

Collective bargaining rights to compete in a global economy

Should have got more applause

Fix the outdated patent process

Review of all government regulations in light of the Common sense test

A shot at libertarians (rugged individualism) Abraham Lincoln

When analyzed in this way the president’s only choice was to push manufacturing to unite both parties, bring back employment, and deliver us out of recession. Still I think it is somewhat short sighted. We need better workers more than we need easier jobs for these workers to do.