Losing Power Has Left the Democrat Party Dazed and Confused

The Democrats know they are in trouble, but they probably don’t know just how deep the trouble is. At the national level the party is now further out of power than it’s been since 1928. This lack of power and control is a problem in and of itself, but it is an even larger problem for what it portends for the party’s future. The party’s problems are deep and systemic and there are no clear remedies.

For the first time in over three generations the Republican Party controls the U.S. Senate, the Congress, and the White House. In all probability, there will soon be a conservative, not liberal, Supreme Court. Not only is there a vacancy on the Supreme Court that Donald Trump can fill, there are 104 vacant federal judgeships waiting for his nominations when he takes office. The judiciary has been the left’s go-to option when they fail to achieve their objectives legislatively. This change in the nature of the judiciary could last for decades.

Lack of power has profound implications for Democrats. Power is the Party’s raison d’être and sine qua non. Without power the party is broke and broken.

Consider, for example, one crucial element of their reliance on “identity politics,” specifically, organized labor. Organized labor is perhaps the single most important and dependable factor in the Democratic Party’s long-term success. In fact, Britain’s equivalent of the Democrat Party is called the Labour Party.

Democrats rely on a perverse variation of voluntary exchange. In exchange for votes, campaign contributions, and election workers, Democrats deliver legislation and regulations favorable to unions. The system works well for both entities, but it only works so long as Democrats have the power to keep their part of the bargain.

On the other side of the quid pro quo, there has to be a sufficient population of union members in order to generate an adequate amount of campaign funds. Unfortunately for the Democrats, the percentage of the U.S. labor force in unions has declined from 20 percent in 1983 to 11 percent now. Less than seven percent of the private workforce is unionized. Thirty-five percent of government employees are union members, but that too is in jeopardy. When President Trump fills the current Supreme Court vacancy, mandatory union dues could well be ruled unconstitutional. That could be a double whammy — reduced union membership and a reduced supply of campaign funds. Trump has said that he wants to reduce the federal workforce by 20 percent. What a glorious accomplishment that would be.

Another major contributor to the Democratic Party’s past success has been the mainstream media, i.e. the major television networks and big city newspapers. The media could not have tried any harder than it did to get Hillary Clinton elected President. They did everything in their power to convince voters that Donald Trump was a despicable racist and sexist, someone who was absolutely “unfit” to be President. It didn’t work. They can’t simply double down on their efforts in the next election because they’ve already exhausted that option.

The media tried so hard to elect Hillary their intentions became blatant and their efforts became counterproductive. They may well have increased rather than decreased Donald Trump’s popularity. Not only did their efforts backfire, the media also paid a high price in terms of credibility.

The media’s influence and power depend on credibility and trust, both of which it used to possess. Credibility and trust are fragile and fleeting commodities. Once they’re lost, it’s almost impossible to get them back.

In the years leading up to the election Hillary Clinton was able to command fees of $200,000 or more for her boring and vacuous twenty-minute speeches. Why was anyone willing to pay her so much for so little? There was a not-too-subtle assumption that once she had the power of the presidency their generosity would be rewarded. The exorbitant fees were little more than prepaid bribes.

A small but nevertheless telling detail of the recent election was the outcome in Washington, D.C. There Hillary Clinton trounced Donald Trump 94 percent to four percent. Residents of D.C. obviously know which party has their best interests at heart, and it’s not the Republicans. The Democrat Party is unquestionably the party of big government and concentrated power, but that party lost, and it lost big. Smaller government means fewer government employees and fewer public-sector union members. Maybe Bill Clinton (Hillary’s pretend husband) was only premature when he famously proclaimed, “The era of big government is over.”

This new and novel (for Democrats) distance from power will not only hurt them in the future, it will even hurt them retrospectively. Because the Democrats used their recent power so arrogantly and incompetently, much of what they’ve accomplished will soon be erased. Not only is Obamacare on the verge of annihilation, so are most of Obama’s executive orders. Obama’s legacy will be the thinnest and most transitory in presidential history.

