27 September 2012

Finally: Net Job Gains During Obama Administration

Obama just reached a hugely symbolic milestone.

In Obama's first 12 months in office, the economy lost 4.2 million jobs. To put that in perspective, the economy under Reagan had created only 4.0 million jobs at this point in his presidency. Just to break even, the economy under Obama would have to create more jobs in less than 3 years than Reagan's economy did in nearly 4. It now has.

Yesterday, the Bureau of Labor Statistics (find them at bls.gov) announced that they'd under-reported job gains by 386,000 for the period between April 2011 and March 2012. These 386,000 additional jobs finally put the job gains under Obama's administration into positive territory, something that was hardly guaranteed before the November election. Even more impressive, the number of government jobs was revised downwards by 67,000 and the number of private sector jobs was revised upwards by 453,000.

Here's how Obama's numbers compare to every president since Nixon. This table includes total jobs lost / gained from a president's first full month in office through August of the fourth year, jobs reported in millions. As you can see, Obama is in positive territory, even if barely.

Jobs Created  Thru Aug of 4th Year
HW Bush
GW Bush

But once the first year is discounted as inherited rather than a reflection of one's own policies, Obama's numbers look nearly as good as Reagan's, which isn't bad for coming off of the most severe recession since the Great Depression.

Jobs Created From Year 2 Thru Aug of 4th Year
GW Bush
HW Bush

There are two more monthly jobs reports that have the potential to make or break Obama's campaign, even though they won't change his place on this list (except for potentially passing Reagan). But for the first time since he took office, no one can accurately claim that there are fewer Americans working than when Obama was sworn in. And that's not just good for him. It's good news for anyone who believes that such milestones can influence investors and consumer confidence.

Republican Party Demise Will Be More Like the Cassette Tape Than 8-Track

I suspect that the Republican Party's demise will be more like the cassette tape than the 8-track, a subtle thing that many households will be unaware has even happened.

As of today, the poll aggregators at Huffington Post show 271 electoral votes in the "strong" Obama category. Even if he loses every other electoral vote (the 61 that lean towards Obama, the 15 that are tossups, and the 32 that lean toward Romney, 108 in all, plus the 170 that are strong for Romney), he still wins the election.

It's also interesting that the Senate race, which earlier looked as if the Republicans would obviously win, now looks like a toss up. Today's best bet is that the Democrats will retain their majority.

This after nearly 4 straight years of unemployment rates over 8%. To paraphrase Reagan, if not now, when? If the Republicans can't win in this environment, when can they win?

Republicans are already trying to blame Romney, who, while clearly the most viable candidate in the Republican primary, has seemed at times as though he's intent on beating himself. His gaffe per week quota ensures his inability to get on message. Worse, for him, American's growing optimism about the economy makes that message resonate less. It could be that he's the problem but I think that if the governor of Massachusetts had been allowed to run (that is, the Romney who is more moderate, less ideological and more of a problem-solver), he would have won. Or at least come close.

The real problem with this campaign seems to be the Republican's agenda. And yet Republicans will do well enough in this election that they'll be caught in a kind of political purgatory, convinced that their problem is candidates when it is, most likely, platform.

Against abortion? They could probably still win a national election. Against abortion in the case of rape and incest as well as working to remove access to contraceptives? They'll lose elections at the national level.

Low taxes? Probably win the election. Insistence that taxes not go up a penny when taxes as a percentage of GDP are at their lowest rate in half a century and we have a massive deficit? They'll lose.

Tax cuts for the rich? Probably still win. Tax cuts for the rich when we still haven't paid for the last tax cuts and now have a massive deficit? They'll lose.

Strong defense? They probably win. Saber rattling against Iran and insistence that we stay longer in Iraq and Afghanistan when our troops are so exhausted and stressed that they're more likely to die of suicide than in combat? Lose.

Cheap talk about fiscal responsibility? They'd win. Costly talk about specific cuts needed to actually balance the budget without raising taxes? They'll lose.

Admitting that climate change is man-made but having no plan to address it? Win. Insisting that climate change is a hoax? Lose.

Cracking down on illegal immigration? They could still win. Refusing to offer a route to citizenship to young adults who've known no other country? They lose.

