Wednesday, November 25, 2009


One thing about the Obama administration that has torqued me up is the negative attitude towards business - in just 10 months, he's railed about the evil insurance industry and the horrible bankers, taken aim at credit card companies, promoted an anti-industry cap and trade policy, nationalized the car industry, and demonized the pharmaceutical and hospital industries while he tries to remake 1/6th of the US economy.

But now, it all makes sense to me after seeing some recent analysis from JP Morgan. Check out this graphic from JP Morgan showing the %age of cabinet officers with private sector experience since the Teddy Roosevelt administration.

(full explanation here. (American Enterprise blog.))

This is troublesome on 3 levels:

1) There's no business expertise around Obama to provide real world advice or context for the challenge of getting the economy going. (In fact, this may be why all of the White House rhetoric is around "jobs" and not "economic growth." While jobs and economic growth are often synonymous, the difference is that dictators and deficit-spending politicians can create jobs out of thin air by fiat, but can't make an economy grow without good ideas and expereinced managers to make them happen.)

Without real-world experience to advise Obama, count on more programs that are selected because they sound good politically or test well in focus groups, but don't do a darn net thing economically, like cash for clunkers or the proposed employee hiring tax credit.

2) You are who you surround yourself with. Seeing that only a fraction of people around Obama have ever held a real job makes me think that he's surrounded by sycophants, lifelong politicians, and issues-oriented hangers-on. Prior to their cabinet positions, these people specialized in 1 thing: getting elected. This is great if you're up for re-election in 2012, but truly terrible for the those of us who aren't. These aren't the folks who will make the best decisions for America, but will ultimately make decisions that are best for them and their political career, because it is what they have been doing for decades.

3) This is more evidence that Obama highly values the political elite ruling class, and undervalues the working class. Case in point: Obama made 3 different nominations for the Secretary of Commerce (Bill Richardson (fmr gov of NM), Sen Judd Gregg, and ultimately Gary Locke (fmr gov of WA). You'd think that the at least one of the three nominees for COMMERCE of all positions would come from the business world - either immediately, or recently, but no, all three are career politicians. Based on the composition of Obama's leadership team, when it comes time to talk about stimulus ideas, do you think he's going to hear the best ideas, or the best politically motivated ideas? Will we get the ideas that make our economy better, or the ones that get us in the best shape in late 2012, when Obama stands for re-election?

Since winning the election a year ago, I haven't posted anything critical of Obama. There's some things that Obama has done that I've liked and others that I haven't, but I fervently hope that he is generally successful. With the approach to date, and the roster of talent that we see, I don't think it likely - he'll be made vulnerable by plainly liberal policies and undone by a poor economy. I hope even the most strident Obama advocate would agree that the Obama administration would be more effective with more people on his team who have worked in the real world, and less reliance on career political class and unicorn chasers.


Kevin said...

economists:business :: oil:water

Not to defend Obama, but the insurance industry is greedy, credit card companies are deceptive, and wall street bankers are over the top greedy. The car industry wasn't really nationalized, it was propped up, though Chrysler, and maybe GM, should have been allowed to fail along with the banks. That could have led to 30-50% unemployment -- or not. It would have been an interesting and potentially costly experiment.

I am rooting for the Senate to kill the health bill, because I think it is a partisan mess of pork and good intentions gone awry. However, I think we need some sort of basic coverage. In too many cases people have to choose bankruptcy or life, and the hospitals aren't really allowed to just let you die once you are there. Kind of a catch 22. IMHO, hospitals should not be for profit for just that reason. As for big pharma, I'm pretty sure Curie and Pasteur weren't focused on making profits. Why are other countries allowed to negotiate lower medicine prices, but our gov't is not? Like the newspapers, RIAA and MPAA, and local TV channels, they need to adapt to a changing environment.

At the root of all of the above is the stock market. It's an awesome idea, but it isn't primarily for investment anymore, as I recall was its original purpose. People gambling with other people's money and making huge profits and/or threatening the global market. Public companies are no longer responsible to look long term because shareholders demand constant profit increases, which is impossible to maintain.

Happy Thanksgiving! :)

Anonymous said...

Your blog keeps getting better and better! Your older articles are not as good as newer ones you have a lot more creativity and originality now keep it up!

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