Democrats have held power for so long they are lost without it. Their anger and frustration is almost palpable. The party is lost in the wilderness without a compass. Let’s hope they stay there for a long time. Maybe they can break the Old Testament record.

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◼ CAPITOL DESK Losing Power Has Left the Democrat Party Dazed and Confused

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Inequality Myopia

President Obama says that growing inequality is “the defining issue of our time.” Several Democrats have said that inequality will be their primary campaign theme for the 2014 election season.

If the president is correct, and if the inequality strategy spells success for Democrats, it will be because of a total distortion and over simplification of the meaning of inequality.

At least in their rhetoric, Democrats have made equality their number one priority. It has become more an obsession than a policy objective. Mother Jones contributor Kevin Drum writes, “The heart and soul of liberalism is economic egalitarianism.” According to Jon N. Hall, “For progressives, equality is an end in itself, and a higher value than freedom, happiness, or prosperity.”

Furthermore, liberals have a one-dimensional vision of equality. Virtually the only kind of inequality they ever address is income inequality. The human experience, however, is multi-faceted.

If it were possible to create conditions that would result in equal incomes for all Americans, there would still be wide differences in intelligence, athletic ability, health, ambition, and beauty, just to name a few. If we all had equal incomes, we would not all magically feel equal. Equality of incomes does not equal equality, and equality does not equal fairness.

For liberals it is an article of faith that income inequality is increasing in America. They cite statistics indicating as much. Nevertheless, those statistics are themselves over-simplifications. Such statistics usually hide at least as much as they reveal. Economist Walter Williams observes that “Most of what’s said about income inequality is stupid or, at best, ill-informed.”

For the sake of discussion, however, let’s grant that income inequality is increasing. One of several changes offsetting much of that kind of inequality is a countervailing decrease in consumption inequality.

Historian Victor Davis Hanson, for example, in a column titled “Every Man a King” notes that “Three-bedroom, two bath suburban houses of the 21st century are warmer in winter, cooler in summer, and with far more appliances and comforts than the vast mansions of the rich of the mid-20th century. In sum, Americans are richer, healthier, and have more options than at any time in their history — and in ways that do not register in our outdated metrics of what constitutes being wealthy or poor.”

Virtually every American who wants one has a smart phone. Smart phones open a vast array of alternatives to everyone who has one, especially access to information, an extremely important resource. That universe of choices is essentially the same for everyone regardless of income.

What’s true of smart phones is true to some degree with a large number of other consumer products that have generally increased in quality, variety, and decreased in price. Joseph Schumpeter pointed out that affordable, low-priced washing machines benefit low-income persons far more than upper-income persons.

In regard to impact, consumption is clearly more important than income. Consumption is closer to the ultimate objective — human comfort and satisfaction. Increasing consumption equality deserves a greater weight than decreasing income equality.

Another especially important non-income dimension of inequality is what’s been happening to life expectancies. In an paper titled “Mortality Inequality,” University of Chicago economist Sam Peltzman points out that “The typical income inequality measure leaves out an important dimension: the length of time over which an income or consumption stream is enjoyed.” Rather than focusing only on income inequality, Peltzman uses the term “social inequality.” He found that “Unequal longevity was once a major source of social inequality, perhaps even more important than income inequality, for a long time. But over the last century, this inequality has declined drastically in high-income countries and is now comparatively trivial.”

Life expectancy for Americans born in 1900 was 47 years. It is now 78 years. How much is living an extra 31 years worth? Longevity has increased far more than at any previous time in history, and there is much less inequality of longevity.

According to Peltzman, “The largest contributor to this narrowed gap — and thereby to reduced mortality inequality — has been dramatically reduced infant and early childhood mortality.”

The probability that an infant born in a developed country today will survive to his or her fifth birthday exceeds .99. This is in sharp contrast with much of human history. For example, in the mid-19th century, 23 of every 100 U.S. infants born did not reach their first birthday. Another seven would die before reaching age five.

