Using the Iraq Invasion as a Pattern for Deficit Reduction

The push for radical reform in the budget process reminds me of the Iraq invasion.

Like Saddam Hussein's rule, the deficit is a real problem that makes people with a conscience and reason uncomfortable. This is reality. And then, from this thread of reality, the right-wing weaves a cloth of deceit as follows.

1. Make the real problem suddenly urgent. For no good reason, we had to oust Saddam now. Same with the deficit that the Republicans ignored for roughly a decade.
2. Ignore the problem that "solving" this problem will create other, bigger problems. Occupying Iraq was incredibly expensive, complicated international affairs, and got us into a situation from which there was no easy way out. Reducing the deficit when unemployment is over 9% and the economy is already growing slowly will create similar complications.

And then you simply manipulate the media into the belief that no other issue matters. With Iraq, the neo-cons won once they got everyone to believe that the only thing that mattered was that you had a strong opinion. Their victory did not start with getting people to side with them. Their victory began with getting people to think that this - of all issues - was the one that mattered. So it is with the deficit reduction. Because everyone would agree that Saddam should be removed or that the deficit should be reduced. That is not the question; the question is whether it should happen now and whether it should happen at the expense of any other option or whether this is the best thing for the country.

There are other similarities as well. Blowhards drown out experts. They insist there is only one way to make this happen (shock and awe or budget cuts without tax hikes). They replace nuance or discussion with sheer repetition. I'm sure you could think of other examples.

I fear that the right will again do their damage. Pity. One might have thought that with a Democratic president and Senate, it would have been more difficult for them to destroy the Republic. Still, destruction is always easier than building; just ask the Americans first involved in the defeat of Saddam's army and then involved in building the country.

The Wild Ignorance of the Wild Right

In a recent debate, Michele Bachmann stated that she would push for a constitutional amendment to ban gay marriage, but would not force this on the states. There is so much about this simple statement of hers that is alarming. One, she shows an ignorance of the relationship between the laws and constitution that we would not even accept from a middle school civics student. Two, she is a front-runner for the Republican presidential nomination. Three, she represents the most influential group in politics today - the proudly ignorant.

So now we see the effects of this sort of wild naivete in politics. The surgeon whose sole qualification for doing the surgery was that his thinking had never been corrupted by med school has now proven that it would help if he knew simple, elementary things like how to stop blood flow. The country has been taken hostage by people who are ideological extremists but who don't even understand how politics work - creating, in their confusion, some absurd blend of theater and guerrilla warfare that has nothing to do with reason or compromise.

Of course, even the fact of a second, more severe recession would do little to dissuade their followers that they're wrong. Immune to reason and results, these people have an ideological agenda that requires purity of thought and adherence to uncompromising principles. You know, like the medieval church once advocated. And we know how well that worked out.

[addendum - your blog author continues the rant against the extremists who are attacking his country and portfolio.]

The debt limit negotiations are like a gunfight with someone pointing a gun at his own head.

It is not enough that the Republicans want to slash Medicare and Social Security. This week they decide to gut 401(k) plans and pension funds by driving the stock market to one of its worst weeks in years? Apparently the idea of retirement offends them? 

It is so odd that Republicans have the reputation as capitalist. In fact, under Republican presidents the stock market has fared poorly; curiously, if you invested in the stock market only when a Democrat was president, you'd get 5X the return that you'd get when a Republican was president. Now, the Republicans essentially seize control of the economy for a week and the stock market quickly tanks - falling 4% in a single week. So, I guess it is safe to say that Republicans hate old people AND capitalism? 

The Fourth Economy: Inventing Western Civilization - ebook now published

My book, The Fourth Economy: Inventing Western Civilization, is now available in paperback, and for kindle, and nook.

Overview:


What if the information economy was over?

Since medieval times, the West has been defined by agricultural, industrial, and information economies. Each new economy has forced the West to redefine things as fundamental to its identity as religion, politics, and finance. What if a just emerging fourth economy will force us to redefine business?