The Republicans have become a caricature of, well, Republicans. Demographics suggesting a growth in minorities, a young generation that finds opposition to gay marriage baffling gradually replacing an elderly generation that finds the very fact of homosexuality wrong, and a growing divide between rich and poor all point to hard days ahead for Republicans. Still, they'll likely win just enough elections, and the extreme right will remain just vocal enough and influential enough, that the party is likely to go out with a whimper instead of a bang, only gradually losing their influence at the national level.

Republicans who don't want this to happen have two choices. Either let moderates write the GOP platform while putting the Tea Party back in the pantry or hope that Obama opens the first debate with a "Praise Allah!"

25 September 2012

Proposing a Reality Show: Political Proselytizing Made Personal

Billions are being spent to convert the undecided this election season. Sadly, it seems as though we missed the opportunity to watch this process made personal.

Imagine a reality show that tracked, say, 12 undecided voters from different regions of the country. You might have the urban agnostic libertarian who hates the right's religion and the left's government programs about equally. Or the guy who loves Jesus but not Joseph Smith and doesn't know whether it's worse to vote for a Mormon or a closet Muslim. The black religious conservative who is appalled at legal abortion or gay marriage.

There are a lot of reasons for voters to be undecided but how fun would it be to watch various folks - from local volunteers to "celebrity guests" like famous talk show hosts and politicians - come in and make their case for a vote for their team. Each week could close with poll numbers, showing how the success or failure of different groups is trending.

And if that worked, there could be a reality show starting with actual proselytizing. Folks who are looking for a church might go through a similar - but potentially much more confusing and varied - selection of menu items as members and spokespeople for various faiths came in to literally proselytize new members. And after that we could have shows trying to convert folks to become fans of particular teams, bands, fashion movements, lifestyles, or even reality shows, the medium turned in on itself in a sure-fire sign that it had gone full cycle and was ready to expire. Meanwhile, it could be kind of fun.

22 September 2012

High Schools as Hot Beds of Entrepreneurial Activity

If we took entrepreneurship as seriously as we did football, unemployment could now be at 6.4% instead of 8.1%.

 The essence of Republicans’ economic policy, characterized by Paul Ryan’s plan to lower capital gains tax to 0, is that jobs aren’t being created because we don’t have enough capital, enough investors willing to risk their money.

The essence of the Democrats’ economic policy, characterized by the call to spend more on education, is that jobs aren’t being created because we don’t have enough knowledge workers ready to compete in the global economy.

It could be that more capital would make the difference. If the problem is as simple as insufficient capital, though, it makes it tough to explain why Bernanke’s creation of billions hasn’t created more jobs. Or why companies are sitting atop of trillions. Or why private investors seem more adept at creating bubbles than jobs, bidding up the price of existing assets as varied as gold and real estate but less often creating sustainable new businesses.

It could be that education, the creation of more knowledge workers, would make the difference. It doesn’t explain why the underemployment rate of recent college graduates has been close to20% in recent years and unemployment rates for college graduates remains among the highest it has ever been.

It seems to me that the real job creators are not the professors turning out new college graduates or portfolio managers with handfuls of cash. More graduates and more capital seem ineffectual at creating jobs. (Not that both wouldn’t be handy once we were.)  

Entrepreneurs create jobs and any community intent on creating jobs faster than productivity gains, globalization, and market shifts destroy them would do well to adopt policies that encourage entrepreneurship.

There are a hundred things we could do to encourage entrepreneurship. I’d like to just focus on one thing, one thing that could have a huge ripple effect. It would mean taking entrepreneurship in our high schools as seriously as we do football.

Every year, about 350,000 high school kids start playing football. Meanwhile, every year about 350 men join NFL teams, becoming professional players. So, about one-tenth of one percent – 0.1% - of high school players eventually turn pro.

Think about all the hours of practice, coaching, and play that go into the creation of these 350 new pros. There are, of course, far more reasons for high school football than to simply create a few hundred new stars. These games give kids a chance to be engaged in ways that classes might not, enhance our sense of community, and teach kids broader skills about cooperating to compete and competing to cooperate, discipline, effort, tapping inner reserve, humiliation, exaltation, being cheered and being booed, fitness, and focus.

Entrepreneurial contests could do all that too  – and create jobs. Maybe millions of jobs.

Given high school level entrepreneurial contests could include young women, we might get 700,000 high school kids each year to compete in this world, about double the number who each year choose to play football.