In other words, 160 years ago, 30 percent of newborns did not live past age five! There is probably no greater source of heartbreak and tragedy than the death of a child. The dramatic reduction of that event is an incalculable social benefit.

Peltzman also points out that, “Even in less developed countries, like Brazil or India, mortality is more evenly distributed today than income is distributed in an advanced welfare state. Inequality of lifetimes is well along in a historical transformation from a major source of social inequality into a minor one.”

The generally accepted summary statistic for inequality is the “Gini Coefficient.” For “lifetime inequality” the Gini Coefficient for the U.S. has dropped from roughly 50 in 1850 to about twelve in 2010. Proportional declines have occurred worldwide. In other words, the degree of mortality inequality is less than one quarter what it was 160 years ago. It would be hard to exaggerate the significance of that change.

Anyone who makes sweeping statements about increasing inequality is being deliberately blind to such enormously important countervailing factors. A longer lifespan correlates more closely with human happiness than higher incomes. Which would you rather have — a 40 percent increase in your income, or a 40 percent increase in your life expectancy? It’s not a close call.

Democrats and the left focus virtually all their attention and concern on inequality in America, not global inequality. If they expanded their focus, it would do further damage to their claim that inequality is increasing.

A World Bank report issued last year concluded that “Extreme poverty in the world has decreased considerably in the past three decades. In 1981, more than half of the citizens in the developing world lived on less than $1.25 a day. This rate has dropped dramatically to 21 percent in 2010.… Extreme poverty headcount rates have fallen in every developing region in the last three decades. And both Sub-Saharan Africa and Latin America and the Caribbean seem to have turned a corner entering the new millennium.”

Decreasing global poverty is at least partially the result of “globalization,” although you will rarely hear about any positive aspects of globalization from the left.

Exaggerating and over-emphasizing negative news while ignoring positive news is not a harmless endeavor. The Bill and Melinda Gates Foundation just released “The 2014 Gates Annual Letter.” They title it “3 Myths That Block Progress for the Poor.” Here is how they summarize their letter:

By almost any measure, the world is better than it has ever been. People are living longer, healthier lives. Many nations that were aid recipients are now self-sufficient. You might think that such striking progress would be widely celebrated, but in fact, Melinda and are I are struck by how many people think the world is getting worse. The belief that the world can’t solve extreme poverty and disease isn’t just mistaken. It is harmful. That’s why in this year’s letter we take apart some of the myths that slow down the work. The next time you hear these myths, we hope you will do the same.

That’s excellent advice. I wonder, however, if the Gates have asked themselves why there are so many people who think the world is getting worse? It’s in large part because creating the myth serves the purposes of liberal politicians.

Inequality is not totally a myth, but everyone is not equally concerned about it. The degree of concern is primarily a function of envy and resentment. Those are widespread and powerful human emotions. Demagogues throughout history have played on those emotions to gain power and achieve their objectives.

However, envy has never been considered a virtue and has been strongly condemned for thousands of years. It is one of the Seven Deadly Sins. The Tenth Commandment is “Thou shalt not covet.” Saint Thomas Aquinas described envy as “sorrow for another’s good.” In Dante’s Purgatory, the punishment for the envious was to have their eyes sewn shut with wire “for having gained sinful pleasure for seeing others brought low.”

In a number of speeches President Obama has referred to “millionaires and billionaires,” with contempt and resentment practically dripping from those words. The resentment toward “the one percent” is driven primarily by envy rather than actually wanting to do something for the poor. Envy is not a sound foundation for public policy. The left apparently is bothered more by the existence of rich people than by the existence of poor people. They subscribe to the absurd belief that wealth causes poverty.

The “War on Poverty” recently marked its 50th anniversary. It is more than coincidental that since 1965 the number of babies born to unmarried mothers has increased from 3.1 percent to 40.7 percent. The welfare state reduces the disincentive for having children outside marriage. Basic economics tells us that when you reduce the price of something, you’ll see more of it.