The Fourth Economy is a history book that tells your future. Using a pattern of social invention and revolution to tell the story of how the West emerged from the Dark Ages, it then uses this pattern to predict the sweeping changes of the next few decades.

If the information economy is giving way to a new, fourth, entrepreneurial economy, it suggests something sobering and something exciting. What is sobering is that our old policies are no longer enough. What is exciting is that if we can reinvent ourselves as past generations did in the transition from agricultural to industrial, or industrial to information economies, we can experience prosperity and quality of life better than we could have hoped.

The Fourth Economy: Inventing Western Civilization is a wildly optimistic book that will change how you think about the past and your future.



The Author:
Working as a business consultant for Franklin-Covey and ProChain Solutions, Inc., Ron Davison has worked with some of the world’s largest and best-performing corporations. For Covey, Ron had the good fortune to lead the 7 Habits of Highly Effective People and Principle Centered Leadership seminars. With ProChain, Ron works with project teams inside of Fortune 500 firms to accelerate their development of new products as varied as diapers, computer chips, pharmaceuticals, and stents. Ron’s first full time job was to take over the operation of a 22-employee restaurant- bakery when he was 17.

Ron has hosted a radio show, taught macroeconomics, was part of the organization to first host a trade show featuring American companies in Hanoi, and spoken in a variety of venues that include systems thinking conferences and Deming User Groups. Ron has previously created A Change in Thinking, a video on systems thinking.

The Fourth Economy: Inventing Western Civilization is his most audacious attempt yet to make this a better world.

Two Poems by Billy Collins

From Collins' new book, horoscopes for the dead, here are two poems adjacent to each other, in the middle of the book, to give you some idea of how brilliant it is, even at random.

My Hero

Just as the hare is zipping across the finish line,
the tortoise has stopped once again
by the roadside,
this time to stick out his neck
and nibble a bit of sweet grass,
unlike the previous time
when he was distracted
by a bee humming in the heart of a wildflower.


The Meatball Department

there is no such thing as a meatball department
as far as anyone knows.
No helpful clerk has ever answered the question
where do you keep your meatballs?
by pointing to the back of the store
and saying you'll find them over there in the meatball department.

We don't have to narrow it down
to Swedish and Italian meatballs to know
that meatballs are already too specific
to have an entire department named after them
unlike Produce, Appliances, or Ladies' Shoes.

It's like when you get angry at me
for reading in bed with the lights on
when you are trying to fall asleep,
I cannot find a department for that.

Like meatballs, it's too small a thing to have its own department
unlike Rudeness and Selfishness which are located
down various aisles of the store known as Marriage.

I should just turn off the light
but instead I have stopped in that vast store
and I will now climb into my cart,
clasp my knees against my chest and wait
for the manager or some other person of authority

to push me down to the police station
or just out to the parking lot,
otherwise known as the department of lost husbands,
or sometimes, as now, the department of dark and pouring rain.

Metaphors are Like a Bad Idea and Stuff (or, why the Government is not like a household)

Metaphors are more like poems than mathematical equations. Love is like a heat wave is easy to rhyme, but it collapses under scrutiny.

Governments are like a household and have to live within their means is a metaphor and while it makes something complicated seem simple, it, too, collapses under scrutiny. (When do we reach the retirement phase of our government is like a household and all stop working? And why can't we be like other families and just sit down to a pleasant dinner some day without all this arguing?)

There are lots of dangers with this metaphor as a substitute for thought. The most obvious is that if a government behaves like a household, it just makes things worse.

Any household with good sense will spend lots when it is making good money and will act more frugal when times are tight. If mom gets laid off, we buy our clothes at Goodwill instead of the mall. If mom gets promoted, we travel to the Caribbean instead of Phoenix. This makes perfect sense.

