Finding the Center

When Americans Elect recently folded its tent, the hopes and dreams of many disenchanted pundits and voters found themselves once again on the curb. The collapse of Americans Elect is just the most recent in a long line of sometimes distinguished, sometimes comical, sometimes disturbing, but always failed, third party attempts. Its collapse is especially disillusioning to those who embraced it. Unlike other third party attempts, Americans Elect was not born of bigotry, ideology, or spite. It was born out of disillusionment and hope. It arose from the disillusionment of many with the "partisan gridlock" in Washington and the hope that politics in America could somehow transcend the egos and ambitions of politicians and overcome the dominance of special interest in Washington. It was not just an unrealistic dream. It proved to be a futile one.

Americans Elect was predicated on the notion that the great majority of Americans occupy what is commonly called the political "center" and that that "center" is being trammeled under the influence of special interests and political ideology. It is believed that what is keeping the U.S. government from running smoothly and preventing it from reaching its true potential is the "gridlock" caused by the clash of political extremes. Instead of a march toward prosperity and harmony, we are stuck with a football game where the ball is only moved back and forth between the 30 yard lines and instead of touchdowns we have to settle for field goals. Americans Elect wants to end the game and replace it with a new one in which everyone wins because everyone is on the same team. In such a game, the ball moves endlessly forward .This is as unrealistic an idea as it was when it was first put forward by the Founding Fathers. They too abhorred partisanship and faction. Even in a time when the reach of the federal government was by today's standards unbearably limited, bipartisanship was rare and compromise hard to come by. Some of the greatest political minds and most reasonable men that the U.S. have ever had did the best they knew how to prevent partisanship, and they failed. In a nation many times larger and more diverse, we should not expect better success.

The central premise that underlay Americans Elect and every "middle of the road" movement is that there is a middle ground that the majority can live with. This might be true, but it greatly depends on where the "middle" is and what it is between. You might be able to find an agreeable middle on the budget, but where is the agreeable middle on the abortion issue? Where is it on gay marriage or prayer in schools? That middle has not been found yet. What are the odds that Americans Elect will be able to find it?

What really rankles those with great ambitions and grand designs is the grinding nature of politics. The political process in Washington is designed to remove the sharped edges of policy through a slow and tedious policy of debate and compromise. It is a process that has come to frustrate those who desire swift and grand  results. That is a good thing for as hard as it is to enact policy and pass laws, it is a hundred times more difficult to repeal them.

If you want to reduce partisanship in Washington you have to curb its reach. If you insist that the federal government has a role to play in matters such as marriage, health care, and prayer in schools, if you demand that the federal government ensure that everyone believes and behaves in a manner that suits your sensibilities, you will never find a middle ground.  People compromise over where they are going to eat. They do not compromise over what they believe or how they raise their children.

Government in Washington is no longer a place where policy is deliberated. The stakes are too high for gentlemanly agreement. It has become become a political arena. You do not find compromise in an arena. You find winners and losers. Jim Hightower once famously said that the only thing you find in the middle of the road are yellow stripes and dead armadillos. He didn't like the middle of the road because he was a man of vision. You do not compromise on visions. You might make concessions, but you do not compromise.

If you want to restore comity in Washington you have to lower the stakes. It is that simple. To lower the stakes you have to limit the power of government. It is that difficult.

Don't Worry. They Will be Fine.

The repercussions of the recent debacle on Wall Street are still being felt by those involved. JP Morgan announced that its Chief Investment Officer Ina Drew, one of the highest-paid executives at the bank, had decided to "retire from the firm." Despite her impressive resume, neither she nor JP Morgan can explain how the company lost over $2 billion. Some predict that it could lose up to a billion more before the year is out. She will be succeeded by Matt Zames, a long time trader who has considerable experience with risky financial bets. He was formerly employed at Long-Term Capital Management, a hedge fund whose 1998 collapse plunged the world into economic turmoil. Despite his uneven performance in the recent past, Zames has an impressive record in generating profit. Fumbles are not counted as much as touchdowns on Wall Street. It might be a fall from grace but not much else. Even though Drew lost her job, she is not going to have to do without, No one on Wall Street will.

When Wall Street CEOs or Chief Investment Officers lose their job in the wake of poor performance, i.e. massive financial loss or mismanagement, they do not face financial uncertainty. Their egos might be bruised but their lifestyles are not in jeopardy. When Peter Kraus was pushed out of Merrill Lynch after spectacular losses, he received $25 million. When Martin Sullivan, CEO at AIG was let go he took $47 million with him. Stanley O'Neal left Merrill Lynch in 2007 after losing $8 billion when the sub prime mortgage market collapsed, he took $160 million with him. When former AIG executive Joe Cassano was pushed out in 2008 he took $315 million with him along with another $34 million in bonuses. The $1 million in monthly pay he was offered as a "consulting fee" was eventually cancelled in the resulting backlash. The rest of the money he kept. Like other CEOs and financial officers, Cassano lost vast amounts of money during his tenure.

