The X Factor of the Economy

Recent Scene at Tallahassee Unemployment Office

I'm "between jobs" right now.  That's code for unemployed.  I'm part of the very unhappiest 9.1% of the US labor force, which is defined as working-age people either actively employed or actively seeking unemployment.  Of course, the use of a broad term like "unemployment" is deceptive, because there are two subsets (the underemployed and the discouraged workers) who are completely ignored by this 9.1% figure (a recent Gallup poll suggests that adding underemployed people alone could double the percentage of the labor force in less-than-optimal employment situations).  

This post is not a means for me to blame my plight on others.  Quite frankly, almost all of my difficulty is self-inflicted.  However, it disturbs me that so many other Americans are struggling to find employment right now, because the political answers coming from both sides of the aisle almost uniformly display an ignorance of the psychology of business.  The real problem is that the uncertainty in Washington translates into uncertainty in business, and uncertainty is the true X factor of the economy.

A January 2011 report in the Wall Street Journal revealed that 50 of the largest companies in the world are currently sitting on $1.08 TRILLION in cash.  This fact is an indication of two things: 1) spending, the Holy Grail of Keynesian economics policies, is alive and well, yet the economy continues to suffer, and 2) businesses are hoarding cash due to uncertainty about the regulatory and economic future.  The more polarizing the debate in Washington and the less decisive our politicians become, the more risk-averse businesses become about future expansion.

What does this have to do with unemployment?  Companies are usually not hiring due to turnover within the company; rather, they hire because they are in periods of expansion.  Business expansion is a good but risky proposition, and without proper care, can lead to the downfall of the entire organization.  Hence, business owners seek to minimize the amount of variability in the potential outcomes of their expansions, because the expected value of such a venture suffers in a volatile climate.

Uncertainty about taxes, uncertainty about regulation, and uncertainty about anticipated demand (note: not demand...it's not the present that bothers owners, but the future) lead to businesses not expanding, and hence, not hiring.  It's true that America is suffering from a skills deficit right now, but in practice, it simply means that businesses are much more interested in finding cookie-cutter workers for specific roles, rather than hiring a person who might not fit into one particular box.  Such is my plight, but I had the opportunity to avoid this situation, so don't cry for me.  Cry for the laid-off car worker in Detroit who started working at age eighteen. Cry for the steelworker who quit college because he had to support his family.

Then, once you've stopped crying, write your congressman, senator and President and tell them to make a damn decision one way or the other.

The American Jobs Bill and Pink Cotton Candy: A Comparative Study

"There should be nothing controversial about this piece of legislation," the president said. "Everything in here is the kind of proposal that's been supported by both Democrats and Republicans -- including many who sit here tonight. And everything in this bill will be paid for. Everything."

So set the tone for tonight's speech to a joint session of Congress.  President Obama spoke for the better part of an hour through various measures he wants enacted in order to spur job growth.  He frequently implored Congress to pass the bill by repeatedly saying the phrase, "pass the bill." 

Truth be told, I'm not sure what to glean from tonight's events between the Jedi mind trick and John Boehner looking like he was receiving radio signals about whether to react.  I mean...I can't really argue with payroll taxes or measures designed to encourage businesses to begin hiring, I suppose. (I say the latter with an asterisk until I actually see how much these measures will cost).  I'm not for dumping more money into schools or infrastructure projects, but I'm not really surprised that the president hit those particular buttons.

The speech reminded me of pink cotton candy...fluffy and sweet, but unfilling.  After so much ballyhoo about the gravity of this moment, I just expected a bit more.  The bill really doesn't seem to do much of anything, which is a frightening statement considering that it's projected to cost 447 billion dollars.  I'm glad that he is now expanding the mandatory cut amount from the debt ceiling agreement to include this new expenditure, but like many proposed (and sadly, actual) pieces of legislation, there was no projection of its true effect on the economy or the recovery.  I understand that projecting numbers and failing to deliver is problematic, but it would be nice to know what we're buying before we do.

My other problem is the timing.  The urgency is compelling, and I'm sure that it played well as far as a rhetorical device, but if passage of the bill is so urgent, why does it come on the heels of a month-long vacation that the President just took?  What took so long?  Why the delay?  When the President mentioned that an election was coming in fourteen months, but that Americans couldn't wait fourteen months, I got confused, because apparently, a month is okay.

I guess we'll see.

If I Were President Obama's Campaign Manager...

President Obama's Approval Ratings at a New Low

The latest Gallup poll indicates that President Obama's overall approval rating stands at 41%, and his handling of the economy receives kudos from only 26% of respondents.  Ouch.  Clearly something is very, very wrong in the minds of a majority of Americans with this presidency.

I'm sure that I'd probably be the last person suspected of wanting to help this president recover.  It would seem absurd that such a dyed-in-the-wool libertarian would come to the aid of a president who, quite frankly, shares few common beliefs with me.  However, the truth of the matter is that the 2012 election, in my opinion, remains Barack Obama's to lose, rather than the Republicans' to win.  No candidate on the red side of the ticket has enough legs either in the primary or the general election to unseat a sitting President.  Believe me...it pains me to say this about someone like Ron Paul...but it's the truth.  Though the "top tier" of Republican candidates (Romney, Perry and Bachmann) are excelling amongst the Republican base, there is no way that the entire country will vote for the possibility of a George W. Bush redux.

Hence, it seems likely that we will have four more years of Barack Obama.  So...rather than giving in to bitterness, I want to help this president because the country simply cannot afford (literally and figuratively) to repeat the morass of the last four years.  If I was the president's campaign manager, here would be my suggestions to him:

1) Do something. Anything. Seriously.  Even though I enjoy Warren Harding's presidency for its inaction, it simply does not do for a president to appear this indecisive.  If you're going to do nothing, at least look like you're doing it on purpose.  When asked about a jobs plan, you do not say "ask me in a month" right before you go on an expensive, exclusive and, presumably, taxpayer-funded vacation to Martha's Vineyard.  Even if your suggestions and actions are going to be wrong, and lampooned by people like me, it's better than this Hamlet act you have going.

2) Stop talking.  This suggestion partners with #1.  You are a gifted public speaker, Mr. President.  There is no doubt that you have the power to galvanize entire rooms of people with your rhetorical skills (and indeed, the entire country three years ago).  However, lately you've started to remind me of Leslie Nielsen in the Naked Gun.  Please stop giving speeches reassuring people. 

3) If you must talk, be brutally honest.  I understand that you are a politician.  Part of your job is spin.  I get that.  You have to usually frame and phrase events in the best possible light.  However, people are hurting.  People are suffering.  People know that things are not going well right now.  You need to stop with the sweeping statements of grandeur.  You need to stop calling upon Congress and the American people to do things.  Just talk to us like we're adults.  We can handle it.

4) Finally, STOP WORRYING ABOUT GETTING RE-ELECTED!  This last suggestion wraps around the other three.  In normal times, you would need to get out there and start stumping about the issues.  However, you've reached a point in American history where there's only one issue: jobs.  It's not a secret.  You are the sitting President, but have the good fortune of an opposition party who cannot find a firebrand like Bill Clinton or Ronald Reagan to threaten the incumbent (yet).  The irony is that the less you campaign and the more that you become an action President, the better you will do against your inevitable challenger, even if they do find someone who isn't a stuffed shirt.  In the meantime, you will have improved the country...which is something I agree with, no matter what your party is.