Monthly Archives: March 2009

Spending? Or Investing?

The debate rages on over Obama’s budget.

For good reasons, the “fiscal hawk” position has become a consensus position in our national politics. But what too many fiscal hawks are missing, is that there IS a difference between “investing” and mere “spending”. If there weren’t, all your 401(k) money would go towards electronic Dura Ace 11-speed upgrades.

(Oh, I forgot: it already does!)

During the campaign, Barack said repeatedly that Bush didn’t just spent too much money, but that, in the end, we got nothing for it. The money was spent recklessly, and didn’t help create any platform (infrastructure, education, etc.) to leverage in the future. (And, IMHO, when the full record becomes available, the amount of criminal spending, i.e., big ticket no-bid appropriations that went to politically connected friends, is going to be shocking; remember the $4 billion that “disappeared” in Iraq?)

Obama’s theory is that future increases in economic activity made possible by investments in meaningful things today (repeat after me: Energy, Education and Health Care; Energy, Education and Health Care) will significantly reduce future structural deficits.

This theory makes at least as much sense as the theory behind massive tax reductions, i.e., that the incentives for American entrepreneurs had been thrown so wildly out of whack by the pre-1982 federal tax code that drastically lowering taxes would actually raise tax revenues. And Obama’s reasoning certainly makes as much sense as the Republican orthodoxy, developed over the past decades by a reductio ad absurdum of that same logic – and without the pre-1982 top marginal tax rates any longer as a pretext – that any and all tax reductions actually increase tax revenues.

Obama’s investment-oriented budget is not simply neo-Keynsian tax and spend liberalism; and neither does it make sense to view it through the same lens as one viewed the last decades’ disastrous “voodoo” economics. Maybe we should call it “401(k) liberalism.”

It’s a new mindset: try to think for once past October 2010 (the end of the proposed budget’s fiscal year), and ask yourself, what should America invest in? If you think a good part of the answer to that question is Education, Energy and Health Care, maybe it’s time to stop whining about the size of the investment, and how much that investment is going to (hopefully, temporarily) take from our extravagant spending pockets. Instead, let’s start a dialogue about our priorities and what returns we expect in the future from our current investment in our government.

Liberalism is not Socialism

A favorite professor of mine, Alan Wolfe, explains the difference in this week’s New Republic.

What happened to the “Barack-olypse”?

“It was hard for me to believe that you were entirely serious about that socialist question,” Obama [told the New York Times], defending his policies as consistent with free-market principles.

“The fact that we’ve had to take these extraordinary measures and intervene is not an indication of my ideological preference, but an indication of the degree to which lax regulation and extravagant risk-taking has precipitated a crisis,” he said.

http://www.reuters.com/article/newsOne/idUSTRE52L0J820090322

Like the alien in the 1951 classic, The Day the Earth Stood Still, Barack Obama has been having difficulty convincing knee-jerk conservatives, on Wall Street and elsewhere, that he’s come to save capitalism, not to destroy it.

Yes, the equity markets are not the ultimate arbiter of economic health, but in light of yesterday’s gains, fears that the America we know and “love” was coming to an end – for better or worse – seem grossly exaggerated. Jeff Macke, who suggested on CNBC’s Fast Money, that under the Obama administration, we would be well advised to “work until we made $249,000 and then take the rest of the year off,” will have to postpone his Spring idyll in Aruba. Will Larry Kudlow, of the same network, who has been warning us all to prepare for “Obama’s War on Investors,” now start telling his minions to stand down?

Just a week ago, Mike Huckabee, Renaissance man of the Religilous Right – one part James Dobson and one part Stevie Nicks – railed against Obama’s economic plan:

Lenin and Stalin would love this stuff,” says former Arkansas Gov. Mike Huckabee. “The Union of Soviet Socialist Republics may be dead, but a Union of American Socialist Republics is being born.” 

Is lovable Mike ready to admit that Lenin and Marx long ago joined the firm of Shearson Kuhn Loeb Marx Lenin & Medvedev (known to the homeless intelligentsia around Harvard Square as Dewey … oh, you get the picture)?