Governments are different. Remember Joseph's first job out of prison, working for the Pharaoh in a role akin to Prime Minister? He got that job by interpreting the Pharaoh's dream and warning him that Egypt would have 7 years of prosperity and then 7 years of famine. His advice was to save a portion of the corn every one of the good years and then dispense it out in the bad. Joseph basically told the Pharaoh to act completely backwards from what a household should. When times were good, save and be frugal, Joseph said. When times were bad, raid the storehouse and spend more liberally. This works.

Now the opposite of Joseph's advice would be what we've seen in the advice of talk show hosts in the last 10 years or so. When employment rates were low and the economy was growing, they cheered government tax cuts and the onset of wars that increased spending. Like a household, it made sense to them that government would act flush when the economy was relatively flush. But this was not such a great thing. For one thing, the government stimulating an already growing economy helped to create one of the biggest housing bubble in history. Now, when times are bad, the radio talk show hosts are saying that the government should tighten its belt. Most states have already done that and eliminated government jobs, adding to job market woes. We might yet escape a double-dip recession, but it will - best case - be one of the slowest and weakest recoveries on record. By contrast, China and South Korea engaged in far bigger stimulus (as a percentage of GDP) and came off of a far more fiscally conservative period before the global recession and already those economies are growing at a multiple of ours. A recession is no time to be worrying about a deficit.

So, when government is run like a household and ignores Joseph's advice, boom times become bubbles and bad times become busts. (Every depression in the US followed a time of paying down federal debt. Read more in this great article by Jim Luke.) When the private sector is again thriving, it would (contrary to intuition) be a good time to raise taxes and cut government spending, reducing the deficit. For now, though, the deficit is an abstract problem that can be deferred for a year or two. Sure, we're spending down the storehouse of corn now but you do that in bad years.

The government is no more like a household than love is like a heat wave. But still, it is your turn to do the dishes.

Republicans Raise Taxes

Republican's new balanced budget amendment proposal requires government spending and tax revenues to be equal (hence the balanced) and set to 18% of GDP.

Curiously, this is roughly what taxes have averaged over the last few decades. It is also about 3 percentage points higher than it is now, at roughly 15% of GDP.

So, the Republicans have finally agreed to raise taxes.

The amendment will never pass, and there are so many good reasons it shouldn't. But one overlooked fact in all this is that this amendment is the Republican's first admission that with taxes the lowest they have been in Obama's lifetime, we might have to swallow the bitter pill of tax hikes.

Read this Post or I Shoot the Puppy

National Lampoon had a magazine cover years ago with the picture of a dog with a gun to his head. The magazine cover was, "Buy this magazine or we'll shoot this dog."

Eric Cantor (from the Latin meaning, can't do, referring to someone who obstructs progress), has essentially become a financial terrorist, holding the state hostage to his tax cutting demands.

Not raising the debt limit means insisting that the budget be instantaneously balanced. Cantor refuses to raise taxes a penny, so he's essentially demanding that the federal budget be cut by about 1/3 or more. The implications of this are many, but here are the highlights:

1. The deficit is about $1.5 trillion a year. The American economy is about $15 trillion. So, Cantor is threatening to eliminate about 10% of the total number of jobs in the US economy, more than doubling unemployment in a time of already high unemployment. This means that folks at the EPA will be let go, as will military personnel, government contractors, research scientists (some on government grants and some actually employed as government scientists), etc. Unemployment would, overnight, jump from about 9% to nearly 20%.

2. The implications of the above is a ripple effect into the private sector and into local governments. Dry cleaners by the air force base, sandwich shops by the Pentagon, and car rental staffs around the country are just a few of the thousands of businesses that will layoff in response to a severe drop in demand from former government employees and contractors. This, alone, would raise unemployment another 2% to 10%.

3. It is hard to imagine that the government would be able to quickly respond as described in the first bullet. This means that the budget will also be "balanced" by stopping payment on government debt. The implications of this include (paradoxically) a huge surge in interest payments as agencies lower the rating on government debt. A default would ripple through credit markets, raise interest rates on most every kind of loan (most are tied to government rates), and trigger a fresh round of mortgage defaults, and further contraction in hiring and expansion from a private sector that has just begun to (slowly) expand in this year. This, alone, would raise unemployment by another 2% to 10%.