In a column titled “How to Fight Income Inequality: Get Married,” Ari Fleisher pointed out that “In families headed by married couples, the poverty level in 2012 was just 7.5%; those with a single mother: 33.9%.” Insofar as income inequality has increased over the past half century, a large portion of it could be explained by the increase in single motherhood.

When it comes to addressing the issue, Democrat policies increase the amount of inequality rather than reduce it. Inequality is a problem liberals would rather hype than solve.

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◼ Inequality Myopia February 6, 2014

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Obama’s Labor Theory of Value

Beyond being infuriating and insulting, President Obama’s now notorious “you didn’t build that” speech probably left many people puzzled. It is so foreign to how most Americans think they might have wondered where such thinking comes from.

Whether or not you think it’s accurate to call Obama a Marxist, his perspective on how the economy works is Marxian through and through. More specifically, it is a reflection of what’s referred to as Marx’s “labor theory of value.”

That theory is defined in the Dictionary of Economics as “[t]he worth of a product or service is in proportion to the labor employed to generate it.”

Economists not under the spell of Marxism consider the labor theory of value to be a convoluted mess. Marx himself had great difficulty papering over the logical gaps and contradictions of the theory. One obvious problem is that “labor” is not a homogeneous resource. Furthermore, it is not the only scarce resource necessary for the production of practically every product or service.

The question of how relative prices are determined is still a central question in economics. “Price theory” is what comprises most of microeconomics.

Today the mainstream conclusion about what determines relative prices is that they result from the interaction of “supply and demand.” In the context of price theory, supply and demand are like file drawers where numerous factors can be organized and analyzed.

The price of any product is affected by the quantity of all the resources necessary to produce it — labor, energy, land, information, time, for example. Marx’s position was that only one of these resources mattered, i.e., labor. Furthermore, he devoted none of his attention to the demand side of price determination. It’s as though he tried to design a pair of scissors using a single blade and, in fact, only a small piece of a single blade. I don’t think that it’s an exaggeration to say that no economist, other than true-believer Marxists, thinks that the labor theory of value makes any economic sense or is useful in understanding how an economy actually works.

In his classic textbook on the history of economic thought, William Fellner poses the following question about the labor theory of value and offers an explanation:

What function does the theory perform in the Marxian system, and why do contemporary Marxists continue to cling to it? The answer, we suggest, is that a simple and sweeping doctrine of exploitation is the essence of Marxism as a creed, and that it is impossible to obtain a doctrine of exploitation as simple and sweeping as is the Marxian from premises other than the “worker’s right to the whole produce.” Marxism as a creed is founded on the idea that all income going to the owners of wealth results from exploitation. The Marxian creed requires the exploitation doctrine as its foundation. (Emphasis in original.) — William Fellner, Modern Economic Analysis

A belief in the labor theory of value is what explains the hostility toward profits that is so prevalent on the left. If labor is 100 percent responsible for the creation of value, profit is theft. Profits are only possible if labor is exploited and only if capitalists get what’s not rightfully theirs. Likewise, property is theft, as are various forms of capital. Marx is the inventor of the word “capitalism.” His turgid three volume magnum opus is titled Das Kapital.

In countless ways Marxism is an intellectual mess. Theoretically it makes no sense. In practice it has led not to utopia, but to dystopia. The most horrific and repressive regimes in the world today — North Korea, Cuba, and Zimbabwe, for example — are Marxian in theory and practice.

Nevertheless, a Marxian view of the world continues to be popular on the left. Obama’s speech reflects his deeply held belief that business owners do not deserve the share of income and wealth they receive. All value ought to go to the workers. Any other outcome is the result of “the exploitation of humans by humans.” According to Marx, that’s what happens under capitalism and will continue to happen until private property rights are abolished. Only then can true equality be achieved.

It’s important to remember that even bankrupt ideas can be popular over long periods of time. Two other leading examples are Malthusianism and Keynesianism. Their predictions and policy prescriptions have proven wrong countless times, yet as doctrines they still hold wide appeal. Malthus’s Essay on the Principle of Population was published in 1798 and Keynes’ General Theory of Employment, Interest, and Money was published in 1936. The failure of the Democrats’ massive stimulus spending ought to be enough to toss Keynesianism into the dumpster of ideas that sound good but turn out to be disasters when applied to the real world.

