In the election campaign that is raging at this time, the
Romney-Ryan team has made the point that the Obama administration should take
full responsibility for the bad economic situation in which the country finds
itself because that administration has been in office for nearly 4 years which
is enough time to own the economy even though it was dealt a bad hand in the
first place by the previous administration.
Concurrent with this claim, the Romney-Ryan team also made
the claim that President Obama cannot take credit for the triumph he scored
over Bin Laden because the policy that led to that triumph was put in place by
a previous administration, and that 4 years would not be enough to transfer
ownership of that policy to the new administration. Thus, the credit should go
to the previous administration and not to Mr. Obama.
Well, there is here enough red meat to spark a nice little
debate. So let's have one.
Most people are familiar with the set of tools called the leading
and the lagging indicators used in economics. Less well known is the corollary
to that activity which goes into the decision making process. Unlike the
situation in economics, however, the corollary is not an indicator of what
happened in the past or what will happen in the future. Rather, it is the
effect that is caused by the decisions we take. In fact, as we go through each
day, we make several decisions, some of which result in immediate consequences,
and some of which result in consequences that materialize anywhere between the
very near future and the very far future.
We first look at economics. There exists in this science (as
economics is sometimes called) a relationship between the mountain of data that
is collected about an economy, and the decisions that the captains of the ship
of state take into account when they steer that economy in the desired
direction. The data is grouped in such a way as to form two types of
indicators: there are the lagging indicators which supposedly tell where the
economy has been, and there are the leading indicators which supposedly tell
where the economy is going.
Of course, in either case, the numbers collected do not tell
a story by themselves; they tell it because a human being interprets them and
ascribes to them a meaning concerning the past performance of the economy, or
the expected future performance. The aim of this exercise boils down to the
attempt at estimating what the Gross Domestic Product (GDP) has been in a
previous quarter or a previous year, and where the economy will be in the
future – anywhere between the very near one and the very far. The caveat we
must keep in mind, however, is that different human beings interpret things differently;
therefore the interpretations are not to be viewed as being an exercise in
exact science but an estimate that is tainted by the experience, the intuition
and maybe even the biases of the interpreter.
Because no modern economy can exist without a consumer base
that enjoys a purchasing power of some strength, we find that the employment
picture plays a big role in the galaxy of economic indicators, be they the
lagging type or the leading ones. For example, when workers are laid off, this
would be a harbinger (therefore a leading indicator) of an upcoming slowdown in
the economy. But when workers are hired again, this would be a lagging
indication of the fact that the recovery began a while ago but that employers
are only now confident enough to hire new people.
Another useful indicator is the retail sales, be that of
goods which may range from clothes to cars, or be they of services which may
range from eating in restaurants to going on vacation. You can tell if the GDP
will show an increase or a decrease in the near term from what the retailers
tell you is happening in their businesses right now. As for the longer term,
there is the number of building permits, the orders placed by manufacturers for
production equipment, the orders placed by wholesalers for durable goods and
for consumer goods. And the list goes on.
To refine the predictions, numerous other indicators are
used by the people who get paid to analyze the economic data and interpret
them. These people take into account the average workweek, the initial
unemployment claims, the capacity utilization of plants, the change in the
price of commodities, the change in the price of equities and the change in the
money supply.
Each of those categories is given a weight that is
multiplied by the change measured for the period. A tabulation of all the
categories is then done to yield a picture of what happened in the past or what
is expected to happen in the future. But the honest truth remains that the
exercise is more reliable when it seeks to explain the past than when it seeks
to predict the future. This is because economics is an imperfect science -- a
reality that must be taken into account when shaping policies for the future.
But that admonishment is often ignored by the captains of
the ship of state who go ahead and make decisions based on the analysis offered
to them by the economists and the other political aids who surround them.
Sooner or later, those running the state as well as the public begin to feel
the effect of the decisions that were taken. Some of the consequences manifest
themselves immediately, and some manifest themselves later on -- be that later
in the near future or later in the far one. And the question to ask is this:
What kinds of decisions have an immediate effect, and what kind have a long
term effect?
The best way to answer that question is to take a close look
at the two claims made by the Romney-Ryan team. The first claim has to do with
the economy. Here, the fact is that under ordinary circumstances, even a small
ship of state would take years to fix its economy, having been battered for one
reason or another. But America
is a giant ship of state that has taken a battering under circumstances that
were very much out of the ordinary.
Thus, four years are not enough to fix an economy whose
condition was misdiagnosed in the first place by most (but not all) the pundits
and professional economists who looked at it and analyzed it. And this false
diagnosis is what led President Obama to make the promises he could not keep.
Thus, it must be said that making such promises was the only mistake that the
President committed. If he is to be blamed for something, the blame must not
exceed the severity of the mistake.
As to the credit for the triumph that was scored over Bin
Laden, we must recognize that decisions made on the battlefield by the person
in charge of giving the ultimate command are instant decisions. Whoever
inherits a strategy that was there prior to the encounter, owns it immediately
because he has the duty and the authority to alter it – something he can do by
issuing a single command.
Thus, it must be said that Barack Obama took ownership of
whatever strategy was there the moment that he was inaugurated as President of
the United States
because that is when he became Commander-in-Chief of the American military. And
every decision he took after that moment was his and his alone.
He would have taken full blame had he failed; he must take
full credit where he succeeded.