The list of CEOs, chief financial officers, and top level executives who have lost their jobs in the wake of huge financial losses is as impressive as it is long. Equally impressive is the amount of money they took with them when they left. Despite their blunders and miscalculations, despite their grim countenance and statements of contrition, despite their noble admission of error and lapsed judgement, none of them are going to have to do without. None of them are going to have to sell their homes or sweat paying the bills. Don't worry. Unlike millions of other Americans, the executives and bankers that lose their jobs will be just fine.

As long as a person is perceived to be capable of making other people money, they will always be in demand. People like money. They like easy money even more.Wall Street is easy money. Best of all (or worst of all depending on your perspective) to the extent that brokerages are used, it is also money gained without effort. Indeed, it is almost magical. Therein lies the problem. People invest in the belief that the money they put up will be increased. Many investors have come to expect quick and large returns on their money. Many brokers strive to meet those expectations and are willing to go to almost any length to do so. After all, the better they meet those expectations, the richer they become. I would have written "limit" but there really are no limits, not yet anyway. An investment officer might lose his job. He might even lose a few million in bonuses and options, but he will not lose his lifestyle.

Until brokers and investment officers have more on the line than their egos, any barrier erected to curb their activity will be flimsy. You do not have to threaten them with prison. All you have to do is make it necessary for them to find a new job in another line of work. That would require not allowing them to leave in luxury for doing a lousy job. It would mean hiring someone at a salary befitting a person who lost a billion dollars at their last job. As for the rest, for the life of me I cannot think of a single thing a person can do that is worth being paid $1 million a year short of curing cancer or inventing a perpetual motion machine. But then I do not have as large an ego as many Americans, certainly not as large as the captains of Wall Street. Well, perhaps that is not quite true. It could be because I do not measure my stature by income or possessions. I will have to leave it my biographers to sort out.

Judge Him By the Future

"Common sense is what tells us the Earth is flat and the Sun goes around it." -unknown

Addressing supporters at a rally in Columbus Ohio on Saturday, President Obama told listeners that he would urge Congress next week to implement "common sense ideas" to accelerate job growth. He sought to deflect blame for the languishing economy by chastising Republican lawmakers for not doing enough to bring down unemployment. Obama made his remarks after government data showed that hiring has slowed and the economy continues to struggle three and a half years into his administration.

"That is why next week I am going to urge Congress, as they start getting back to work, to take some actions on some common sense ideas right now that can accelerate even more job growth," he said at a school in northern Virginia: a key battleground in the upcoming presidential election. The economy will be a dominant factor as voters weigh whether to give Obama a second term, and he took the opportunity to tell Americans that he was not to blame. It is GOP intransigence that is hampering progress.

Members of the U.S. Senate and House of Representatives will be returning to Washington next week and begin negotiations on legislating a long-term highway transportation bill, which Obama and Democrats have framed as a job-creating measure. The legislation is intended to fund yet more major construction projects, such as roads, bridges, and mass transit systems. Fortunately there are always roads to be paved and bridges to refurbish. Immigrant laborers will be happy to learn that their jobs are not in jeopardy.

Government data showed U.S. businesses slowed their pace of hiring in April to115,000 new jobs, compared with forecasts for 170,000. Unemployment edged down a tenth of a percentage point to 8.1 percent, but this was partly because of the number of discouraged workers who dropped out the labor force last month. "There are still a lot of folks out of work, which means we've got to do more," Obama said. The question is more what?  More spending and more government according to the administration.

Not only are Obama's solutions not very good, they are not very new. Obama has been "stimulating" the economy for over three year yet the economy is still not stimulated.  That is because government sponsored jobs almost always cost more than they produce. What is the point in spending $100,000,000 to stimulate the economy if it only results in $75,000,000 in economic activity? Other than obtaining the gratitude of those who were hired, nothing is gained. Why not give that $100,000,000 to the public and let them spend it? Because the government has no control over how people spend their money. Progressives do not trust people to spend money in ways that benefit the government or advance their agenda. Indeed, most Americans have no agenda. They have families, homes, and their own priorities. Unless it can be demonstrated that buying a new television or taking a trip to Disney World advances the progressive cause, liberals are not interested. Government jobs create workers who are dependent on the government for their paychecks. Government grants create communities and organizations that are dependent on government to balance their budgets. Government spending creates people who are dependent on government for their well being. The more people that are dependent upon government, the more indispensable government becomes. The more indispensable government becomes, the more immune to reform it becomes.

Obama cautioned the public. "They'll (Republicans) tell you who to blame, and ask you if you're better off than before the worst crisis in our life time. The real question  - the question that will actually make a difference in your life and in their lives of your children - is not just about how we're doing today. It's about how we will be doing tomorrow." Against the economic policies of his his opponents, Obama is once again holding out the promise of a better future. That is really all he has to offer. After three and a half years under his leadership, the present is discouraging. He is asking the public not to judge him by the way things are now, but by the way things will be four years from now if he gets another chance. Obama ran on hope in 2008. He is running on hope again in 2012.