Marx fully expected capitalism to collapse within a few years after the publication of The Communist Manifesto in 1848. V. I. Lenin’s Imperialism: The Highest Stage of Capitalism, published in 1916, was essentially an attempt to explain why capitalism still existed. By then Marxists fully expected that capitalism would be long gone.

One thing that J.M. Keynes got right was his understanding of the power of ideology. In the final paragraph of The General Theory he wrote, “The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood.… Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”

Whether or not Barack Obama is a Marxist depends on how you define Marxist. Most everyone who acts like a Marxist reacts strongly if called a Marxist. There are probably a hundred Marxists for every one who admits to being one. The birth certificate I would like to see is one that would show where Obama’s ideology was born.

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◼ Obama’s Labor Theory of Value August 13, 2012

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Infuriator in Chief

President Obama’s greatest talent seems to be his ability to infuriate his opponents. The latest example is the campaign speech he gave in Roanoke, Virginia last weekend. In that speech he declared, “If you’ve got a business — you didn’t build that. Somebody else made that happen.” The Wall Street Journal opines that, “This burst of ideological candor is already resonating like nothing else Mr. Obama’s said in years.”

Of course, Obama’s explanation of how success happens is absurd, but that’s only part of the story. Also interesting are the motivations and consequences of his remarks. His view is much more than wrong, it is insulting, infuriating, and demeaning to a large portion of the populace.

Obama’s supporters may agree with the views he is expressing. His words may make them more enthusiastic in their support for him, make it more likely they will donate to his campaign, and show up to vote in November.

On the other hand, do those words cost him any votes? Those who are incensed by what he says probably weren’t going to vote for him anyway. When the people who are already angry enough to vote against him get even angrier, are there any consequences? Is he increasing the population of voters who are livid, or is the impact simply redundant?

Coaches tell their professional sports teams to measure their words when talking to sports reporters. They tell them not to say disrespectful things about their upcoming opponents, and not to say something that will end up on their opponents’ locker room bulletin boards. Providing extra motivation for your opponents is never a good idea.

There is a vast difference between Barak Obama’s public persona and his true nature. In other words, his public persona is a fraud. An inherent problem with a fraud is that it is not easy to sustain in the long run. There is a constant tension between the reality and the fraudulent image. An old adage says, “The truth is easy to remember.” The corollary of that is lies are hard to remember. Like bubbles, the truth tends to rise to the surface. What we saw in Roanoke is the real deal Obama. Now and again Obama actually delivers on his promise of transparency.

There is a degree of internal logic to Obama’s world view. In his Roanoke speech he said, “There are a lot of smart people out there — there are a whole bunch of smart people out there.” In other words, there’s no real difference among individuals, therefore, incomes and wealth ought to be equal.

Getting our arms around Barak Obama’s worldview is extremely difficult for those of us who don’t share it. We ask ourselves, how can anyone believe such things? But believe it he does, and the rest of us need to recognize that fact.

Obama is well known for his frequent use of argumentum strawmanium. He makes up grotesque caricatures of his opponents’ policy positions. Included in his Roanoke speech was, “There are some things, like fighting fires, we don’t do on our own. I mean, imagine if everybody had their [sic] own fire service. That would be a hard way to organize fighting fires.” Does he not recognize how insulting and condescending that sounds? Who in the world advocates having his own free-standing fire department? No one is that stupid. It speaks volumes about his opinion of his audience’s intelligence. Being talked down to that way is not a way to win friends and influence people. Obama is incapable of dealing with his opponents’ real arguments, so he describes them in absurd, cartoonish ways. It’s pathetic.

