Following the political shot in Massachusetts on January 19 heard 'round the nation, the magazine The Economist analyzed the aftermath of the Senate race there by saying, "After the Democrats' stunning loss, Barack Obama has no choice but to move back to the centre."
This conclusion makes no sense at all, since the most important domestic economic issue - which is creating and retaining high-quality jobs and near full employment of the nation's workers - has no business being triangulated by any magazine writer or pundit or, frankly, administration economist into being left, right or center.
Yet darn it, when it came to the domestic economy sections of last Wednesday's State of the Union Speech, it seems that the "move back to the centre" theme was high on the agenda. As Machinists President Tom Buffenbarger said in reaction to the Speech, "When one-fifth of America's workforce is idled to some degree, the full force of government, business, labor and academia must be marshaled to get them back to work. But no such comprehensive strategy was outlined."
Specifically, what the country needs to see right now are hard results from taking - but this time taking effectively - the sensible, pragmatic steps to help middle class Americans that Candidate Obama proposed during the 2008 Campaign. And the reason I say "but this time taking effectively" is because I believe that the President's administration made six major mistakes over the last year in executing his domestic economic recovery plan, mistakes that probably should have been acknowledged in the Speech and at least still need to be addressed.
Mistake number 1 was compromising right out of the box on the new administration's promised commitment to "new populism."
What this compromise led to was an undersized and misdirected Stimulus Plan that was crippled from day one because a third of it was wasted on tax cuts designed to win the votes of Republicans who all voted against it anyway, and because it over-romanticized small businesses and individual entrepreneurs versus stabilizing and creating world-class manufacturing enterprises that by nature tend to be capital-intensive and produce high-quality jobs. And all the while, short shrift was given to job-intensive investments in airports, freight rail, ports and congestion-relieving highways that contribute so much to economic growth.
Mistake number 2 was immediately thereafter putting health care reform so obviously ahead of CREATING JOBS, even though Candidate Obama had said that jobs and employment would never take a back seat to any other initiative.
We know now that the voters of Massachusetts were much more concerned about the wrong priority that the administration was giving health care reform than they were reacting to the reform plan itself.
In addition to the misplaced priority versus creating jobs, the voters of Massachusetts also took strong exception to the unfair manner in which the Senate was proposing to pay for the changes to our health care system - this was mistake number 3.
Throughout the 2008 Campaign all of the Democratic candidates spoke repeatedly about paying for these reforms mostly by rolling back the Bush tax cuts for the extremely wealthy, modestly raising the capital gains tax rate on the wealthy, and going after tax abuses at home and abroad. It was never contemplated that the burden would fall heavily on the roughly 200 million Americans who already have pretty good (albeit overly expensive) health care coverage.
Yet when the administration gave the Senate Finance Committee, instead of the more appropriate HELP Committee (which includes Health), the primary mandate to develop the Senate's version of the health care plan, the Finance Committee Chairman opted to have much of the reform's cost paid for by the already-insured - and the administration acquiesced. Heaped on top of a jobs-ravaged economy, this approach is nuts and very unfair - and the electorate in Massachusetts and everywhere else clearly see it as such.
Mistake number 4 was the high priority that was at once given to Wall Street's massive bailout.
After the Inauguration, when the damage wrought by Wall Street and its ilk was even more apparent than during the Campaign and when the number of real unemployed workers on Main Street was obviously exploding geometrically, the economic team in the administration nevertheless put resuscitating (and not even reforming) Wall Street well ahead of revitalizing Main Street, when they should have been given at least equal shrift.
And what compounded this particular mistake into another big one was that even the relatively little attention which was paid to creating millions of new jobs was overly influenced by senior economic advisor Larry Summers' long-held beliefs that a "job is a job" and that the decline in our nation's manufactured goods (and, by extension, the labor force that makes them) can be made up by a favorable trade balance in such products as software, legal services, university tuition, and motion pictures.
Both of these premises are dead wrong. In fact,
Instead of contributing just 11.5% of our GDP and employing only 8% of the U.S. labor force, our manufacturing sector needs to be at least twice as large. And when it is, 12 million more workers will be employed directly in the sector and up to another 30 million workers indirectly.
Mistake number 5 was not addressing head-on the trading abuses of our major trading partners, especially China. As was also promised during the Campaign, government must assist American businesses and their workers by demanding trade agreements that have meaningful labor and environmental standards, forbid illegal subsidies and currency manipulation by other nations, and have enforcement "teeth." And we especially need to establish a new trade relationship with China, that includes stopping its unfair trade practices and illegal subsidies, especially its artificial devaluation of its currency, which alone creates a staggering 25% illegal subsidy on Chinese exports.
Yet in the SOTUS, all we heard from the President, as we have heard from his administration for a year, is a largely meaningless pledge to "double our exports over the next five years" and a vague commitment to a "National Export Initiative that will help [only] farmers and small businesses increase their exports, and reform export controls consistent with national security".
What about our big industrial firms like the automobile and aerospace companies?