Entrepreneurial contests could include the same kind of training and coaching as football, but have a different focus. Kids might compete on business plans or product design, or cost reduction ideas or on marketing or advertising campaigns. They might even start actual businesses.

Let’s say that that the same percentage of the kids competing at the high school level went on to become “pros” at the same rate as football players. That is, this sort of practice and awareness and the combination of luck and opportunity for hidden talents to emerge resulted in similar 1 in 1,000 of high school kids who went on to become successful entrepreneurs. Assuming double the participation rate of football, this would mean the programs would eventually produce about 700 new, successful entrepreneurs per year.

Further, let’s assume that success put entrepreneurs in the top one-tenth of one percent of firms, firms that created an average of 400 jobs. The result would be about 280,000 new jobs per year.

Now, stay with me here, if each of those ventures were viable for about a decade, the net effect after that first decade would be about 2.7 million extra jobs.

Peak unemployment in the last decade was 15.4 million, the unemployment rate hitting 10% that month (October of 2009). At its best, the number of unemployed was only 6.7 million, unemployment hitting 4.4% that month (October of 2006). A program that created an additional 2.7 million jobs would have lowered the unemployment rates in those months to 8.3% and 2.6%. Assuming an additional 2.7 million jobs, last month the unemployment rate would have been just 6.4%.  Among other things, it’s easy to imagine that incomes would have gone up rather than down in the last decade in such a scenario.

Obviously these numbers assume a sort of domino effect that’s fairly optimistic, which means that reality could be even more impressive.  James Fowler of UC San Diego has studiedsocial contagion and concluded that your friends’ friends’ friends influence your happiness, the likelihood that you’ll suffer from obesity, smoke, drink, or even be altruistic. So if communities begin to focus as much on the entrepreneurial skills of their young as they do their football ability - covering this in newspapers, having pep rallies, coming out in the hundreds to watch competitions -  think what that might do to behavior in the community. Might not a 40 year old father get inspired by someone’s business plan, changing how he runs his business? Couldn’t a 30 year old woman decide to start a business after hearing the 23rd 17 year old explain how to profit from changing demographics?

I think that corporations could do the most to make more employees more entrepreneurial, transforming the rate at which equity and jobs are created. But it’s not just corporations that could change. To repeat, there are at least a hundred things communities could do to encourage entrepreneurship.

And once communities become more entrepreneurial, we’ll need more capital. We’ll need more knowledge workers. But it’s entrepreneurs who will create the jobs; at this point in our economic development, the capital and knowledge workers just follow the parade, they no longer lead it. Maybe one way to get this parade moving faster would be to take entrepreneurship as seriously as we take high school football. It seems less risky and expensive than cutting tax rates in the midst of chronic deficits, or expecting kids to take on ever larger student loan debt. And it has incredible promise.

20 September 2012

Scott Brown's Big Political Lie

Listening to the Scott Brown - Elizabeth Warren debate, I heard Scott Brown make the claim that "Professor Warren wants to raise your taxes. I'm not going to do that. I'm not going to spend one extra dime of your money." [see footnote]

Here's the lie. If you can't list the budget items you would cut in order to bring the deficit down, you are going to spend an extra dime of the taxpayers money. In fact, you are going to spend that dime plus the interest that accrues on it before it is paid off. And if paying that off takes decades, as it does with a mortgage, you're probably going to charge them something closer to a dollar than a dime thanks to the miracle of compound interest.

To raise taxes with a massive deficit is not the same as deciding to spend money. To raise taxes is a decision not to charge what you're currently spending. If you want to prove that you're going to save the taxpayers money, you'll have to itemize cuts. If you don't do that but instead just refuse to raise taxes, you're just compounding what taxpayers will have to eventually pay. The big lie is that if you refuse to raise taxes even while leaving spending at roughly the same level, you're saving the taxpayers money.

You pay some taxes now or more taxes later. If you can't cut the budget, you've already decided to spend your constituents' money; tax rates just determine how you're going to pay for that spending. Buying a car with zero down does not save you money. If you want to save money, buy a bike instead of a car.

No. These quotes are not verbatim. I'm a blogger. My fact checker is still on summer vacation. These quotes capture the spirit of what he said, even if they don't capture the exact wording.