Barak Obama is unquestionably the most divisive U.S. president in modern history. People I never would have suspected have expressed to me an intense resentment and anger about what he has done to the country they love. Two wonderful ladies I know, both age 85, have for the first times in their lives become politically energized. I’m pretty sure neither one of these fine ladies have had this much political anger in all of their lives. I don’t think they are isolated examples. In November we will learn just how many voters share their feelings.

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◼ Infuriator in Chief July 19, 2012

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

The Republicans’ Wasted Angst

Republicans need to chillax. Especially within the Republican establishment, some apparently are having anxiety attacks about how the primaries are unfolding.

Here’s what the panic prone seem to be overlooking — if the election were held tomorrow, Charley Sheen would beat Barack Obama. Heck, you could even say John McCain would beat him. The point is this: the election in November will be almost exclusively about Obama. The relative importance of Obama versus fill-in-the-blank will be in the neighborhood of 95 to 5. This election will be overwhelmingly a vote against rather than a vote for. The deciding question on the majority of voters’ minds will be, “Which of these two guys is not Barack Obama.” There will be tens of millions of “one-issue voters” and the one issue will be Mr. Obama.

In the 2008 election Obama had virtually every imaginable factor in his favor. The mainstream media gave him a free ride, as they will again in November. There was no due diligence, no vetting. Even with every imaginable advantage, 47 percent of the electorate voted against him. It’s reasonable to assume that virtually none of those who voted against him then will vote for him this time.

Now consider the 53 percent who voted for him. That 53 percent comprised a number of sub-populations — young people, minorities, Jews, labor union members, progressives, independents, for example. Now on an almost daily basis we see polls showing how he is hemorrhaging support from one or another of these groups. In a wide variety of ways he has managed to alienate many of his supporters.

There are, of course, Democrats and liberals who would never vote for any Republican. Nevertheless, some will simply opt not to vote at all. On the other hand, those who voted against Obama in 2008 are now more highly motivated to vote than they were then.

Obama’s greatest asset in 2008 was his unknown-ness. That asset has now disappeared. In 2008 his blank résumé miraculously transformed into a blank canvas that voters used to envision their heartfelt fantasies. Obama is now a known quantity and a known quality. Getting elected by concealing who you are is not a strategy that can be recycled.

The number of people he has angered or at least disappointed is immense. Even his supporters are angry at him. The difference between the hope and the results is huge. People who were mildly against him are now fervently so. The high unemployment rate only partially reflects the pain and anxiety in the population. Thousands of businesses have failed, and thousands of others are hanging on by their finger tips. Many of those people voted for him last time and will have a tough time doing so again.

The Obama White House and reelection team are trying to show a brave face. The Republican primaries are their primary basis for optimism. They and their mainstream media support team think the Republicans are self-destructing, and many Republicans seem to agree.

Fortunately for Republicans, in this election an ideal candidate is not a prerequisite for victory. As is always the case, everything is relative.

It is now obvious that Obama cannot run on his record. His State of the Union address almost totally avoided any mention of his accomplishments other than killing Bin Laden.

Obama’s only real hope is that the economy turns around between now and November. That, of course, is a real possibly. Our economy has enormous inherent strength and resilience. No recession has lasted forever.

If the economy does turn around it will be in spite of, not because of, Obama. Nevertheless, a recovery would change the mood of the country. Some voters will give credit to Obama. Many voters, however, are so strongly opposed to Obama that nothing between now and November could swing their vote in his favor. If the economy does not recover significantly, Obama is toast, no matter who the Republican nominee turns out to be.

It’s never smart to be overconfident or to make assumptions, but it’s also not smart to be defeatist when there are so many valid reasons for being optimistic. You’ll have a lot more fun watching events between now and November if you maintain an optimistic outlook.

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◼ The Republicans’ Wasted Angst January 27, 2012

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Why President Obama Is Painful to Watch

If someone looked at your face while watching President Obama make a speech or hold a press conference, I’ll bet it would reflect pain and discomfort. Your facial expression might be described as a grimace. There are a number of reasons for that kind of reaction. It might not even matter whether you are liberal or conservative. There is much about Mr. Obama’s style and content that repels rather than attracts.

