Returning Home To Hope And Change?

Like it or not; believe it or not -- the one thing we all have in common as a species is that we change because of two reasons: Change comes about because we like to change and because we hate to change. We like to change because we get bored being exposed to the same thing, thus we clamor to see, feel and experience something different. But too much change, especially the unexpected type, can also engender a sense of instability and insecurity, thus we fear change. In the end, we find that we live in a state which alternates between the desire to seek change and the desire to change back to the status quo ante.

We deduce from the above that boredom and fear are two of the forces that can motivate a person to seek change. But can this apply to a large group of people such as a tribe or a nation, for example? And the answer is yes. Tribal wars, civil wars and cross-borders wars have resulted from fear; which is easy to understand. But they can also result from boredom; which is not as easy to understand. It was argued, however, that the First World War happened because of sheer boredom.

It was explained that there came a moment at the end of the Nineteenth Century when people thought that every science which can be discovered was discovered, and every technological innovation which can be developed was developed. Yet, the world did not suddenly snap into a state of utopian nirvana as expected. Bored waiting for this to happen, however, people began to imagine that “the other man's grass was greener,” and they decided to poke the neighbor in the rib just to engage in a little adventure, thus generate some excitement and break the boring monotony. But that first poke provoked a counter-poke which provoked another, causing an escalation that culminated in the first Great War.

If on the national level you do not trigger a civil war because of boredom – which may be accompanied by a little envy that may or may not be merited -- you end up having a battle of the ballot box. For this to happen, you need to have in place at least two political factions battling each other with speeches, tactics and strategies as they try to capture the hearts and minds of the electorate. And this is the situation which exists in the United States of America today as we move into the final stretches of the campaign between the incumbent president who is of the Democratic Party, and the challenger who is of the Republican Party.

The Democratic President, Barack Obama was elected in 2008 having promised that he will bring hope and change to the nation. He had a vision in which a system of health care covering everybody was enacted after almost a century of attempts that left America behind the other civilized nations of the world in this field. But the debate that ensued brought with it the sort of acrimony you encounter only in a civil war. It felt like each faction believed the other was threatening the existence of the nation -- and was putting all it had into the fight. In the end, the President got the bill passed in the Congress, and he signed it into law.

So much venom was spilled by then that the mid-term elections of 2010 were to play a decisive role in the unfolding drama. It happened that the opposition had played hard on the emotions of the independent group of voters, convincing them that the change which will result from what they called Obamacare was going to turn America into a European style socialist state. This will bankrupt everyone, warned the opposition, and will force the American people to live in a permanent state of poverty. The argument won the day, and the independent voters experienced what came to be called a “buyer's remorse.” They joined the opposition and voted to give it a huge majority in the House of Representatives, thus giving the President what he called a “shellacking.”

It was obvious that the same people who voted for hope and change in 2008 had voted to return to the status quo ante in 2010. But what happened between then and 2012 may well have forced these same people to experience another bout of buyer's remorse. It is that they got what came to be called the Tea Party in the House of Representatives -- a group of people who froze the House into inaction. This turn of the events did not take long to dismay the population, 90 percent of which now thinks unfavorably of the Congress.

But will this be enough to make the group of independent voters believe that the President's original message of hope and change had only been delayed for two years and not crushed forever? Can they be convinced that reelecting the President will put America back on the trajectory they hoped for in 2008?

It all depends on what his team will do to send this message to the electorate.

The Tax Plan Could But Probably Will Not

Martin Feldstein has an article published in the August 29, 2012 edition of the Wall Street Journal written under the title: “Romney's Tax Plan Can Raise Revenue” and the subtitle: “IRS data show that limiting deductions for high earners would more than cover the dollars lost by reducing income-tax rates 20% across the board.” The thing to say about this piece is that even if the assumptions in it are correct, why go through so much trouble only to reap so little in return? But there is more than that.

The first that Feldstein does is point to the criticism leveled against the Romney plan by the people whose judgment is based on calculations done by the Tax Policy Center about which he says this: “Such forecasts are inevitably speculative.” And he goes on to say that the careful analysis which he conducted proves otherwise. The point being that a reduction of all individual income-tax by 20 percent is preferable to keeping in place the Alternative Minimum Tax, the estate tax, the tax deductions and loopholes that allow high-income taxpayers to reduce their tax payments – he sets out to provide the proof.

To this end, he uses “the most recent IRS data, which is based on tax returns for 2009.” Applying the 20 percent reduction to the $904 billion of tax credits (which excludes dividends and capital gains,) he arrives at the figure of $181 billion. This would be the “static” cost to the IRS of the Romney reduction.

But having called the calculations of the Tax Policy Center speculative, he now does a little speculation of his own, and continues with the analysis to make a comparison. He says this: “past experience shows that taxpayers do respond to lower marginal tax rates by acting in ways that increase their taxable incomes … More specifically, history shows that a tax cut that raises the after-tax share of earnings an individual keeps by 10 % raises taxable income by about 5%.” From this, he deduces that the actual tax loss to the IRS will only be $148 billion, not the 181 billion mentioned earlier.

Well, I'm sorry Mr. Feldstein, but if you don't accept the speculation of someone else, you cannot ask someone else to accept your speculation. Still, he goes on with the argument by adding 38 billion dollars to the loss of revenue due to the elimination of the Alternative Minimum Tax and the tax on interest, dividends and capital gains. This brings the total loss to the IRS back to the $186 billion level.

This done, he asks if enough revenue can be raised to offset this loss. And he answers the question starting with a caveat: “It is impossible to calculate the exact effects of the future reforms since Gov. Romney hasn't specified what he would do.” And so, Feldstein goes on to calculate the value of that offset because “refuting the Tax Policy Center's assertions doesn't require that.” But refuting the assertions of the Center is not the essence here. What is important is that without knowing what the future reforms will be “it is impossible to calculate the exact effect” as he says himself.

No matter. He does the calculations anyway based on the gross income of taxpayers who earn between $100,000 and $200,000 (the middles class) as well as the taxpayers who earn an income higher than $200,000 (the upper class.) If everybody paid 30 percent, he says, instead of the first group paying between 25 percent and 35 percent, and the second group paying between 33 percent and 35 percent -- which is now the case -- the revenue to the IRS will be an extra $191 billion dollars. That is, the upper class will contribute nothing while the middle class will pay the total cost. And this $191 billion gain will more than offset the $186 billion loss to the IRS.

Thus, with all the caveats and the assumptions, the Romney plan proves to be revenue neutral, says Feldstein, but even then, such will not be his personal preference because he believes that: “This does not mean eliminating all deductions.” Instead, what he wants to see done is “retain all deductions but limit their total tax benefit to a moderate percentage of each taxpayer's adjusted gross income.” And he gives examples.

The man has a heart, after all – more or less. But why go through so much for so little when what is needed is a complete overhaul of the entire system?

What To Expect In The Ryan Speech

Paul Ryan who was chosen by Mitt Romney to be his running mate as they seek the post of president and vice president of the United States of America, will soon give a speech at the Republican National Convention that is held in Florida. You know these two have very little to say because they have accused their opponents -- the incumbent president Barack Obama and his vice president Joe Biden -- of having run out of ideas. In fact, it has been the habit of these two to accuse their opponents of what they are themselves.

Romney and Ryan have been on the campaign trail for a while now, have said what sounds like a broken record and have repeated it several times -- plagued as they are by a dearth of ideas to fill the void in their message. Like the arsonist who claims he knows how to extinguish the fire he started, Romney has been running around saying he knows how to bring back to America the jobs he helped send abroad. Well, it may take a thief to catch a thief thus bring matters back to their original state, but it is impossible for an arsonist to bring back to normal what he has damaged.