4. Worse, this would ripple out from the US to the rest of the globe. The 2008 financial crisis destroyed trillions in wealth and millions of jobs. This Cantor-induced default on debt payments would screw up credit markets around the world, particularly the already shaky euro market.

In short, what Cantor would do is plunge us into a depression just as we're (barely) recovering from a recession

One thing that Cantor does make clear, though, is that this determination to reduce the size of government does not come from a vision of economic prosperity, an actual belief that the economy will thrive in response to smaller government. This is, instead, an ideology that has to do with a belief in little or no government rather than a commitment to a healthy and growing economy. Like the Taliban, Cantor is committed to an ideology that has nothing to do with normal measures like poverty reduction, rises in income, or low unemployment.

Cantor has the world economy hostage. One can only hope that voters will realize what a calamitous mistake this is when he next comes up re-election. Then maybe he can go in to real estate and see how much success he has selling houses only to families who can afford down payments that are 100% of the purchase price, avoiding debt and living within their means.

No Sex for You

"No sex for a week or two," my doctor said.

"That seems like a fairly severe prescription for recovery from an ingrown toenail," I protested.

"What," the doctor said, looking puzzled.

Pause.

"What did you just tell me again," I asked.

"You shouldn't wear socks for a week or two," he repeated.

"Oh," I nodded. "Yeah."

The Book is Published

The Fourth Economy: Inventing Western Civilization will be available on amazon sometime in the next 24 hours. 

Stay tuned. 

David Brooks on the Republican Party

Conservative commentator David Brooks wrote this:

the Republican Party may no longer be a normal party. Over the past few years, it has been infected by a faction that is more of a psychological protest than a practical, governing alternative.

The members of this movement do not accept the logic of compromise, no matter how sweet the terms. If you ask them to raise taxes by an inch in order to cut government by a foot, they will say no. If you ask them to raise taxes by an inch to cut government by a yard, they will still say no.

The members of this movement do not accept the legitimacy of scholars and intellectual authorities. A thousand impartial experts may tell them that a default on the debt would have calamitous effects, far worse than raising tax revenues a bit. But the members of this movement refuse to believe it.

The Illusion of Understanding

There seems to be this notion in matters of diplomacy and relationships that if only two parties understood each other, peace would ensue. The apparent assumption is that engaging in real dialogue with better communication will result in a healthier, stronger relationship.

That, it seems to me, presumes that the two parties really will respect what they come to understand. If the husband likes spending money on every new gadget and could care less about saving, his wife likely won't feel more loving once she better understands this about him. If the Palestinians really do think that you as a people should not exist, better communication will do little to bring peace.

The tough nut always seems to be the same. Without a context of compassion and acceptance, understanding does little to repair a relationship. And while you may easily accept the very different philosophy of someone across town or in another country, it is tougher to accept that your neighbor or lover has a different view of the world than you do. Better communication that lets you understand such differences might just alarm you. If you don't have compassion enough to be ready to accept whoever they are, you aren't ready for real communication. And they probably won't give it to you.

A Cure for Patriotism

Patriotism makes me uneasy. It makes me feel like someone is about to sell me an aircraft carrier.

I suppose that people would be less supportive of wars if they had to pay for them. The occupations of Iraq and Afghanistan will cost about $3.7 trillion. That works out to about $12,000 for every American, or nearly $50,000 for a family of four. If getting a war meant having to come up with the $50,000 up front,I think that lots of families would simply opt to tour Europe rather than invade the Middle East.

If we set up such a budget arrangement, we might have a world where people supported war and soldiers in the same way that they supported living on the French Rivera: they might love the idea of it but simply know that they can't afford it.

Oh, Happy 4th of July!

Retweeting June

Republican plan to default on debt so it doesn't hurt economy is like shooting your son down off the roof before he gets hurt. 