For example, the man is tiresomely repetitive. How many times has he used the terms “millionaires and billionaires,” “shared sacrifice,” and “corporate jet owners”? He gives new meaning to the term ad nauseam. Most of what he repeats wasn’t worth saying the first time. You’re left wondering, “Is that all you’ve got?”

Saying the same thing over and over makes you totally predictable and uninteresting. Mr. Obama has become tedious and boring.

How many times has he told us that creating jobs is going to be his number one priority? Has it ever happened? His “credibility gap” is growing wider than LBJ’s.

A particularly annoying aspect of Mr. Obama’s personality is that he has virtually no sense of humor. There are very good reasons why humor is categorized as a “sense.” Humor is akin to a sense of taste or sense of balance. Individuals vary widely in regard to these characteristics. Successful comedians have inherent and highly developed senses of what’s funny and what’s not. They are “naturals.” Of course, there are people on the other end of the spectrum, such as Mr. Obama.

It’s painful when people with no sense of humor attempt to be funny. Mr. Obama frequently makes lame attempts at being funny, and people in the room usually laugh, particularly members of the press. If you listen, however, what you hear is an uncomfortable, polite, and brief kind of laugh.

Mr. Obama makes use of awkward and unusual figures of speech. One glaring example that I’ve never figured out is the title of his second book, The Audacity of Hope. I realize it is a phrase he took from his mentor and long-time pastor, Jeremiah Wright. Wherever it came from, what in the world does it mean? It is typical of most of what Mr. Obama says. I suppose that it was meant to sound profound, but if you think about it, it’s anything but.

In the midst of the health care debate Mr. Obama said, “There’s something about August going into September where everybody in Washington get’s all wee-weed up. I don’t know what it is, but that’s what happens.” So far as anyone could determine, no one had ever used the term “all wee-weed up” previously. Later the White House explained that it meant wetting the bed. That still doesn’t make any sense. Let’s just say, the man is not a great communicator. Articulate he is not.

Recently in the debt limit negotiations Mr. Obama warned the Republicans, “don’t call my bluff.” That’s just weird. Anyone with half a brain knows that a basic requirement of a bluff is that you don’t let it be known that you’re bluffing. Admitting that you’re bluffing cancels its effect. If you admit that you’re bluffing, you are sure to be called on it.

Mr. Obama is often cloyingly folksy. One obvious example is his insincere and frequent use of the word “folks.” A similar lame attempt at sounding like a down-home good-old-boy is the dropping of the g in words like going, doing, etc. It just makes him sound phony. Mr. Obama is attempting to act a part, but he’s not a very good actor. Watching bad acting is no fun.

The odds are looking better all the time that Mr. Obama will be a one-term president. There’s a good chance we will only be burdened with his tiresome style for another eighteen months.

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◼ Why President Obama Is Painful to Watch August 12, 2011

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

This Recession Is Not Like the Others

As they used to say on Sesame Street, “One of these things is not like the others, one of these things is not the same.” The current recession “is not like the others.” At 33 months it is already more than three times longer than the average length of the other ten recessions we’ve had since WWII. There are no clear signs it will be ending anytime soon. Glimmers of a recovery appear from time to time, but most indicators remain depressed and many are worsening. On balance, the outlook is more negative than positive. Not since the Great Depression have we had two consecutive years of unemployment in excess of nine percent. What we’re seeing is economic stagnation.

Something else about the current situation that “is not like the others” is the defeatism of those in charge. President Obama’s economic advisors, Tim Geithner and Larry Summers specifically, have been warning that unemployment could remain painfully high for years to come. Vice President Biden has declared that we may never regain the eight million jobs lost over the past two years. I don’t think an administration’s spokesmen have ever before been so pessimistic, especially for the long term.

Mr. Obama and his advisors are not draftees. They asked for this job. They asked to be put in charge. They wanted us to believe that they were “the ones we’ve been waiting for.” In no uncertain terms they convinced voters that they would do a vastly superior job than that dufus cowboy George Bush. Now they have been reduced to pleading, “No one told us it was going to be hard!”