Like FDR before him, Obama assumes the mantle of the presidency at a time of economic meltdown. (A meltdown, much like the Depression, of our own making; but that’s another post.) And braving the taunts and torrents of criticism from both left and right – but especially from the disingenous right – is navigating a course designed to once again save capitalism from itself. To the chagrin of the (so-called) left, he is not going to dramatically alter the American corporate or banking systems, storming the offices of Mother Jones magazine in the name of a Scandanavian-style cradle-to-grave welfare state. Neither, to the chagrin of the right,  is he going to back down from his commitment to address the obvious inequities in the current system, to end the decades-long rape of the middle and working classes by their executive overlords, to raise the top marginal income and capital gains tax rates by some incremental amount, and to insist that the government builds and sustains the legal and human resources necessary to ensure that the stewards of our large public companies are bound by the fiduciary responsibilities they accepted when they became officers of those companies.

Fiduciary responsibility: to wit, corporate officers (whether of banks or motor companies) are the custodians of large sums of other peoples’ money – our money, investors’ money. Schemes that lead to excess corporate compensation – whether they are built on bad loans, clever stock option manipulation, or just the bald assertion that one person’s honest labor is worth 400, 600, 800 times that of another – are just simple theft.

Reining in excess compensation, and increasing marginal taxes on incomes at the far end of the earnings bell curve, is not socialism. It’s shareholder activism, writ large, and (finally) with the power of the federal government behind it. Here’s hoping that yesterday’s rally means that Wall Street’s instinctually right-wing know-nothings, and their financial commentariat echo chamber, can wrap their collective head around the fact that this is hardly the apocalypse. It’s just an adult president telling them, as gently as possible, that they have to start acting nice, and give back some of their friends’ toys. As the whining and tantrums in the pits and trading desks start to settle down, I expect the equity and the credit markets will settle right down with them.

Half Lives

While I don’t hold much truck by superstitions of any kind, I’m a Gemini, and I suppose it should come as no surprise then, that I’m of two minds when it comes to the state of affairs, both in the public realm, and in my personal life.

Having divorced my very troubling client, I am slowly wading back into the dating pool of client acquisition and job hunting. (There may be more to  that metaphor than meets the ear, if the testimony of this dating coach applies more broadly.) Since it’s been the better part of a decade since I last hunted, I do sometimes feel rather inept and helpless. There’s got to be the perfect client or job out there. I prowl Craigslist, although I haven’t reached the one-night-stand level of desperation yet (Write for our website! $0.01 a word! Fabulous opportunity! Wednesday only!). Where are all those desperate housewives? Why don’t they love me? Why can’t they tell from my resume what a wonderful guy I am? I’m available, I’m straight: send me an assignment!

That’s the despair half. Then there’s the good day: answering a listing for the perfect job (writing for the public affairs/public relations department of my alma mater); refinancing my mortgage at 4-3/8%. The mail can’t move quickly enough. I have a date! What should I wear? Will she love me as much as I love her? This is an opportunity to reinvent onself, as surely as were once moving on to a new school or taking a new lover. No more selling lipstick or mutual funds. I’m gonna’ do something for myself, for my community, and for my world.

The wife is tiring of both the tribulations and jubilations. (A good time to mention, I suppose, that I am happily married.) She loves her job, and as long as there is a daily newspaper left in this country, she’ll likely keep it. Her career moves mostly in predictable ways, each change bringing generally deeper satisfaction, propelled by colleagues who think well of her and reach out in those dangerous transition moments.

But even she is subject to the “half-lives”. Our salaries were halved in the aftermath of the Internet bubble bursting (mine directly; hers indirectly), and they’re being halved again in this moment of economic transition. Our retirement accounts are halved. And at moments, I’m sure I appear half the man I used to be.