18 September 2012

Romney Calls Out a Nation of (47%) Deadbeats

A video of Mitt Romney explaining the American polity is making the rounds. Romney shares this:

There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that's an entitlement. And the government should give it to them. And they will vote for this president no matter what…These are people who pay no income tax.

Romney collapses three facts into one here.

  1. It is true that 40-some percent of Americans would cast their vote for the Democratic candidate no matter what. (And of course the same is true of voters inclined towards Republicans.) 
  2. It is also true that about 40-some percent of Americans pay no income taxes. (Although quite a few of these pay taxes into medicare, social security, sales taxes, etc.) 
  3. It is also true that 40-some percent of Americans get some kind of government transfer payment.

Of course one major flaw in Romney's analysis is that these groups just aren't the same group, in spite of some overlap. Among the 40-some percent of folks receiving government transfer payments are quite a few farmers and senior citizens. These folks tend to vote for Republicans, not Democrats. Among the poor who don't pay income taxes (but don't necessarily get government transfer payments, these folks constituting what we call the working poor) are quite a few social conservatives who love Mitt because he'll get rid of gay marriage and protect their guns.

Romney calls a group 47% and then makes it equal in membership to every other group that is 47%. (Which would almost be forgivable if any of these groups were actually 47% rather than "about 40-some percent.") It'd be like saying that 30% of Americans are white males and 30% of Americans believe in UFOs so it's obvious that all white males believe in UFOs. I don't even know what category of logical fallacy that falls into. "Things with the same numerical value have the same membership" fallacy? In any case, it seems unsurprising that a man who has such a tenuous grasp of numbers would be trailing in the polls.

(Next - Family Values, What Romney Was Trying to Say, and How an Unreported Shift in Demographics is Changing Politics)

14 September 2012

How Obama Makes Decisions

Michael Lewis wrote a brilliant piece about Obama for Vanity Fair. There is a lot there to give you insight into the presidency and Obama, but in particular it is a fascinating look at decisions. Obama makes dozens of decisions every day that are more important than any one decision you or I are likely to make in our entire life. It's worth understanding how he does it, because whether you are a stay at home parent or a CEO, this seems to offer some interesting guidance.

From Lewis's article ...

This time he covered a lot more ground and was willing to talk about the mundane details of presidential existence. “You have to exercise,” he said, for instance. “Or at some point you’ll just break down.” You also need to remove from your life the day-to-day problems that absorb most people for meaningful parts of their day. “You’ll see I wear only gray or blue suits,” he said. “I’m trying to pare down decisions. I don’t want to make decisions about what I’m eating or wearing. Because I have too many other decisions to make.” He mentioned research that shows the simple act of making decisions degrades one’s ability to make further decisions. It’s why shopping is so exhausting. “You need to focus your decision-making energy. You need to routinize yourself. You can’t be going through the day distracted by trivia.” The self-discipline he believes is required to do the job well comes at a high price. “You can’t wander around,” he said. “It’s much harder to be surprised. You don’t have those moments of serendipity. You don’t bump into a friend in a restaurant you haven’t seen in years. The loss of anonymity and the loss of surprise is an unnatural state. You adapt to it, but you don’t get used to it—at least I don’t.”


But if you happen to be president just now, what you are faced with, mainly, is not a public-relations problem but an endless string of decisions. Putting it the way George W. Bush did sounded silly but he was right: the president is a decider. Many if not most of his decisions are thrust upon the president, out of the blue, by events beyond his control: oil spills, financial panics, pandemics, earthquakes, fires, coups, invasions, underwear bombers, movie-theater shooters, and on and on and on. They don’t order themselves neatly for his consideration but come in waves, jumbled on top of each other. “Nothing comes to my desk that is perfectly solvable,” Obama said at one point. “Otherwise, someone else would have solved it. So you wind up dealing with probabilities. Any given decision you make you’ll wind up with a 30 to 40 percent chance that it isn’t going to work. You have to own that and feel comfortable with the way you made the decision. You can’t be paralyzed by the fact that it might not work out.” On top of all of this, after you have made your decision, you need to feign total certainty about it. People being led do not want to think probabilistically.

12 September 2012

Winston Churchill vs. Martin Luther King

Obama replaced a bust of Winston Churchill in the Oval Office with one of Martin Luther King. Romney has vowed that once he's in, he'll send this bust of a great American into the closet and put back the bust of a great Brit.