Wish I could remember that Alzheimer's joke.

As alternative to the apps store, it'd be interesting to have a mishaps store. It would offer character building experiences.

I'm nearly certain that the average person citing the Heisenberg uncertainty principle is largely uncertain about it.

"Son, anything can happen to anyone, but it usually doesn't." - Phillip Roth.

Skechers shapeups work on the principle of instability, forcing muscles to work for balance. It's the same reason that drunks are so fit.

Kevorkian died today, but not before setting a new record for the number of attempted suicides

He had a Napoleaana complex - cheerfully assuming the world would be better if only he ruled it.

78% of Americans can name all three stooges. Only 42% can name all three branches of government. http://bit.ly/mtL1vE

Is causality like dominoes, cause - effect - cause ....? Or is it like swamps and alligators, changing environment to change outcomes?

Wonder if a term has a better chance of defining a group if it is less defined. Think about a concept like democracy or even America.

The bachelor's variant on "Best by" expiration dates: "but still not bad by" dates.

Les Paul's birthday and the google logo has gone electric (which is so much more practical than acoustic search engines). So cool.

He was baffled that he'd done so poorly on the math test. After all, hadn't he given it 110%?

Google's new scheme for making money. I clicked on the "I'm feeling lucky" button and they offered to sell me lottery tickets.

2012 Conservative Dream Team or 1980s prom court? Perry & Palin: when you'd rather your candidates were photogenic than policy wonks.

Theirs was the only salsa bar in town that boasted everything from ketchup to pepper spray.

In the decade since Bush's tax cuts, federal debt rose an additional $2.6 trillion. Oh well, at least the economy has thrived.

Facebook about to do IPO and last month, for 1st time ever, total users in US dropped. Is Zuckerberg selling at the peak?

RT @TIME: Airlines made $3.4 billion off of baggage alone last year. (Our therapist said the same) | http://ti.me/jFvFEc

Manuscript back from editor and now mine to rewrite. Gulp

RT @brainpicker: Pure awe – year of moon’s movement in 2 minutes http://j.mp/jSAO4i (The world's first strobe light or awesome screen saver)

Weiner resigns. There's really nothing funny about that story. Except, of course, imagining Barbara Walters making the announcement.

In wake of Stanley Cup loss, Canadians riot, leaving a trail of scone crumbs and tea stains all across Vancouver.

Michele Bachmann rises to 2nd in GOP polls after debate when she claimed she'd push for constitutional amendment but not force it on states.

RT @brainpicker: Oh great. U.S. military spends more to air condition tents than NASA’s entire budget http://j.mp/j6335Y (@Richard_Florida)

Now this is what a news headline should look like: "Deer dropped by eagle knocks out power in Montana" http://yhoo.it/kQbEBu

Have to love that the "Teen Real Life" section is immediately adjacent to the "Humor" section at Barnes & Noble.

"Writing about music is like dancing about architecture." -Elvis Costello

Idea for eco-friendly, more active alternative to a Segway: tour groups on pogo sticks.

If all goes well, my commute home from work today will be only 10 hours. That's 5 hours less than yesterday's commute to work.

You don't know what you've got 'til it's gone ... unless, of course, it is your mind you lose in which case you still won't know.

Flew LAX to Albuquerque today. Excited to see Batman walk onto the plane and sit directly behind me (Batplane!) but it was just Val Kilmer.

Today men in military uniforms repeatedly called me sir. It's disconcerting - like being mistaken for a jockey.

4th of July weekend. I might just walk around with a t-shirt that says, "parade of one."

“If you are not paying for the service, you are the product being sold.” 

-Eli Pariser on “free” websites and other media

Estimated price tag for wars in Afghanistan and Iraq is enough to cover California's budget for next four decades. http://bit.ly/jIzqov

"What was your first clue they might negotiate rather than fight?" "Well, they were rallied around a leaf." Happy Canada Day!