Somehow the “masters of the universe” who make the decisions that bring this about are never so economically diminished. The CEO of the wife’s former employer lives happily on the beach in California, writing poetry for his new wife, on the $400 million parachute he received after concluding what, at the time, was widely considered the worst business deal in global corporate history. There’s the coterie of 8-figure geniuses who ran my investment bank client into the ground, while lamenting that they didn’t get paid quite as much as Alex Rodriguez. Or Stanford Kurland, the former COO of Countrywide, who is now into making his second billion buying up the same bad mortgage loans his former company issued, for pennies on the dollar, screwing the rest of us a second time. Well:

There’s an old saying in Tennessee — I know it’s in Texas, probably in Tennessee — that says, fool me once, shame on —  – shame on you. Fool me — I can’t get fooled again.

So there’s one half of my reaction to the public realm: anger, despair, jealousy. At the same time, about once a week I have an epiphany: these are the beginning days of a new economy. An economy that is going to be more fair to those wage and debt slaves otherwise known as the American middle class. Senior executives who value creating jobs as much as they value adding another garage bay to their Greenwich manses will suddenly emerge from obscurity. And a new federal government that once again realizes that we’re supposed to be living in an “advanced” capitalist economy, with all that implies about mitigating the excesses of uncontrolled markets, and all the historical lessons of the 20th century economy intact. That us Average Al’s should no longer simply be at the mercy of the Bernie Madoff’s and Stanford Kurland’s of the world.

Today, I’ve got a date with that America. What do you think I should wear?

The President We Deserve

If, as they (who ‘dey?) say, we get the President we deserve, does that mean we’ve suddenly become a better country?

I suppose it seems no more intimate to think of the President as “Barack,” than as “W”. To me, at least, “Barack” seems like an affectionate appellation, whereas “W” insinuated a taunting nickname, a kinder, gentler “Turd Blossom.” Is that affection I feel when I think “Barack” instead of “President Obama” the same feeling the 29%’ers felt and feel for the 43rd President? I guess that’s possible.

But can anyone seriously imagine W answering Jay Leno’s question, last night, about the bailout and how bank balance sheets work? Explain, to the public at large, on a talk show, what Tier 1 capital requirements are, for instance, to enthusiastic applause?

Call me a Hope junkie, but I believe we’ve gotten both the President we deserve, and the President we need. On good days, I believe that, leading by example, this President is going to help restore some of the integrity, honesty and decency to American culture and society that we need and that the majority of us long for. On bad days, of course, I still despair that good guys still always finish last, that thieves are the only true representative Americans, and that the self-important nouveau riche (bobos in paradise, if you will) will continue to set the tone for our society at large.

Insofar as Barack’s “brand” is the political embodiment of our “good day” selves, here’s wishing our better angels prevail. I think most of deserve it, and him.

Interns

Today’s Today show job search lede: “Starting over at 40 – The New Interns.”

Now, I’ve worked a lot of places, and very few of them – including places like unions and union pension funds that had no money to call their own – ran on such a tight budget that they couldn’t dredge up a couple of hundred a week to give someone a “job” instead of an “internship” if they needed something done. Today, it’s like, “hey we have a new client, let’s hire some interns.” Or “Wow, that filing’s really piled up, let’s hire an intern.” The executive assistant at one of my clients is an “intern.” He’s been an “intern” for, like, two years. I’d like to see them try to hire an executive assistant for the barely-over-minimum-wage salary that kid is making.

So, further to, and in honor of, Keith Olberman’s “special comment” last night about the excesses of contemporary corporate culture – which was itself in response to news that Citicorp just redecorated its senior executive offices to the tune of $10 million (quick: how many $100,000/year jobs is that?) – enough with the internships, guys! In the old days we had a name for these kinds of internships: They were called jobs. (A nice Anglo-Saxon four-letter word that, “jobs.”)

Okay, at last

Well. Finally taking the blog plunge.

It seemed like a good idea during the 2004 campaign. It seemed like a good idea during the 2008 campaign. It seemed like a good idea every time I was in the market for a new client.

Okay. Better late than never.

I hope this blog will amuse those who come here for amusement, and inform those who come here for information. It’s my intention to deploy my wit and talent for the well-turned phrase to attract readers, and entice those few who need professional editorial services to purchase them from me.

Wish me luck. And here’s looking at you.