It is for this reason that Paul Ryan is running around laying the blame of unemployment in America on the fire brigade that is now working to extinguish the Romney fire, rather than tell the truth and admit that the fire was set by the arsonist who is a jobs pyromaniac. No, Ryan is not saying the current administration was responsible for setting the fire, he is only blaming it for not putting out the fire fast enough. And so, he claims that he and his boss will do a better job in this regard. But the trouble is that Ryan does not say how they plan to do so except to repeat the old ideas about closing the loopholes which, presumably, have allowed the arsonist to add fuel to the fires that he set himself.

But Ryan does not come right out and admit the last part of the argument. Instead, he claims that closing the loopholes will lower the tax rates for everyone, including the creators of jobs who will take advantage of the new tax regime to hire more people and thus help lower the unemployment rate. But who are the people who take advantage of the loopholes right now? you ask. And he answers that they are the rich people. But are these not the same people who are supposed to create jobs and hire people to fill them? If you close the loopholes and deprive them of their traditional source of revenue, how will they take advantage of that and hire more people? Can you explain this, Paul Ryan?

Well, you shouldn't have embarrassed the challengers to the top posts in America with this question because neither Ryan nor Romney have answered it, and never will they because there is no answer to be given considering the fact that the premise of the argument is nothing less than a fantasy. And what is worse is that the fantasy does not stand alone because there is another fantasy standing alongside it to from the two legs of a narrative so contorted, it makes the pretzel look like a line as straight as the beam of a laser.

What Romney and Ryan are pushing on the public is the notion that they will eliminate waste, fraud and abuse from the programs which are administered by the federal government. They promise that such elimination will have the same effect on the economy as the closing of loopholes. But you ask: Is this not what the Obama program is doing in Medicare, for example, where the approach taken will help save 716 billion dollars over ten years? No, they say, this should be called a cut in the program for the elders.

They don't explain that last part well, but when you listen to the gobbledygook that Ryan utters when you ask a question on the subject, you get an earful that makes very little sense. To make it easy on yourself, you take into your own mind all that he says, and you put it in the form of a simple analogy that ends up sounding like this: You don't make the pig look good by putting lipstick on its lips. But if you call the pig a Bambi, you have a dandy on your hand that does not need lipstick. This is why we call the approach taken by the other guys a cut in Medicare, and call our approach a saving that is achieved by giving the seniors a voucher they will spend anyway they choose. You see, the cut which is a pig becomes a saving which is a dandy of a Bambi. Get it?

No, you don't get it but you keep asking question after question trying to understand how this will work in actual life. But all you get is that the President will cut 716 billion dollars from Medicare. Competing against this is the Romney-Ryan voucher program that will rely on the seniors achieving the same goal of cutting (now called saving) the same 716 billion dollars from the same Medicare program. The difference will be that instead of the government battling the giant insurance companies, the elderly will be asked to go into battle alone against those same giant companies.

Thus, all that the government will do is hand the elderly the promised voucher and wash its hands. As to those who will fail to wrestle the insurance companies to the ground and win the fight, they will be condemned to pay out of pocket what they did not win – and added to this will be the legal expenses they will have incurred when they dared to take on the insurance companies and fight them.

The dandy Bambi here will be the Romney-Ryan understanding of the capitalist notion which says that people ought to have the freedom to choose. In this case, the elderly will be given the freedom to chose fighting the giant insurance companies and lose everything they have including their false teeth and their walking canes, or chose to bow their heads and capitulate the moment they receive a letter from their insurance company telling them what they will get and no more. But there will be no government standing beside them to protect them or do as little as hold their hand. Freedom will have triumphed and brought back to America, will say Mitt Romney and Paul Ryan.

Thus, what is expected to be in the Ryan speech is the kind of vague gobbledegook that will mask all those realities, attempting to make the pig look like something it is not by calling it something else.

Mitt Is Adding Insult To Injury

As if he did not do enough to damage the American economy and hurt the middle class doing it, Mitt Romney is adding insult to injury. He is accomplishing this by pursuing a double lane narrative. One lane defines success as being the accumulation of wealth anyway you can, even if you hurt other people in the process. The other lane is to tell those that were hurt something to the effect that what happened to them was due to their laziness, their lack of imagination and the low expectation they have of themselves.

Now that his story -- which he defines as being a success story -- has come to light, the world knows that Mitt Romney has accumulated wealth by swooping down like a vulture on ailing American companies. He cut them up into small morsels, laid off their workers -- most of who were of the middle class, -- sold the morsels to foreign countries, and sold what is left of the carcass to local junkyards or international ones. But Romney was not alone doing these things, as they had been an American business model since the advent of globalization a few decades ago.

As it happens when a critical mass is reached, the American economy nearly collapsed because the Romney pattern was being duplicated by too many other players. Slowly but surely, the crisis was transforming the economy from one of production that was balanced by consumption to one of little production and a very high rate of consumption. The result has been that the population could not find enough locally made products to buy, so it turned to the consumption of foreign made goods. A vicious cycle was triggered whereby more American companies were pushed to the brink, inviting more vultures of the Romney kind to cut them to pieces, which brought still more American companies to the brink. With the near collapse of the economy, the laying off of workers became epidemic, and the rate of unemployment went up as a result.

This was the time that the governance of America was passed from one administration to the other. Now under the leadership of Barack Obama, the response of the government was to do what an emergency response team normally does in such circumstances. It extended a helping hand to those who got injured through no fault of their own. In the meantime, President Obama did what he could to mend the economy and get the people back to work as soon as possible. But given that the damage to the economy was more severe than anyone had expected, it was deemed it will take a little more time to reach a satisfactory rate of employment.

And while all this was happening, the twists and turns of the drama were unfolding somewhere else. It is that Mitt Romney had decided he wanted to challenge the President in the upcoming presidential election. However, rather than recognize the part he played in the tragedy which put so many people out of work, he added insult to injury. He did what he did in a way that was nowhere near being subtle enough to smooth the cruel edges. What he did, in fact, was to cite the example of people who started their own businesses – perhaps in good times or even in bad times – as he scolded the people who continued to accept help from the government rather than go out and start a business of their own.

Needless to say the reaction was: What's that again, Mitty boy? You want everyone in America to go into business for themselves? If this happens and every adult is in business, who will you recommend that these business people hire to work for them? Will they be robots? Or will they be monkeys from the Planet of the Apes? Come off it, man and be reasonable. Not everyone was created to be an entrepreneur, let alone be the kind of vulture capitalist that can live off the flesh of those he decimates and not feel guilty about it.

You did it, you're happy, enjoy the flesh but other than that lower your rhetoric because there are many people out there who enjoy a 9 to 5 kind of lifestyle. They don't mind working for someone else because they cannot bring themselves to worry about other matters. So who the hell do you think you are, telling these people they should be able to live their dream only if they are willing to start a business of their own? Can you, Mitt Romney, grasp a point of this complexity? Or is the point so alien to your way of thinking, it is impossible for you to assimilate it in your thought processes?

Until we get answers to these questions, it is worth mentioning another matter that is related to all of the above. Yes, it was a touching moment when Romney's running mate, Paul Ryan, called on his mother to join him on the stage while campaigning in Florida. But when the sentiments wore off, people began to realize they were conned into believing in something that does not make sense when scrutinized with a dispassionate eye. It has to do with Ryan saying that his mother is on Medicare now and so was his grandmother. And these are the reasons why he would not change Medicare, he claimed.

But his grandmother is now dead, and his mother is so rich – having been in business and still cashing in from it – that she could do without Medicare. Thus, the Ryan presentation was an exercise in deception, a stage act of make-believe in a literal sense.

And this fits nicely with the Romney concept of being successful by any means you employ that will allow you to get away with it.

Shame on you both.

Where Will You Spread The Wealth, Mitt?

The Romney team has been criticizing President Obama for saying he wishes to spread the wealth. No, the criticism was not meant to be a joke; these people mean it when they say what they say. They also do what they do not because they dislike spreading the wealth but because they want to spread it in places which are different from those that the President has in mind.