It's easy to imagine that King was prophesying about two things in the following remarkable speech. One, that he would be killed before the full effect of the civil rights he was fighting for could be enacted. (And he was. The very next day.) Two, that he thought that America might one day be a country where a black man could be in the Oval Office. Here's what he said:

And then I got to Memphis. And some began to say the threats, or talk about the threats that were out. What would happen to me from some of our sick white brothers? Well, I don't know what will happen now. We've got some difficult days ahead. But it doesn't really matter with me now. Because I've been to the mountaintop. I don't mind. Like anybody, I would like to live - a long life; longevity has its place. But I'm not concerned about that now. I just want to do God's will. And He's allowed me to go up to the mountain. And I've looked over. And I've seen the  Promised Land. I may not get there with you. But I want you to know tonight, that we, as a people, will get to the Promised Land. So I'm happy, tonight. I'm not worried about anything.

It seems obvious that Barack Obama would take inspiration from such an American and want him commemorated in the White House. And it seems obvious that Romney's vow to remove the bust would contribute to his polling at 0.0% among blacks.

Here's an excerpt of King's speech. Powerful enough on its own. Incredible when considered in the context of being delivered only hours before he was assassinated.

11 September 2012

What the Internets Might Predict About the November Election

The first sign that Barack Obama would be president may have come from what was - at the time - an oddly obscure measure. In the leadup to the 2008 campaign, Obama had far more "friends"on Facebook than Hilly Clinton and vastly more than John McCain. Initially, no one knew whether to take this seriously, particularly since Obama wasn't really doing that great in the polls. Compared to Clinton and McCain, he was fairly unknown. As it turns out, Facebook friends was a decent predictor of future success. Which brings us to some curious results from the Republican and Democratic National Conventions just ended.

Using the number of views that a video got might be as silly and irrelevant as Facebook friends, which is to say that it might actually have some predictive value. So, let's look at the matchups for similar politicians from the DNC and RNC.

First, and most important, let's compare the number of views for Obama and Romney.

THE candidates  
Barack Obama       2,020,592
Mitt Romney          287,513
 Obama wins this match, 7 to 1. Curiously, the current odds based on serious polls give Obama a 4 to 1 edge over Romney. Hmm. So, if we're to take video hits seriously, why would Obama's 7 to 1 edge drop to 4 to 1?

Paul Ryan          592,213
Joe Biden          136,748
Here we see that Ryan wins over Biden. The triumph of youth? The reputation for faux pas vs. deficit hawk? I love Joe Biden but it might just be that this 4 to 1 edge for Ryan is enough to bring down the odds of a Obama victory.

1st Ladies  
Michelle Obama       4,121,080
Ann Romney          545,696
Michelle beat the aspiring first lady by more than her husband beat the aspiring president, 7.6 to 1. I won't comment further.

Should Romney lose, the GOP will want to blame him for the loss rather than their policies. This will allow them to avoid change and take hope in their future. In light of that, it's worth comparing a couple of the stronger contenders for a 2016 nomination.

2016 Possibility?  
Julian Castro          646,708
Chris Christie          361,740
Here again, the Democrats take the lead, Castro winning by nearly a 2 to 1 margin. (Although to be fair, there had to be at least a few viewers who were actually expecting Fidel Castro to be addressing fellow socialists at the DNC, which could account for, oh, at least 4 or 5 of the views.)

Senator & Senatorial Candidate  
Elizabeth Warren          212,676
Marco Rubio          164,076
Rubio gave a great speech, but this sitting senator who was nearly the VP candidate got fewer viewers than a senatorial candidate who is trailing in the polls. Another bad omen for the GOP future.

Past Administration  
Bill Clinton       5,009,069
Condoleeza Rice          281,696
George W. Bush did not show up at the RNC. Nor did Cheney, Rumsfeld, Karl Rove or any number of luminaries from the GOP's last time to hold the White House. Condoleeza Rice was thus left to represent the previous administration against Clinton. It's probably fair to say that this was a mismatch, Clinton's views are currently about 18 times Rice's (and higher than anyone else's, including the two presidential candidates).

But the Republicans had more than one victory. In addition to Ryan's victory over Biden, they did totally crush the Democrats in one category: the popularity of their celebrity. Here we have a stunning 50 to 1 victory for the GOP.

