10.26.11

From Occupation to……….

Posted in General Musings, Politics and Policy at 8:51 pm

The OWS protesters have gotten everyone’s attention now, and started a conversation (that probably should have taken place in late 2008 or early 2009, but better late than never); it’s now time to move from just occupation to an actual program for moving forward.

Some suggestions:

Get rid of all of the demands that aren’t related to the economy.  Issues like animal rights, gay marriage, and other social issues are creeping into the conversation.  They’re all fine issues that deserve a hearing of their own.  However, with regard to what is trying to be accomplished here, they’re a distraction.

Have both a short term agenda and a long term agenda.  We have a lot of short term problems right now.  Many are symptoms of longer term issues.  Both sets of issues have to be addressed, but sequence and priority is critical.

Keep the agenda points short and concise.  Limit the number of them.  Don’t get mired in the details.

Here’s a good starting point:

Short Term

  • Focus on jobs.  The government should make jobs a top priority until the unemployment rate falls below 5%.  Bring the full power of fiscal and monetary policy to bear, and if necessary, pursue direct works programs.
  • Focus on housing.  The housing market is fundamentally broken.  It needs to be fixed.  The economy will not recover until it’s fixed.  Doing nothing is not an option.
  • Focus on education.  The economy of the future demands a better educated workforce.  People shouldn’t have to become lifetime debt slaves to acquire a college degree and a secure future.

Long Term

  • Realign finance.  Financial institutions should exist to fund productive investment by matching savers/lenders with investors/borrowers.  The economy can’t function without a working financial system.  Unfortunately, it’s been turned into a casino where heads the big banks win and tails the taxpayers pick up the losses.
  • Develop an industrial policy.  Historically, this has meant a combination of trade restrictions like quotas/tariffs with subsidies to business.  That’s not what we need now.  What we need is a policy that takes into account the needs of all stakeholders – importers, exporters, labor, management, business owners both small and large.
  • Save the middle class.  This is what all of the short term and long term agenda points mentioned thus far lead up to.  A vibrant, growing, and upwardly mobile middle class is what has made America great.  For generations, people were inspired by the idea that their children would do better than them.  That idea is fading rapidly.  We need to change that.  It will take action – a large middle class is NOT something that just comes about naturally, it’s not a natural outgrowth of capitalism or any other ism; disabuse yourself of that false notion.

This is the sort of agenda that will resonate with the American people.  The statistics on the decline of the American middle class are indisputable.  When confronted with this, the 1% will have no choice but to remain silent or change the subject.  Keep pushing.

10.01.11

The question that needs to be asked at the next GOP debate

Posted in General Musings, Politics and Policy at 4:26 pm

“If you were president, and you received a call at 2AM stating that Greece has defaulted, the contagion has already begun to spread to several other European countries, and a number of large European banks are hours away from bankruptcy and about to trigger a repeat of the 2007-2009 financial crisis, what would you do?

“Before you answer, Mr. Candidate, understand the following.  In 2008, the US exported $325 billion in goods and services to Europe; in 2009, that figure dropped to $258 billion due largely to the financial crisis and recession.  That effect alone was enough to trim over a half a percentage point off of GDP growth, and Europe was not the center of that crisis.  In this case, we could likely expect the impact on US GDP to be an immediate multiple of that.  However, that’s not the biggest problem.  The biggest problem is that US Money Market funds have nearly $1 trillion in exposure to European banks.  Once again, the entire US financial system, and much of the world financial system, are roughly 24 hours away from complete collapse.”

“The Chairman of the Federal Reserve and the Secretary of the Treasury have been meeting all night and are prepared to brief you on the situation as well as lay out their plan for avoiding catastrophe.  It involves extending unlimited liquidity lines to the ECB and other central banks as well as massive capital injections into the largest domestic banks.  We have the chairmen of the SEC and CFTC along with the president of the NYSE on standby to dial in.”

The answers to this question should be quite illuminating for a number of different reasons.  They will immediately demonstrate which candidates have a grasp of economic policy issues and which do not.  This represents a crisis situation that demands a solution, and will demonstrate candidates’ capability to respond to an emergency.  It is a specific question that demands specific answers, rather than ideology, handwaving, and spinning of past accomplishments.