Whereas the middle class in America was decimated by the near collapse of the economy as engineered by the previous administration, President Obama wants to help it get back on its feet. By contrast, Romney and his team seek to do something that is truly heartbreaking. As if it were not enough that Romney spent many decades spreading the wealth of America's middle class abroad, he now wants to fleece what is left in the accounts of this same middle class and spread it among those who have much already, and wouldn't know what to do with more.

Why is that, you may ask? Well, it is because this is a version of the game that Romney likes to play. It is a challenging game that is called class warfare where the goal is to take from those who produce, and give to those who accumulate. You then call “losers” those who produce, and call “successful” those who accumulate. But you do not stop here because the next thing you need to do is accuse President Obama of waging a class war as he was caught committing the sin of working hard to help the middle class recuperate, and help it recoup what it has lost.

When you come right down to it, you will find that Romney never built a factory of any kind, yet he shipped American factories of all kind to foreign lands. He never produced as much as a pencil, yet he helped flood the American markets with imported pencils made in the factories that were shipped abroad. He never produced as much as a bolt, yet he helped flood the American markets with the foreign appliances that used to be made in America. He never rendered a service to anyone except the service that he rendered to himself and to all his partners during that painful war game.

Never forget that the American middle class is what made of America the exceptional nation that used to be, but is no more thanks to the Romneys of this world and of this America. And so, because there is now a President who is trying to restore the middle class, thus restore America's designation as an exceptional nation, the Romney team and all its mouth pieces are running around vocalizing that you need not be exceptional to be exceptional; it is enough to keep repeating that you are in order to believe it yourself, and maybe convince someone else to believe it as well.

Thus, the Romney people sent out the call for other people to join them, and come to chant in unison their exceptional status. The idea was to make this phony belief the litmus test by which to determine who is patriotic and who is not. It will serve as the noise that will camouflage the treachery that was Romney's career up to now. All the while, the Romney people plan to keep plundering what is left to the middle class, and keep spreading that among the exceptionally wealthy on whose behalf they work so hard and so diligently.

Opposed to the Romney team is the Obama team which is now forced to work harder than ever before in order to achieve two disparate objectives. The first is to try and blunt the destructive activities of the Romney team. The second is to continue the effort at restoring to the American middle class the ability it used to have to produce the goods and services that are consumed at home, and produce the goods and services that will be sent overseas to the people who would buy the Made in America goods and services.

This is the strategy that will reverse the damage which the previous administration had caused when it engineered the decimation of the American economy; when it collapsed it just as the Obama team was about to take over. The decimation was so complete that even the most pessimistic prediction as to how fast the Obama Administration will be able to restore the economy to its previous level, turned out to be too optimistic. Thus, the projections that were made then turned out to be erroneous but because the Romney team has labeled them promises, it is mounting an anti-Obama campaign that aims to spread the word Obama cannot deliver on his promises because he does not know how to do so whereas Romney knows how to be successful.

But what is not lost on the electorate is that when Romney speaks of success, he means the success of taking from those who produce and give to those who accumulate. And they wonder what he means when he says he will now give to the American Middle class. And so they ask: what will he give to that class? They go further and ask: Who will he take from? Will it be more borrowing from the foreigners? Is this not what brought America to the brink the last time around? Why would he want to repeat the tragedy as painful as it was?

No, this does not make sense, the people are saying. The only thing that can be said about the Romney plan – whatever final shape it will take if a plan will ever come – is that it will aggravate a situation that was created by the previous administration but was beginning to stabilize under Mr. Obama. And the electorate will prefer to stay with the man it knows has been healing it as opposed to the one that has hurt it yet promises to do better than the one who started the healing process.

In short, the people will not trade the bird they have securely in the hand for the ten birds on the tree which are promised by a flip-flopper who can flip more times in a day than a bird will flip its wings in a lifetime.

No Mitt, You Didn't Tell The Truth About Oil

The Romney campaign put out a circular titled: “The Romney Plan For A Stronger Middle Class: ENERGY INDEPENDENCE.” It is basically a compilation of quotes that were made through the years on the subject of energy. It is not an exhaustive compilation but one that brings together the quotes that tend to support the current point of view of Mitt Romney. As to the quotes that were made through the years but do not support the Romney point of view, well these ones never made it into the circular.

Luckily, however, the truth was not lost for ever because it can still be extracted from the circular itself despite the fact that the quotes were cherry picked to tell a fake story. One of the goals that the circular tries to accomplish is refute a thought expressed by President Obama on the subject of energy. In fact, it happened that Romney criticized Obama for saying the United States has only 2 percent of the world oil reserves yet consumes 20 percent of it. In fact, something like this was said in the Nineteen Seventies. To be precise, it was fashionable to say that the United States had 5 percent of the world population yet consumed 25 percent of the world resources. The reason for saying it at the time was to promote the culture of conservation, which undoubtedly is what President Obama is trying to do now.

Under the heading: But The President Gives An Incomplete Picture Of U.S. Oil Resources, the circular quotes Glenn Kessier who wrote this: “The president is trying to make the case that the world has finite oil resources, and the United States – the world's biggest oil consumer – needs to use less oil in the future. But using 'oil reserves' as a key metric gives an incomplete picture of U.S. oil resources.” Even without reading the entire article, this quote alone should alert the attentive reader to the fact that something about it isn't kosher because it conveys the notion that oil resources in the US is infinite, which is downright idiotic.

So then, what is behind this? Well, what is behind it is the definition of the two words: reserve and resource. When it comes to the underground natural resources, you call a “resource” what the instruments say is there whether or not you can get to it. For example, the seismic tests may indicate that 700 million barrels of oil exist under this patch of land. You call this a resource. But if only 100 million barrels are recoverable with the existing technology, you call this a “reserve.” Thus, it can be 700 million barrels of resource but only 100 million barrels of reserve. And when you read the prospectus of a company that is promoting its stock, the words are clearly defined so as not to mislead the investors; or someone can be sued for putting out a false prospectus. In fact, some companies go further than that and call reserve only the part of the 100 million barrels that has been developed and is currently producing.

Not only do some companies in North America do this but a few countries do it as well when they publish data on the size of the natural resources they have. For example, it is generally accepted that Egypt may have as much as 25 billion barrels of conventional oil resources. Between 6 and 8 billion of these are recoverable using the existing technology; and yet the country lists its oil reserves as only 4.5 billion barrels because only this much has been developed and is currently producing.

To come back to the size of America's oil reserves as compared to that of the world, it is 20 billion barrels versus 1000 billion. And this puts America's reserve at 2 percent that of the world which is what President Obama was referring to. But what some characters have been doing is compare apples with oranges. That is, they started to compare America's resources with the world's reserves. Not only that, they even exaggerated America's potential by considering as being a resource not only what has been detected by the seismic instruments and could someday be recovered with improved technology, but counting what is sometimes called “inferred” resource.

That is, if you have a patch of land under which there is a huge formation of the same geological type, and if you discover an X number of fields separated from each other by a few miles, containing 10 million barrels or so each, you may infer that there is a Y number of fields under that whole patch of land even though you have not yet detected them. This is what those characters have done, thus have come up with the figure of 140 billion barrels for America -- 7 times the 20 billion proven reserves.

And the reason why people do something like this is always political. You can see it by the spin with which the news was made public in the Romney circular. Under the heading: Proven Oil Reserves Are Not All Of Our Oil Resources – Not Even Close, the circular quotes Benjamin Cole as saying what I basically said in the above paragraph, to which he adds this: “That estimate does not include oil that we know about, yet are unable to access because of regulatory barriers. For example, the billions of barrels of oil in ANWR are not included in our proved oil reserves.” But the reality is that there may be at best 10 billion barrels of oil in ANWR which is situated near the North Slope of Alaska – an area that is protected because of its unique environment. Thus, the spin here is part of the war of words between those who want to develop everything and those who want to protect the environment.