Clint Eastwood       4,718,419
Eva Longoria             94,392
I think, though, that this might qualify as a Pyrrhic victory.

[Numbers posted by Guy Kawasaki at http://www.facebook.com/guy]

10 September 2012

Republicans Need a Mondale Moment

As of this morning, Nate Silver puts Obama's chances vs. Romney at 80.7% vs. 19.3%. Those are 4 to 1 odds., folks, and ought to give Republicans incentive to reconsider their party platform.

Ronald Reagan crushed Walter Mondale in the 1984 election, winning 525 out of 538 electoral votes. After that, the Democrats were open to the possibility that they needed a different image, a different set of policies. As it turns out, people did not want to choose between pro-business and pro-government programs to help the needy. They wanted both and Clinton (a hairdresser's son?) provided that.

The Republicans need a Mondale moment. They probably won't get it in this election that they're likely to lose by only 100 electoral votes rather than 500. That will leave them close enough that they'll be able to blame Romney rather than their platform. Plus they'll hold onto the House and may even gain the Senate. Those are conditions less likely to force them to do any soul searching than just make them cantankerous. But given the shifting demographics and the Republicans penchant for offending women and minorities, it seems probable that things will get worse, not better, for the GOP by 2016. Maybe by then they'll begin a slow slide into obsolescence, going the way of the Whigs and Federalists. Or perhaps they could reinvent themselves as did the Democrats in the late 80s and early 90s.

The odd thing is that it would not take much for  Republicans to change themselves back into a dominant party. Against abortion and they get some support; against abortion even in instances of rape and incest and they are instead perceived as ideologues wildly disconnected from popular opinion. Against an increase in taxes and they get support; against even one dollar of tax increases for every ten dollars of budget cuts and, again, they are perceived as intransigent extremists. The Republicans now offer too many positions that the average person has to vote for them in spite of.

Even though the average American realizes that Obama did create the recession, this was nonetheless the Republican's election to win. Unemployment has never been below 8% since Obama's first full month in office. The Republicans had to essentially hand over policy to the Bill Kristol and the Tea Party in order to lose this one. If the GOP jettisons the extremists for independents, they could easily take the next election. They still own the old, white religious guys vote but lots of them will be heading to heaven over the next few election cycles, leaving earth to be ruled by an increasing percentage of young, minority women whose politics are more secular. If the Republicans can't win in 2012, they definitely won't be able to win in 2016 or 2020. It's not too soon for them to start reinventing.

There are at least two places to start with their reinvention. One would be by confronting reality, whether it comes in the form of inconvenient truths like climate change or budget arithmetic. Another would be by honestly assessing why George W. Bush's presidency resulted in so many failures, from domestic security to foreign relations to economic growth and stability. The current teachings of the GOP faithful is that Bush somehow screwed up, executed poorly. That's possible but I don't buy it. Cheney was a former CEO. Bush had an MBA. They had some really sharp and incredibly conscientious people in positions of authority. Instead, it seems easier to argue that the whole Bush team executed bad beliefs really well. In fact, one of the problems with a really bad beliefs is that the better you are at executing them, the worse things get. Napoleon and Hitler both had troops that bravely executed the really bad idea of invading and conquering Russia. George W. had the really bad ideas of de-regulating financial markets he was obligated to insure and of putting a democratic government into the country Iraq that still can't decide whether to vote itself into pieces  or into a theocracy. Bush championed terrible ideas that ably executed.

Republicans have to give up on such ideas - or at the very least modify them to reflect even a programmer's humility of realizing that his program as it is currently written just keeps crashing. Until they do, either they'll lose at the polls or we'll lose when they win office.

07 September 2012

The Four Year Moving Average That Might End Obama's Presidency

This morning the Bureau of Labor Statistics reported the new jobs numbers. They’re bad. Not only do they report a mere 96,000 jobs created in August but they make a downward revision to the numbers for June and July. The unemployment rate dropped from 8.3% to 8.1% but only because discouraged workers walked off the job market.

While the job creation rate for this year and even the last two is positive, the average of the last four years is still negative.

During the 60s, no party had to face re-election with a negative four year moving average. During the 70s, no party had to face re-election with a negative four year moving average. Same in the 80s. And 90s. As bad as a recession would get, they were never so severe or prolonged as to bring the four year moving average into negative territory in any year, much less an election year. Not until this century.