And when will the President and his administration move away from the discredited one-size-fits-all Doha approach to trade and away from relatively meaningless FTAs with small countries like Panama and Columbia, and instead identify and confront the mercantilist practices that are the biggest threats to American manufacturing, such as China's?
Mistake number 6 was allowing some in the administration to officially declare the recession over when the nation again had positive GDP growth, no matter how meager that growth was and how it was really gained. And so it was that on December 13, after third quarter GDP had grown a measly 2.2% almost entirely because of vast new profits on Wall Street and stimulus-prompted government hiring (including of short-term Census takers), Larry Summers said that, "Everyone agrees that the recession is over".
Well, Mr. Summers, the "economic recovery" we are in is a jobless one that already involves the largest absolute number of unemployed American workers ever, that may see another half million or so jobs lost before we truly bottom out, and in which it will take years to recover the millions of new jobs needed to get back to real full employment.
None of this is lost on the electorates, just as they have known firsthand for years that using GDP growth alone is a weak and misleading indicator of true economic vitality. The only measure that matters to them - and to the nation - is employment.
So when The Economist says that "Barack Obama has no choice but to move back to the centre", it's simply wrong. Because getting back to near-full employment of all 159 million American workers through sound stimulus efforts, thoughtful investments in jobs-rich activities, our own "buy-domestic" federal procurement program, wise tax policies, out-of-school youth employment programs, and fair free trade practices is not at all about right, left or center.
Now it's all about meaningful results, and not about theories and more promises. I only hope that the Obama administration draws the proper lessons from the recent election results in New Jersey, Virginia and Massachusetts, and focuses not on misplaced ideological divides but on achieving those results for middle class Americans.
Leo Hindery, Jr. chairs the US Economy/Smart Globalization Initiative at the New America Foundation. He is the former chief executive of AT&T Broadband and other major media and telecom companies.
Obama would do well to make Leo Hindery, Jr. a senior member of his administration.
Anyone who has read his books would know that he is a pragmatist and wants to include all peoples ideas in his decision making. It is the LEFT that wants him to be left and the RIGHT
that wants to make him more than left. I guess the Right and the Left have something in common..
They both want him to fail if he is not on THEIR side which is hardly a way to go forward when we have so many pressing issues to solve.
Conservatism
has to lie to the serfs,
you understand why, right?
http://en.wikipedia.org/wiki/Conservatism
But as regards Mr. Hindrey's specific analysis, it is not true that jobs are not subject to triangulation into left, right, and centre. Indeed, his own recommendation proves it.
It is only by triangulation to the left that Hindrey or anyone would suggest government stimulus for a specific sector (e.g. manufacturing) is the solution to sustained job growth. For contrast, triangulation to the right would instead suggest a trade-off of process incentives (e.g. the rewards of lower taxes, the risks of bankruptcy) to achieve the social benefits of sustained job growth.
Mr. Hindrey suggests stimulus for the manufacturing sector. Mr. Obama pointed stimulus at Wall Street. Mr. Bush pointed it at AIG. Each was/is a classic leftist "solution". Mr. Hindrey may not know his ideology, but it is in plain view.
One might observe: The failure of the present left-inspired stimulus policy to deliver its promise to keep unemployment below 8% is evidence that the leftmost point on the triangle is something less than sharp.
There's no free lunch with either left or right ideology. But at least faith in free markets as the better seedbed of individual liberty is a liberal - not a left - ideology. It is absurdly conservative and aristocratic of the left to think that its political class has the wisdom to "stimulate" an economy into job creation.
1observer
Conservatism conserve the monarchy and it surfs and to destroy Democracy and the Enlightenment.
That's why conservative Groover wanted to Bankrupt the Democracy so the monarchy of money can run things unfettered.
http://en.wikipedia.org/wiki/Conservatism
Which side are you on.
Since 1963, when the South regained the Presidency after an absence of over 100 years, following a few shots in Dallas, the 'Southern Strategy' has prevailed until the unexpected election of Barack Obama in 2008.
But Obama's entry into the Oval Office has not convinced the Republican, Red State, Southern Strategists that losing the Presidency means relinquishing control of our foreign policy and control over the Pentagon. Nor are they convinced that the Democratic majority in both Houses of Congress means that they have lost control over the domestic agenda.
Their Senate policy of 'No' at a time when we face an economic catastrophe rejects compromise. While the Left seeks 'consensus' the Right prepares for the violent conclusion that will follow the economic collapse their refusal to join in governance makes a certainty.
As early as 1831, Samuel Taylor Coleridge, English poet (Rime of the Ancient Mariner, Xanadu), philosopher and seer observed that "The American union has no center ' and that ...'it was too late to establish one". He added that its division into two or three separate nations might provide a 'splendid' solution.
Absent any definable 'center', the question of secession should be revisited, before we tear ourselves apart.
In particular, while your comments on the inadequacy of the stimulus plan may be reasonable (leaving aside the debate over small vs. large business focus), your insistence that it was a mistake to concentrate on health care (to the degree which that occurred, which is debatable) AFTER that stimulus plan was put in place (and therefore in no way placing job creation in the 'back seat') is not.