But what happens if we compare apples with apples? Will the 1000 billion barrels of proven world reserves increase to say 7 times that amount? Well, let's take one example. Canada lists its reserves of Tar Sand oil as 175 billion barrels but the fact is that 500 billion barrels could be recovered with an improved technology, and as much as another 2000 billion (2 trillion) barrels of what is called bitumen could be recovered with an improved technology and a price per barrel of oil that reaches 300 dollars. This is because you will have to extract as many as 3 barrels to obtain one barrel of usable oil. The other 2 barrels or the equivalent thereof in natural gas will be used in the process of extracting and refining the bitumen.

Thus, if we take into account the inferred conventional oils in the world and add to them the known oil sands, and the known oil shale, the number could exceed the 10 trillion barrels. Not only that, but there is more to the story – more of what the dreamers may consider to be bad news. It is that because America has developed industrially faster than the rest of the world, most of what can be inferred in America has already been inferred.

This is not the case in the rest of the world where vast tracts of land are yet to be prospected and tested. In fact, while America's number in conventional oil has declined from about 40 billion barrels to 20 billion since the turn of the century, the world proven conventional oil has risen from 1000 billion barrels to 1400 billion. Thus, to be honest in comparing apples with apples, America has less than 2 percent of the world oil whether you compare reserve with reserve or you compare resource with resource.

In conclusion, President Obama spoke the truth when he painted the energy situation in America, and his motive was honorable -- he can be trusted. By contrast, Mitt Romney and his team spun the truth to mislead the public and score a dishonorable political point – they cannot be trusted.

Impressive Mitt But Nowhere Near Barack

Mitt Romney is running for president of the United States. He wrote what amounts to a personal profile in the form of an article in which he details the experience he has had in business – at least, the part of it which he believes qualifies him for the job. The article was published in the Wall Street Journal on August 24, 2012 under the title: “What I Learned at Bain Capital” and was given the subtitle: “My business experience taught me how to help companies grow -- and what to do when trouble arises. When you see a problem, run toward it before the problem gets worse,” a sentence that was lifted from the article.

The profile may be impressive for someone seeking a similar job but Mr. Romney is running against Barack Obama who is the sitting President and has a record that is well known to the public. Thus, the Romney profile will have to be looked at not in isolation but in comparison to that of Obama. But because the Romney profile is a description of the self, it only represents the glossy side of a career and none of the crude side, some of which was discussed in public but will be ignored in this discussion.

To be fair, however, we must only compare the glossy side of Obama's profile against that of Romney. To this end, we look at a President who has managed a 15 trillion dollars economy for four years in a row, has saved the financial system and the auto industry from collapse while being commander in chief of the most powerful military in the world, a post in which he ended one war and started to wind down another. And these were troubles he inherited before he sat behind his presidential desk. In making this comparison, Obama wins hands down.

So then, what else is there by which to compare the two candidates? Well, there is the fact that each has a different vision for the future. Obama's vision is pretty well known, being the completion of what he started. That is, now that the American economy has been stabilized despite the predictions it was going to implode, Mr. Obama will see to it that the private sector will thrive under rules that match the challenges of the modern globalized economy, not the outdated rules that almost ended the American economy.

To assist the private sector in attaining its maximum potential, the President will continue to work on developing a set of public-private partnerships -- as he has been doing from the start -- between the government and the public sector. This should replace the widespread view that the government is the enemy that must be fought against, not the friend that is here to help and to facilitate matters when help and mediation are needed. Nothing is more important to do in a world where the giant economies of the future have learned to co-ordinate between the two sectors, and have chosen to march together with one vision toward the goals they define in concert.

As to the Romney vision for the future, his article says a few things about it. He begins with this: “I will take a sensible approach to tapping our energy resources, which will both create jobs and make energy more affordable for every sector of our economy.” The problem is, he did not say what magic wand he has hidden in the bottom drawer of his desk by which to accomplish a miracle that has eluded many American presidents and other world leaders for decades now.

Here is another revealing passage: “My plan for a stronger middle class includes policies to give every family access to great schools and quality teachers, to improve access to higher education, and to attract and retain the best talent from around the world.” Well, allow me, Mr. Romney to ask with all due respect, that you skip the vague talk about policies, and give instead details as to how you will build great schools, how you will incubate quality teachers, and how you will improve access to higher education. And while you're at it, having done all this, why on earth would you still want to acquire and retain talent from around the world? Would you not be producing your own at home?

He also says this: “I am committed to capping federal spending below 20% of GDP and reducing nondefense discretionary spending by 5%.” Well, nondefense discretionary spending in the federal budget is peanut, and 5% of that is not worth the shell of a peanut. As to capping federal spending below 20%, it so happens that everyone who made a promise like this, changed their mind right after they got the job and were asked to deliver on the promise. Romney will not do any better especially when you consider that his overall promises are more outlandish than any made before him.

And the proof of this is the way he ends his profile: “I know what it takes to turn around difficult situations. And I will put that experience to work, to get our economy back on track, create jobs, strengthen the middle class and lay the groundwork for America's increased competitiveness in the world.” I tell you, my friend, not even a mother would say this about her child. As a retired teacher, a school master and previous owner of a school, I met many a mother who came to tell me what a prodigy her son was but turned out to be less than a fraction of what she described.

And what these mothers described was only a fraction of what Romney is saying about himself. I must therefore conclude that he will not deliver a fraction of a fraction of the vague promises he is making.

Thus, the American electorate has the tried and proven Barack performance to weigh against the vague promises of what seems to be a dreamer that may well turn out to be the flip-flopper he is reputed to be.

Beware The Vulture In A Dove's Plumage

Every election in America brings with it a set of images that make their way into the archives and remain there forever. The election of 2012 is no different in that it is at this moment developing an image which is forcing its way onto the stage of the everlasting. It is the image of the flip-flopper who teamed up with the kicker of cans to pull a fast one on both the elders and the youngsters of America.

Mitt Romney who flip-flopped on everything except the belief that it is acceptable to accumulate wealth anyway you can as long as you do it with a stealthy hand that does not get caught, is running for the presidency of the United States. He chose Paul Ryan to be his running mate for reasons of his own, but what is clear to the observer is that he chose someone whose training was done in the congress of the United States of America where he spent 14 years learning how to kick the can down the road and get away with it.

No one disputes the fact that the biggest problem facing America today is the accumulated national debt which is caused by a runaway yearly deficit which itself is aggravated by a set of ballooning entitlements. Among these is the healthcare complex comprising Medicaid, Medicare and what came to be called ObamaCare. The latter was given this name because it was conceived by President Obama who saw the bill through both houses of Congress then signed it into law. Almost immediately after that, the party of the people who are now challenging the President for his position in the highest office in the land, took the law to the constitutional court to have it struck down but failed in their attempt.

Normally, matters would end here in America but not this time. Unable to accept what the political and judicial processes had wrought, those people staged a process of primaries at the end of which they picked Mitt Romney to run against the President in the hope that a set of arguments they developed will allow them to stitch together a narrative that will distort the truth and maintain it in a distorted condition long enough for them to win the upcoming election and do away with ObamaCare. More than that, the Romney people see themselves as being in a position to accomplish the bigger plan they always had at the back of the head.

And what is back there is the view that a world which is now globalized in the business sense has become their oyster. This gave them the idea that the world is a place where America no longer occupies a special place. They came to this conclusion despite the fact that America was the land that gave them the opportunity to develop, to grow and to be who they are in the eyes of that same world – one that is welcoming them not because of who they are but because of what they bring to them from America.

What the Romney people plan to do is fleece America of its capital -- much as they have been doing for years -- and transfer as much as they can to places around the world where they expect to see a higher return on their investment. To do this, they first need to get the man himself elected president; and for this to happen, they need to capture the youth vote, something that has eluded them in the past. But with the addition of the youthful Paul Ryan to the ticket, they see themselves as being in a better position than ever before to achieve that goal. What they needed now was a narrative that would allow them to win the young vote without losing that of the elders. And so, the people of the Romney campaign came up with a devilishly crafted narrative.