(Click on the chart below to enlarge.)

In the graph above, the red bars trace the 4 year moving average. The green bars track annual job creation (or loss). Note that even though the green bars dip below the line, the red bars never do. Well, never did until after we entered this new millennium. 

The job losses in 2008 and 2009 were so severe and the job creation in the year before and years after so paltry, that we're now in our fourth year of a negative four year moving average. This moving average defines the unemployment rate more than what happens in the current year. George W. Bush faced re-election with a negative four year moving average but 2004 - the election year - was actually fairly strong, stronger than 2012 is shaping up to be. You see that the red bar dips below the line only slightly in 2003 and 2004. And George wasn't running on his economic record: he was the commander in chief with two  wars. 

By contrast, the 4 year moving average for Obama has been negative since he took office. And by quite a bit. In spite of the fact that job creation has been positive in three of his four years, public perception (and the reality of chronic of unemployment) is colored by that disastrous first year of his administration and the last of Bush's. The economy under Obama has yet to create more jobs than it lost in 2009.

It is no wonder that Obama seemed subdued Thursday night. Now, he has to be hoping that by election day the unemployment rate will fall below 8% for the first time since the month he was sworn in, and that the economy will have finally created more jobs than it has lost during his term. No other president has had to settle for such poor job performance in the category of job creation.

In any case, next year the 4-year moving average will finally be positive again. Whoever is president will finally be out from under the shadow of the Great Recession of 2008. Obama has to hope that it is him. It would have to be the worst kind of frustration to have finally repaired the car just in time to watch someone else drive off in it. 

06 September 2012

Bill Clinton's Philosophy of Progress

Everyone says that Bill Clinton is a great speaker. And of course they're right. But this ability of his to deliver such a great speech is not separate from his worldview: it emerges from it.

It's worth remembering his great story telling and emotional connection with the audience rests on a worldview that writes his speeches. One reason that Clinton's speeches do so much is that he knows that speeches, alone, can't do much. A speech is no substitute for a worldview. Until you have an effective understanding of your audience, the world you share, and the arc of history, you can't deliver a speech that not only connects to your audience but makes them feel connected.

Last night, in just a few words, Clinton shared the essence of his world view. For Clinton, economic progress is moral. It is not just the right thing to help a mother to feed and educate her child. It turns out that this mother's child, properly helped, is more likely to become a productive, innovative adult able to create prosperity for the next generation. His worldview appeals to both emotion and reason and it resonates with our own experience and the data "out there." The speech works because the worldview aligns emotion, experience, data, and hope.  If your worldview misses any of these elements, it doesn't matter what your teleprompter says or how well you deliver it: your speech won't do what Bill Clinton's speeches do.

Here is President Clinton from last night (5 September 2012):

The Republican narrative is that all of us who amount to anything are completely self-made.  
One of our greatest Democratic Chairmen, Bob Strauss, used to say that every politician wants you to believe he was born in a log cabin he built himself, but it ain’t so. 
We Democrats think the country works better with a strong middle class, real opportunities for poor people to work their way into it and a relentless focus on the future, with business and government working together to promote growth and broadly shared prosperity.  We think “we’re all in this together” is a better philosophy than “you’re on your own.” 
Who’s right?  Well since 1961, the Republicans have held the White House 28 years, the Democrats 24.  In those 52 years, our economy produced 66 million private sector jobs.  What’s the jobs score?  Republicans 24 million, Democrats 42 million! 
It turns out that advancing equal opportunity and economic empowerment is both morally right and good economics, because discrimination, poverty and ignorance restrict growth, while investments in education, infrastructure and scientific and technological research increase it, creating more good jobs and new wealth for all of us.

05 September 2012

Were You Better Off 4 Years Ago?

Let's go back in the time machine and listen to what the president had to say about how we were doing four years ago.

04 September 2012

Top Ten Economic Arguments Obama & Biden Could Make This Week at the DNC

In which your blogger sounds as partisan as he ever has.

1. We're no better off than we were four years ago? We may be at about the same unemployment level but there's a big difference between passing a point as you climb up the cliff and passing that point as you fall off the cliff. Four years ago we were losing hundreds of thousands of jobs every month. This year we're gaining hundreds of thousands of jobs every month. The direction we were going four years ago would have put us into another Great Depression. The direction we're going now puts us among the best of the developed nations in recovery from the Great Recession of 2008.