Nor is your assertion that the Mass. results supported your view, as you would know had you analyzed the subsequent polling data more carefully. What those results showed was that people were unhappy with the DETAILS of the current health care bill and the failure to pass ANYTHING in this area.
After WE destroyed the economy of the planet we have to go look after ourselves to the detriment of all others? - Again?
What You propose is the mistake that still terrorises the economies of most nations across the globe: Make profit / get profitable jobs - even if that means others lose them.
China is not our enemy. In fact they gave us a trillion dollars. And they do not have that kind of money because they are evil. They have it largely because they do not step under the axe of US big businesses.
Look at the nations that DID lay their heads on the block of our profit. Russia had 2 Million poor when communism fell. Ten years after free market took over it was 74 million. Look at south America. At east Asia. At Africa. .... - Massmurder, wars, poverty, child prositution, massrapes, ... You name it - they have it. And why? - Because our profit is set above the lives of a mere few million lives somewhere we don't even know exists.
China takes the jobs because it does for its own profit what we do in a hundred other nations: massacre human rights and lives, torture, destroy democracy, and install a dictatorial regime so corrupt that our parasites can buy anything for a pittance.
China is THEIR enemy. And YOU bus into the moronic drivel because You are a "good american", right? ;o)
Facts is the last thing YOU want, buddy. Because with facts You'd actually have to think for yourself instead of repeating the nonsense the parasites tell us.
Thank you.
See my comments on buying solar panels from China: The USA get 75-90% of the total profit stream, China only gets 10-25%, AND we get trillion in save electricity costs!
thank you China for make solar panels cheap enough to replace fossils and Nukes!
10-25% is a good reward for that!
We sorely need to see that it is the ones sucking our blood are our enemies. Not the ones who just opened our veins point at and say "KILL HIM!" while making a profit from the weapons You use, the graves You by, and the possession of the ones You just killed.
We need to realize that an american is not good just because he was born here. - In the cases of big money and politicians the opposite is the case. those are the exact same people the second amendment was put in place for. - To fight oppression.
Popular online markets for customized education (CE) can be expected to catalyze the creation of many jobs.
From a November 6, 2009 article in the Wall Street Journal:
"According to the Census Bureau, nearly all net job creation in the U.S. since 1980 occurred in firms less than five years old. A Kauffman Foundation report released yesterday shows that as recently as 2007, two-thirds of the jobs created were in such firms. Put more starkly, without new businesses, job creation in the American economy would have been negative for many years."
From a 2005 report by The Nielsen Company:
"By enabling entrepreneurs to start a business online and immediately reach a market of 157.3 million registered users worldwide, eBay has become the best place to start, grow and operate a small business."
Harvard Business School professor Clayton Christensen is the originator of the canonical Model of Disruptive Innovation, and a co-author of the 2008 book Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns. From Disrupting Class:
"Students need customized pathways and paces to learn.
…The second [phase of the disruption of standardized education] will be the emergence of a user network, whose analogues in other industries would be eBay…"
You don't say how to actually grow the economy. You argue how to improve the decisions that Obama made, but why any of them could be done or why they would grow the economy and thereby produce more jobs is a mystery.
The focus on creating jobs seems misplaced. The focus should be on encouraging businesses to be born, grow and compete in the world economy. Until O realizes that his actions and words [his enemy of the week program - Auto companies, banks, insurance companies, chamber of commerce, SCOTUS] cause people that have businesses to want to wait until the environment becomes more predictable, he won't accomplish much. The jobless rate will stay high as long as he tries to control the economy. Would you hire someone in your small business with a new tax was threatening your profit margins?
If O would shut his mouth for 6 months, the economy might start to grow. He needs to instill in the business managers of the country enthusiasm for the future. When he stops attacking business on a periodic basis, when he encourages business and helps get the government out of the way of business, we will grow. I suspect this is a view that Obama doesn't share. I would love to place a bet with him over which of us is right.
No, unions are a shrinking part of the work force. However, a recent FT piece forecasts that China and Germany will run positive balances of trade for the next few years, Japan will bounce along even, the EU will run deficits, and the US will run unsustainable deficits. Germany and Japan are likely more unionized than the US.
China setting its currency so low, then pegging it to the dollar and setting up high import tariffs for anything not re-exported was actually making economic war. The wealth and tech transferred to China in recent years is historic in scale corresponding to the loss of a war. The Bush administration took a dive. The voters were lulled by artificially low prices, Mexico's economy started to fail, and NAFTA failed. The US could invisibly borrow back a large part of the trade deficit dollars for its wars, oddly bloated yet ineffectual government, and its economic program. That program consisted in writing rubber checks for the few and converting our US into a Ponzi scheme.
As an inevitable result the US is not too big to fail, but it is too big to rescue. An IMF regime for a number of years would cause real privation and disorder.
Confusing large US banks and corporations that buy Washington with Main Street is fine ideology but zero reality..