What they said was that if their team were to be elected, they will not touch Medicaid, will not alter Medicare for those who are now 55 years of age or older, but will scrap ObamaCare altogether. To replace Medicare and ObamaCare, they will put together a voucher system whereby everyone's premium will be subsidized up to a point beyond which the insured themselves will pay for the difference if they chose an expensive plan. And so, the Romney people went to the elders and told them to rest reassured because nothing will change as far as they are concerned. And they went to the younger crowd and told them the following:

Trust that we shall do the right thing for you when the time will come even though it looks now like we are doing what Ryan did for 14 years which is to kick the can down the road for ever and ever. All you have to do is give us your vote, and watch us rebuild America's glorious past by doing the reverse of what was done then. That is, instead of the world sending their capital to America like it used to be, we shall be sending America's capital to the world like Mitt Romney has been doing most of his life. And this will be the best testimony as to his acumen in business because he will have proven that he can do more than walk and chew gun; he can walk backward and take America sideways -- and do all this without having to chew gum.

To add credibility to what they say, the Romney people tell the part of Canada's story that suits them but not the whole truth. They do not mention that Canada has had a national healthcare system covering everyone for nearly half a century. They do not reveal that on a per capita basis, the Canadian system costs about half as much as the American because it has a board of professional bureaucrats who earn their keep by discharging their duty faithfully, not by kicking the can down the road as do the elected and always unreliable politicians.

Thus, the American public still does not know what the big American corporations do which is that the healthcare system is what encourages the American manufacturers to open plants in Canada. This is especially true of the auto companies (American and others) who produce more cars in the Province of Ontario than in the State of Michigan. These industrialists appreciate the fact that they are not burdened with having to pay for the healthcare of their employees.

The other consequence resulting from the Canadian system is that the economy is doing much better than all the advanced economies, having neither a debt problem nor one of deficit. And this is why it happened that during the tough times through which the rest of the world is passing, Canada was able to reduce the tax rate down to 15 percent.

But instead of saying let us have a healthcare system that looks like that of Canada to be in a position to build an economy that is as good as theirs, the Romney people turned things upside down. They failed to mention Canada's healthcare system but revealed the fact that the taxes were lowered, and then suggested that America do the same. They skipped the portion which explains that Canada was able to lower the taxes because it has the healthcare system that it has.

There should be no doubt now that the Romney people are vultures in a dove's plumage. All they want is get into the seat of power where they plan to keep kicking the can down the road while hollowing out the rest of America to send all that they can abroad and compete as equals with the newly forming moguls of Asia. And damn the American middle class.

What this class should be aware of is that such a trend used to take place in the Third World countries, practiced as it was by their own people and by the foreigners who declared war on the middle class there too. And this is the reason why these countries were left behind in a backward state.

Likewise, the Romney people who had a dry run practicing the same sort of operations now wish to make it legal and official by calling it the legitimate practice of free and unshackled capitalism. In the end – if they have it their way -- there will be no work for Americans to do, no Medicaid or Medicare to protect them, and nowhere to hide their poverty.

Not This Year, Paul

It is a good thing that Paul Ryan was chosen by Mitt Romney to run with him on the same ticket as they seek to get elected president and vice president of the United States. I make this judgment not because it will be good for America and the world if they win but because it will be a good dry run for Paul Ryan to have run at all. This experience should prepare him for when the time will favor him best -- which could be four years from now or later -- at which time he could run for vice president or even president. And when you consider Ryan's young age, the wait should not be too much of a bother.

You get a sense of all this when you read his publication: “The Path to Prosperity. A blueprint for American renewal.” What grabs you when you read his words, and expose yourself to his thoughts is that he is a sincere young man who is endowed with an above average intelligence. He is concerned about the state in which his country finds itself, and he wants to do something about it. The trouble is that while showing a high degree of maturity for someone his age, he may not have matured enough to turn his concern into realistic approaches and policies that will help him realize his goals.

This becomes apparent when you discover that he has not yet connected in his mind the ideas that have a natural affinity with each other. For example, being on the campaign trail for a number of days, he has talked about the dysfunctional state of governance in America, especially the Congress which is an institution he knows well having worked there for fourteen years. He also criticized President Obama for not being enough of a leader, promising that he and Romney will lead. These are big thoughts you say to yourself, but you wonder if the dysfunction of which he is talking, and the lack of leadership to which he is pointing are clichés he tosses in the air because other pundits are tossing them, or if they are a part of a bigger picture he has in his head.

When people who are mature add experience to their maturity, they paint a complete canvas of reality as they see it. This would be a picture in which all the parts fit together and form a smooth and integrated whole. When new information is made available to these people, or when they live through a new experience, they modify the canvas to make it conform to the new reality while still maintaining the integrity of the picture. By contrast, when people lack experience, they show a deficiency when they start to describe complex situations. What they do is toss in the air clichés that do not fit together. Instead of painting a smooth canvas, they create a collage of pieces, the edges of which may blend in a few places but clash almost everywhere else.

You see an example of this in Paul Ryan's publication. Under the subtitle: “Restoring Economic Freedom,” he writes this: “The President's health care law is the crown jewel of the new crony politics.” This is without a doubt a cliché he picked up because everyone else has been tossing it. The trouble is that it clashes with what he has been saying about the dysfunction of governance and about the lack of leadership he says is displayed by President Obama. You come to this conclusion because past presidents who have shown strong leadership abilities were the ones who brought together big government, big business and big labor to iron out the right deal when the nation found itself in difficult times – as did, for example, President Kennedy when he brought under the auspices of his government, the big steel companies and the big labor unions.

The current health care situation being a difficult time in America, you would expect Ryan to urge a formula under which the executive branch would bring to the table all the stakeholders so as to iron a deal that will satisfy everyone. But this is not what he asks for. Instead, he complains about this: “The law [ObamaCare] increases the discretionary power of the bureaucrats [and] of those … in the health care industry that are big enough to secure themselves a seat at the table.” What he dislikes about the law is that the bureaucrats are unelected and unaccountable, he says. What did he expect? That all bureaucrats be elected to form a congress of several million bureaucrats? Clearly, Paul Ryan needs time to blend all the notions inside his head, as well as fashion a complete and smooth canvas that is not the mere tossing of clichés he plucks from the air.

Under the subtitle: “Strengthening Health and Retirement Security,” he writes this: “The new health care law empowers bureaucrats at the expense of patients and providers, setting up … a board … tasked with cutting Medicare through formulaic rationing.” This too is a cliché that has been tossed in the air since before Paul Ryan was old enough to know what formulaic rationing means. And yet, to explain it, he uses another cliché that is no less false in describing what was intended by the legislators who passed the law. This is the sentence he uses to describe what he has in mind: “One-size-fits-all Washington based decisions to restrict certain treatments punish beneficiaries by hitting all providers of the same treatment with across-the-board cuts, with no regard to measures of quality or patient satisfaction.” This is a mouthful, I tell you.

What is misinformed about that passage, and where it misleads the public is that it confuses buying insurance with buying a tie, for example. To see this, we look at the expression: “One-size-fits-all.” Unlike a tie that you take it or leave it because it fits you or it does not; because it satisfies you or it does not -- an insurance policy has a basic coverage to which you can add a few more things, if you like, but for which you will be asked to pay a higher premium.

Now, when the insurance policy deals with a situation where a human life may be involved, such as auto insurance, fire insurance or health insurance, a basic premium is requested for the basic coverage that will be necessary. And this is what is provided in the law that Ryan is condemning; something he does, not because he knows what he is condemning but because he threw at it a cliché, the origin of which he probably does not know because he never bothered to check.