2. Four years ago, people's retirements had  been pushed out. Their portfolios had lost 25% during Bush's 8 years in office. In the four years since, the stock market has doubled. Investors who depend directly on the market through 401(k)s or indirectly through pension funds are more secure, more affluent, and closer to retirement.

3. Mortgage standards are better. Home prices are still down but they are no longer in free fall. In fact, they're starting to go up again. People buying homes now are better qualified than the people buying homes four years ago.

4. The Republicans' argument depends on the belief that George W. Bush had everything going great and then Obama came along and messed up our economy. It is simple. If you believe that it took Bush 8 years to  fix the bad economy he had inherited from Clinton, an economy that Obama then quickly ruined, you really should vote for Romney. If, instead, you think that Bush derailed an economy that was doing well under Clinton, and Obama is slowly getting that economy back on track, you should instead vote for Obama.

5. There is not much that Romney has made clear about the policies he'll pursue. Among the few things that he has made clear is the promise to slow the troop withdrawal from Afghanistan and Iraq and get tough with Iran, even to the point of another war. These steps would significantly increase defense spending. Oh, and he would cut taxes. Bush was the first president in history to go to war with tax cuts. If he kept his promises, Romney would be the second. If you thought that our ballooning deficits had something to do with bad policy and not just bad luck, you might think twice about voting for Romney.

6. Obama did run up a big deficit. It's bad. What isn't clear is how the GOP would have avoided that. Would they have raised taxes in the midst of the worst recession in nearly a century? Or would they have slashed spending on social security just as so many baby boomers were retiring? Or slashed defense spending in the middle of two occupations? And do they honestly believe that such policies would have lessened rather than worsened the recession? Because once the recession was underway and the tax cuts were in place, deficit growth was inevitable.

7. The Republicans can't explain why Bush's policies contributed to economic catastrophe. They never talk about what could have been different. That's scary. It suggests that they don't know whether the policies they're now proposing (policies little changed from the Bush - Cheney policies) wouldn't once again make the economy worse.

8. The recovery is too slow and has, so far, replaced too few jobs. The problem is that Obama's policies are working slowly. They do seem to be working, though. What would Romney do differently? He promises to cut the deficit more quickly and plans to do that by cutting taxes to the rich and raising taxes on the middle class. This will cut take home pay for the people who spend the biggest portion of their income, shrinking consumption and slowing the recovery further. Obama plans to cut the deficit more gradually, first bringing down unemployment by leaving more take home in the hands of the middle class. Romney may move more quickly, but that's not the real question. The real question is in which direction? Would you rather move quickly in the wrong direction or slowly in the right direction?

9. For Ryan's budget numbers to work, he'd have to cut federal programs like the National Science Foundation, education, green energy, and student loans by about 40%. The pace of innovation will quicken, not slow, during the next four years. If anything, we should increase such investments, not cut them.

10. Bush inherited the best economy in American history. Obama inherited the worst economy of the last 80 years. You gave Bush eight years to ruin the economy. Maybe you could give Obama eight years to fix it.

03 September 2012

Fox News Lowers Impact of GOP Convention?

Last week's convention didn't do much for the GOP. Fox New's success might explain this.

In 1996, the two major parties got media outlets. Suddenly, along with PBS and the major networks, we had the partisan broadcasters Fox News and MSNBC. Since then, political conventions seem less effective at changing votes.

After the Democrats nominated Clinton at their 1992 convention, 45% of voters reported that they would be more likely to vote for them. No convention since has come close in impact. In fact, the GOP's convention last week gave the party a bounce of only 2 percent. No convention since Gallup has begun tracking this has been so negligible.

The Democratic convention seems to consistently produce a bigger bounce. I wonder if the fact that Fox News has higher ratings than MSNBC (Fox has nearly double MSNBC's ratings) is a reason that political conventions do less for the GOP. For them, winning approval and rousing the base is more of a daily game than an election year exercise.

If the Dems are more reliant on post-convention bounce, it suggests that this week's convention matters more for the Democrats than last week's GOP convention. Given that, it is no wonder that they're featuring Clinton, hoping for some measure of the 1992 magic.