However, something similar to that kind of coverage exists in all the advanced nations, including here in Canada where I live. Being a senior, I don't even pay a premium and I am covered for everything that is not cosmetic. If I want that, I can buy additional coverage. But get this now my friend, when it comes to the drug plan, they make exceptions where needed. For example, if a new drug comes to market that my doctor (and my doctor alone) decides is good for me, I get it and pay nothing extra no matter how expensive it is. When the drug goes past the patent period and is copied by the cheaper generics, I am supposed to switch to them unless something about them clashes with my condition, in which case I stay with the original. In fact, I am now taking one such drug despite the fact that it costs several times the generic copy. In my books, this is not one-size-fits-all, and neither is it rationing. If it were, I would have said: give me more rationing because it keeps me alive and I like it.

This is quality good enough for me; quality that satisfies me fully. But if someday I develop a different need or a different taste, I can always buy additional coverage and pay a premium for it. In fact, there are all kinds of companies advertising all the time about the extended coverage they would provide for what premium. So far, I have said to them thanks but no thanks. This is my prerogative; it is my choice – because when the law was enacted here, no Paul Ryan was around to deprive me and my compatriots of it using demagoguery or misinformed and misleading clichés.

This young man, has some ways to go before acquiring the necessary experience which, when added to his innate intelligence, could develop into a formidable asset for his country. But if he gets the honor too soon, he may get caught in the day to day operations, and end up as only a flash in the pan that could have been but never was.

No Mitt, You Didn't Build That

Mitt Romney and Paul Ryan are fond of quoting President Obama out of context, especially the part when he said that no one alone can build something which takes not just a family to build or even a tribe or a city state or an average country, but takes an idea as big as the foundation upon which America was conceived. In fact, Obama took pains to explain that America is where such an idea took root and grew to become the kind of economy where it is possible for someone -- who may not be the smartest or the hardest working person -- to start something from scratch and make it grow by integrating it with the vast economy that is America's.

Given that ideas which normally succeed in America would not necessarily succeed in say, a place like Zimbabwe, it is hard to see how Romney can refute what Obama has said until you realize that Romney suffers from a vision which can only be described as the inverted interpretation of the American values. The fact is that Romney did not build any of what he has accumulated; he let someone else build them, and then -- like a hungry vulture – swooped down on them and acquired them the moment they looked weak and vulnerable. And he did so not with his money, but with the use of other people's money, itself borrowed from the banks.

And this is the vision as well as the philosophy that Romney and Ryan bring to the campaign as they seek to do what was promised by many people on the first day that Barack Obama took office. These people did something that was never done before; they vowed that they will divert all their energies during the next four years not to help run the affairs of the nation – although they were themselves elected to do that -- but to make Obama a one term president. Their plan was to the effect that if the man who said: “There is no red state or blue state but the United States of America” is made to fail in his attempt to unite the country, they will have a good chance to unseat him and take over after four years. Well, the Romney and Ryan current approach is part of the effort to fulfill that outrageously offensive promise.

The issue of the day where Romney and Ryan are directing their effort is healthcare. It is possible to envisage what role Romney's inverted vision will play in the campaign but it will be impossible to predict how the events will unfold or what the end result will be. What is at play is the choice that will have to be made come election time by the American voters, a choice between two clear alternatives. Considering that this is probably the most important consideration facing them today -- given that it involves the future of a system of healthcare under which they will live and die -- which of the two alternatives will be better for them in the long run?

Claims and counterclaims are made by both sides. However, when all is said and done, neither party will have complete control on what will happen to the healthcare system under which America will operate. This is because many extraneous factors will intrude and will play a role in altering the realities as time moves on. In turn, these realities will force changes to whatever system will be there, and whatever party will be in office to administer it.

But what will make a difference as to how matters will evolve is the philosophy by which each party will be governed. On one side, there could be a Romney-Ryan administration whose philosophy is that it does not matter how you acquire your wealth. If you have it, you deserve more of it, and the government will be here to take from the rest of society and give to you. But if you are not wealthy enough to buy your way through the corridors of power, you can build something; but don't you stagger for a moment because if you do, there might be a vulture out there that will swallow you alive. Now you can imagine what kind of healthcare system will evolve under this administration.

As to the Obama-Biden administration whose philosophy is that everyone should play on the same level playing field, the government will be here for you when you stagger. It will be here because America would not have been here were it not for you before you staggered. And America will not be here for anyone if everyone who staggers is left to perish alone. America is not a Darwinian jungle, and neither is it Zimbabwe.

America is bigger than that despite the vultures that keep chipping at it, sell what they chip to foreigners and hide their ill-gotten gains in foreign bank accounts. Now you can imagine what kind of healthcare will evolve under such administration.

The choice is between the heartless vulture and the nurturing hand.

A Healthcare Plan To Run Like The Congress?

One of the smartest things that Paul Ryan does on the campaign trail these days is point out how dysfunctional governance has become in America, especially at the federal level where the nerve center of politics is located – the District of Columbia, to be precise. And this is the place where Ryan has lived and worked for twelve years; the place inside of which exists the most important institution of all, the Congress of the United States of America. And this is the institution that has rendered itself infamous by becoming the most dysfunctional of all; the one that enjoys no more than ten percent of the public's confidence and respect.

And yet, you see and hear Paul Ryan repeatedly attack the provision in the Affordable Healthcare for America Act which shields the system from the kind of dysfunction that is plaguing the Congress of infamy. It is a provision that is not unique to the Act but one that exists at all levels of democratic institutions by virtue of which professional technocrats are employed to write the regulations and oversee their implementation in practice. This is the work that these people do without passing judgment on anything or anyone; they do it in good faith and do it in accordance with the intent of the legislators.

What is odd about the Ryan stand is that while attacking the dysfunction of the Congress as if the institution were made of clowns, he praises the work force of America for making the country what he calls the best in the world in all of history. Well, this labor force is made of 150 million non-elected technocrats whereas the Congress is made of 535 elected clowns. If he believes that a work force of technocrats made America the greatest thing while a Congress of clowns made it one of the worst, why on Earth does he attack the technocrats for not being elected? Does he want all of America to become as dysfunctional as the Congress of useless clowns?

What he is complaining about are 15 professional technocrats who will have no axe to grind, no one to pander to, and nothing to guide them but their conscience and the sense of pride in doing what they do while maintaining the highest level of professionalism. This is what will get lost if Ryan has it his way in asking these people to run for office. Sooner or later, they will be compelled to prostitute themselves sucking up to this one group and then that one, trying to win some votes in here and then win some more in there. And like it happens all the time, they will learn to say absolutely anything that will help them raise as much money as they can.

Does Ryan want to see these individuals run to the gun lobby and proclaim that it is acceptable to shoot people if this will safeguard their right to shoot rabbits? Does he want to see these individuals run to the Jewish lobby and proclaim that it is acceptable to kill unarmed Palestinians if this will safeguard the Jewishness of the stolen Palestinian lands? Does he want to see American citizens placed on a blacklist and barred from receiving any kind of healthcare because they said something that did not sound kosher enough to the despots of AIPAC or the Anti Defamation League? Would Paul Ryan commit the care of his mom – whom he dearly loves as he made abundantly clear – into the hands of a Sheldon Adelson rather than the hands of 15 medical professionals? Does he want to see the administration of the Affordable Healthcare for America Act become as paralyzed and as useless as the Congress of the United States?

Ryan is campaigning and saying those things, having been chosen to run as vice president alongside the presumptive presidential nominee, Mitt Romney who represents the Republican ticket. Romney has had a plan for nearly a year now which he prepared in case he gets elected. It is contained in a publication he put out, in which he claims that he can fix all of America's problems, and get the country back on track where it belongs. He has a letter at the beginning of the publication in which he says this: “I have formulated a ... plan that focuses [among other things] on ... labor, human capital, and fiscal policy.”

Inside the publication, there is a subtitle that reads as follows: “Enact Entitlement Reform.” In it, Romney promises that: “with respect to Medicare, the plan put forward by Congressman Paul Ryan makes important strides in the right direction ... As president, Romney’s own plan will differ, but it will share [Ryan's] objectives.” And talking about Medicaid, as he does later in the letter, he says this: “As president, Romney will push for the conversion of Medicaid to a block grant … This approach could save … over $200 billion each year.”

This brings to the fore a few points. For one thing, it shows that the Romney plan for healthcare will end up being substantially that of Paul Ryan, especially in the areas where Ryan conforms to the philosophy of Romney. Also, like Romney has stated on numerous occasions, he prides himself on achieving efficiency by cutting cost where he sees fit. In fact, he promises to do so in healthcare where he wants to cut $200 billion from Medicaid alone. Now imagine how much he would cut from the entire Healthcare Act. And this, in case he does not scrap the whole Act altogether as he promised he would do on a few occasions -- and so did Paul Ryan on many occasions.

But there is more to the Romney-Ryan approach than meets the eye. What is obvious is that even the Republican hopefuls see there is much fat in the healthcare system that can be cut without reducing its quality. They see the waste, the fraud and the abuse that everyone else sees. Yes, this was to be expected in a project of that size, especially when considering the amounts of money which are involved. But what came as a surprise was the fact that Ryan -- and now Romney -- lambaste President Obama for trying to save $716 billion from Medicare by ending all that waste, all that fraud and all that abuse.

What Obamacare (as it has come to be called) will do is save money in Medicare, and use it to make the Affordable Healthcare for America Act run better. Yet, Romney and Ryan say that this move would be like robbing Peter to pay Paul. If this is their view, it is one that conveys the notion they intend to rob the States of their Medicaid money -- to the tune of at least $200 billion -- to pay the federal government.

Is this what they wish to communicate? Or was it a Freudian slip? Please explain or retract.

There Is Snake Oil In Them Words

An article published in the Washington Post on August 15, 2012; written by Glenn Hubbard and Kevin Hassett has the title: “Obama inconsistent on pace of economic recovery”. The two authors are economic advisers to Republican presidential candidate Mitt Romney. What they do in the article is play a version of the “Heads I win; tails you lose” game. Come to think of it, this is an appropriate game for economists to play because money is their game, and because economists hold opinions so sharply opposite to each other, they cover the whole landscape, thus create a vast menu from which to cherry pick what they want when they want it.

And this is what Hubbard and Hassett do in the article. But before we look at how they maneuver their way to the end, let us look at the last two paragraphs where they put forth the exaltation about them winning either way. The essential argument contained in the two paragraphs is shown here in a single paragraph: “If … the Reinhart and Rogoff analysis is correct, then the White House should … stop calling for marginal hikes in tax rates … If the president wants to continue claiming that the … Reinhart and Rogoff's results do not explain the slow recovery of the U.S. economy … [he should concede] that the more likely explanation is the failure of his own policies.”

Now, how do they get to this point? Well, the first thing they do is remind the readers what the president has said which is: “that recoveries after financial crises are always slow.” They agree with this notion, but do so with a caveat: “Carmen Reinhart and Kenneth Rogoff documented this … But their study ... cannot be used as a logical explanation for the economic policies advanced by the administration.”

And because you want to know why they say so, they tell you why: “Michael Bordo … and Joseph Haubrich … concluded … that, contrary to the findings of Reinhart and Rogoff, recessions stemming from financial crises in the United States tended to be followed by faster recoveries.” Aren't they lovely, these economists when they contradict each other! But are we supposed to be surprised by that?

Our two authors, Hubbard and Hassett, now start to work on setting the gotcha trap. They do it this way: “The president's … campaign rhetoric is inconsistent with the analysis of his own economic team.” Well, does this mean, we should be surprised? They don't bother answering the question but they go on to say that shortly after taking office, Obama projected a 4.6 percent growth for the GDP. That was then and this is now you say, but they shout: Aha, look here. And they point to something else they want you to know about: “Even today, Obama is implicitly declaring that we are doomed to a slow recovery for five more years – the administration's estimates call for GDP growth climbing to 4.1 percent in 2015.” Are we caught in semantics about what constitutes a fast recovery or a slow one?

They do not clarify this point but go on to give a lecture as to when a Keynesian stimulus is most effect and when it is not. This is followed by the last two paragraphs where they claim to have won the argument either way. Not satisfied with any of this, you wonder how much the two believe in what they say. Knowing that they advise the campaign of Mitt Romney, you seek to find out what they are telling their candidate. You unearth this from the foreword that Hubbard wrote for the “Mitt Romney's Plan for Jobs and Economic Growth.”

Attributing the thought to Nobel laureate Robert Lucas, Hubbard says this: “even slight increases in growth rates, when accumulated over time, have an overwhelming impact on quality of life.” Well, it seems that he is not so obsessed about the rate of growth that it can be said his concern is real. In fact, it even looks like he harbors a concern of another kind. Look at this passage: “To bring the unemployment rate back to its pre-financial-crisis level by the end of next president's first term would require real GDP growth averaging 4 percent per year over that period. That is an aggressive goal.” Considering that this was written a year ago, Hubbard is giving himself five years to attain this goal which is a modest one by his own standard. But that's not what he says now as he hedges his bet by warning that it is an aggressive goal.

And he has a good reason for wanting to hedge his bet. It is that he knows the problem is a structural one, and it is deeply entrenched. Look what he says: “the crisis years of 2008 and 2009 pulled back the curtain on a problem: economic growth had been slowing. U.S. GDP growth has averaged 3.3 percent over the past 50 years. But in the 2002-07 period … that growth averaged just 2.6 percent.” Well, this is not too far from what we have now. Does it not mean that Obama has brought the economy back to the pre-financial-crisis level?

Still, Hubbard does not stop here. He goes on to say: “And many economists argue that we are in a growth downdraft, where deleveraging and an aging population limit growth.” In other words he agrees with the economists he berated in his Washington Post article. Also, in using the word “deleveraging” he admits that the problem is essentially a financial one; something he mocked the President for. But like the President, he points to what he has called an “excuse” to tell why he may not be able to do better should Romney win the election, and he is called upon to run the economy.

And guess what he does after that. He uses the words of the same old economists to erect a wall against which he liens so as to stay on his feet but also to cover his back. Here is how he does that: “Some economists speak of a 'new normal' of growth of at most 2 percent per year for an extended period of time. At that rate, joblessness will remain high.” Yes, he stays on his feet for now, and he prepares for the day when he might have to say: But I did tell you that 2 percent was the best we can do, and joblessness was going to remain high. After all – get this now, my friend –: “Getting economic policy right is not just about GDP numbers.” What? Say that again, Glen! Not just about GDP numbers?

Well, dear reader, contrast this with the way that he mocked Obama in his Washington Post article: “In other words, according to the excuse narrative, even though the Obama stimulus was brilliant and timely, it could not deliver a normal recovery because the financial crisis made that impossible.”

And what is Glen Hubbard's excuse for allowing himself to be caught with his pants down? Gotcha!

What's Really Missing In The Ryan Budget

On August 16, 2012, Daniel Mitchell published an article in the Wall Street Journal under the title “What's Really in the Ryan Budget” and the subtitle: “Good fiscal policy requires the private sector to grow faster than the government. That is the crucial goal of the House Republican budget.” And this is basically what sums up the essence of the article. Rather than blame one party or the other for the economic difficulties which America is facing at this time, the author blames both the Bush and Obama administrations for what he calls “the spending spree that's put America in a fiscal ditch.”

But he promises that the Ryan budget adopted by the House Republicans will fix all that. And the promise rests on the fact that the private sector will be put in charge of the economy which, according to him, is good news because “what matters for prosperity ... is the degree to which labor and capital are used productively. This is why policy makers should focus on … leaving more resources in the private economy.” What is meant by this is that the private economy is more efficient than government. Well, this may be true – more or less some of the time -- but is not always as relevant as we would like it to be.

One of the mistakes that people make is that they automatically associate growth in the economy with efficiency as if there exists a cause and effect relationship between the two. But the fact is that no such relationship exists, and the proof is that you can have a jobless recovery such as the one we are having at this time. Thus, the reality is that the two conditions of growth and efficiency can coexist or they can exist separately. Both can also be missing, or one may coexist with the opposite of the other. That is, it can happen that growth will coexist with inefficiency, or that stagnation will coexist with efficiency. In short, any combination is possible, and this is why the attempt to forecast the exact performance of an economy is almost always an exercise in futility.

Yet, what Mitchell does throughout the article is discuss his forecast and those of others when in fact, all that we can do -- if and when a new policy is contemplated -- is to envisage the broad outlines of what the policy may accomplish, and no more. This means we cannot tell ahead of time exactly where the unemployment level will be, or where the growth rate will sit as a result of an action we may take. The reason why we almost always go wrong in our forecasts is that we can only talk about a sliver of the economy not knowing how the sliver relates to the whole because we can never have a grip on all the factors that enter into the equation. This is a point I shall return to a little later on.

Yes, what most people advocate is correct, mainly that the government must work to reduce the national debt and the deficit. But how this can be done without hurting the economy more than it is already hurting is a question we cannot always answer with certainty. To see why this is so, we must realize that the economy is made of two parts; the part that constitutes the production side of the economic engine, and the part that constitutes the consumption side. Unaware of this fundamental reality, most people do not realize that there exists a constant interplay between the two parts, let alone know what goes on in there.

To take an example, two knowledgeable people could have a discussion on radio or television that goes this way: When you give a tax break to the rich, you encourage them to modernize their businesses. This will cause their operation to be more efficient, something that will lead to a higher growth for the business, and for the economy as a whole. When this happens, more money can be raised through taxation without hiking the tax rate. This will help reduce the deficit immediately, and reduce the national debt in the long run. Well, someone listening to this conversation who may not be as well versed in economic matters will be prompted – as it often happens -- to go around and echo the following: The rich produce the wealth; give them more money and they will solve all our problems.

Unfortunately, this cannot always be true. What is missing in that narrative is the fact that the part of the economic engine which produces the goods and the services cannot keep producing if the part which consumes those goods and services is unable to consume all that is being produced. When this happens – as when it is dictated by the economic cycle and other factors -- you get a bottleneck that forces the engine to slow down. This is simple enough to understand, but where it gets complicated is when you introduce the notion that the economic engine must also dedicate some of its output to do more than just feed the consuming part.

The thing is that every operation needs to allocate resources to do some repair work and some maintenance as well as do the occasional renovation, even expand when it is so desired. If we are talking about the national economy, expansion is always desired to avoid being hit with stagnation and unemployment. In this context, expansion means the production of more goods and/or services next year than were produced this year. That is, what is needed is to register a growth in the economy that will at least match the growth in the population if not exceed it by a little or even a lot.

When it comes to determining how much maintenance is needed for a business operation, there is generally little difficulty here because when a machine breaks down, we know what new parts will be needed, and what sort of repair crew will work on it. But when it comes to determining how much of the economic output should be set aside for use to expand the national economy and register the desired growth -- well, this is a different matter. What must not be forgotten when working the math in such cases is a phenomenon called diminishing returns. In plain English, it says that you cannot keep handing money to the rich and expect them to grow the economy by the same proportion. What will happen is that a point will be reached where the throwing of more money at the rich will yield lesser and lesser results, till you get zero return.

And this brings us to the definition of the word efficiency. To be efficient in a business operation is to obtain a larger output even as you feed the input with the regular amount or less of it. A word that is often used by mathematicians to mean the attainment of maximum efficiency is “optimization.” The branch of mathematics that allows you to find the optimum point of a process is called differential calculus. The difficulty here is that you can find the optimum point of a process only if you can set up the correct equation. This is usually done with ease in geometry and in science where the number of variables are limited, and can easily be determined. But the same cannot be said about economics or the other human activities because the number of variables involved is unlimited, and every situation has a unique combination of them. This necessitates that you determine a unique equation for each situation, something that is almost always impossible to get exactly right.

In fact, there exists, right now, a number of equations in the memory banks of many a government computer describing all sorts of economies that happen to stand at a different level of their development, and a different point in their cycle. But these are approximate equations that will only yield an indication as to how an economy may respond to a policy decision but will not yield an exact answer. To get a sense of what is involved here, consider the following example in geometry – the simplest I could think of:

You have a string that is 12 feet in length. You need to make an enclosure, other than a circle, that will optimize the surface area of the enclosure. What dimensions should you give the rectangle you make with that string? Well, given that the surface of a rectangle is determined by multiplying one side called the length by the other side called the width, you reason that one length and one width will have to be 6 feet long – half the perimeter of the rectangle. Not knowing how to set up an equation let alone solve it, you look for the answer by the method of trial and error.

To this end, you make the length equal to 5 feet, and make the width equal to 1 foot. Multiplying the two numbers gives the surface area of the enclosure as being 5 square feet. You now try 4 and 2, thus get the result 8 square feet which is a greater value than before. You now try 3 and 3 to get the result of 9 square feet which is an even greater value. And you realize that this will have to be the optimum point because to go further is to reverse the operation and get the same results in the reverse order. Thus, the rectangle that has the optimum surface area in this type of problems is actually the square -- where the length and the width are equal.

Instead of experimenting as we did here, an equation could have been written and solved by differentiation, and it would have given the same answer. This being a simple problem, it was possible to arrive at the answer by trial and error, something that could not be done with more complicated problems. This is why calculus was invented, but here too, calculus will do well when solving problems of geometry or science. However, it will never do as well when trying to solve economic problems or the other situations where human nature is involved. This is because the factors are endless – most of which we don't even know about. Try as we may, the answer will never be exactly right.

Well then, absent a scientific way to determine how we can optimize the growth of the economy without getting caught in a situation of diminishing return, what is there to do? To be sure, this is a serious question, and the answer is that you should experiment. What is meant by this is not that you do an experiment in the lab and apply the result somewhere else. Rather, it means that the management of the national economy must be a continuous experimentation; a never ending process of trial and error. With it comes the predicate that accompanies every experiment, and the risks that result from it.

The predicate is that you will need to have flexibility when you take on the task of solving the economic problems of the nation. This will be necessary given that you will proceed blindly as if walking through a minefield. As to the risk, it is that flexibility will require the suppression of the checks and balances that can tie the hands of the czar or the committee in charge of conducting the experiment. Such suppression will be necessary because decisions will have to be taken on the spot when the experiment starts to go wrong, and decisions will have to be executed without delay.

The central bank has this kind of flexibility as well as the authority to act on a weekly, even daily basis when necessary. It does well when the economy is running normally or running a little out of whack. But when the economy goes very bad, the central bank alone cannot solve the complex problems that ensue because the treasury has a part to play as well. However, in a democracy -- or what passes for one -- the treasury is overseen by the legislature and by the rest of the executive branch. This slows the decision making process so much that fixing the economy becomes a difficult thing, if not an impossible thing to accomplish. Thus, the economy is left alone to fix itself most of the time, something that takes a long time to do.

What is needed instead, is that a czar or a small committee be given a broad and flexible mandate, and put in charge of running the economy till it is fixed, after which things are returned to their normal state. As to the Mitchell view that: “the Ryan budget … limits the growth rate of federal spending, with outlays increasing by an average of 3.1% annually … If spending is left on autopilot ... it would grow by 4.3%” cannot be seen to change anything because it still reflects a rigid approach with no provision to navigate around the waves that hit the economy on a daily basis.

What is needed, therefore, is the release of the central or federal treasurer from any constraints so as to act alone when necessary, or act in conjunction with the central banker. The two should also be able to suggest to the chief executive and to the ministries or the departments what else needs to be done to get the nation back on its feet.

And everyone will have to work together on fine tuning the economic machine on a daily basis to get the exact balance between the production side, the consumption side and what must be set aside to provide for maintenance and for growth without wasting anything on diminishing returns.