This raises a crucial question — why is the current recession so long and deep? A frequent focus of scientific research and analysis is the attempt to explain and account for differences or anomalies. This recession is “not like the others.” A new name has been invented — the Great Recession. It’s being said that 10 percent unemployment is “the new norm.” Why, exactly? What’s changed?

Past recessions have been largely self-correcting. Furthermore, they have self-corrected in a matter of a few months. Why is it taking so long for that to happen this time around? What’s standing in the way of the self-correcting mechanism?

Geithner, Summers, Biden and Obama are all saying “this time it’s different.” They can say that, of course, but they need to elaborate. They are making assertions that cry out for explanations. If you’re going to make a dramatic, unprecedented proclamation, you really ought to provide details and support. If you make a bold statement, you must have some idea as to why it’s so.

The answer is relatively obvious to anyone with open eyes. The overarching factor that is making this recession different is that the Obama agenda is qualitatively and quantitatively different from any previous president’s agenda. The anomaly of the current recession is the anomaly of Barak Obama’s political philosophy and worldview.

A fundamental conclusion of financial economics is that there are two main dimensions to investing — risk and return. What space and time are to physics, risk and return are to investing. When evaluating an investment opportunity, return is the good, risk is the bad. Another basic conclusion is that risk and uncertainty are just two ways to looking at the same thing. Risk is uncertainty in work clothes.

The Obama administration’s reckless and unprecedented restructuring of the economy has greatly increased the level of uncertainty for anyone thinking about investing, starting a new enterprise, or making consumption expenditures. Mr. Obama has turbo-charged the amount of uncertainty in the minds of decision makers. This is an administration with no brakes, and the ride is frightening.

The massive and rapidly growing federal debt overhanging the economy portends future tax increases. Those probable tax increases reduce the expected return of investments. The lapse of the Bush tax cuts is little more than four months away. The bad news is relatively certain, the good news is highly doubtful.

Mr. Obama and his spokesmen need to explain what’s going on with the economy, and how exactly their policies will cure our serious economic difficulties. If they can’t explain the nature of our problems, what are they doing? Are their policies based on nothing more than a hope and a prayer? Why should anyone have confidence in your corrective action if you don’t show that you understand the nature of the problem?

Mr. Obama and his advisors act as though they themselves are hapless victims of the Great Recession. They imply things have gotten so bad we’re just going to have to get used to it. This is pathetic. Rather than rising to the occasion and dealing with the challenge, they whine and blame the previous administration. They need to be rethinking their strategies and analyzing why their previous solutions have not worked. Unfortunately, because of their doctrinaire attitudes, that is extremely unlikely. They will never admit that the fundamental problem is them.

The president is losing the support of even his most ardent supporters. Arianna Huffington, for example, said recently, “The president put all his trust in the wrong economic team — an economic team that didn’t understand what was happening.”

The injuries done by the Obama administration are painful but not fatal. The U.S. economy has fundamental strengths that will allow it to recover eventually in spite of the damage done by the Obama administration.

More and more, voters are recognizing that electing Barak Obama president was a terrible mistake. In November they will have opportunities to begin reversing that mistake and start undoing the damage. As Sarah Palin said recently, “From my house I can see November.”

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◼ This Recession Is Not Like the Others August 12, 2010

Ron Ross Ph.D. is a former economics professor and author of The Unbeatable Market. Ron resides in Arcata, California and is a founder of Premier Financial Group, a wealth management firm located in Eureka, California. He is a native of Tulsa, Oklahoma and can be reached at rossecon@gmail.com.

Many Questions, Few Answers

◼ Many Questions, Few Answers

There are many reasons why support for President Obama's health care plan has declined as the details have become clearer. I suspect that Mr. Obama and his advisors were afraid this would happen. That's probably why they wanted to rush it through Congress (even though most of its provisions don't become effective until 2013).

Their central dilemma is this -- voters want more than vague outlines of what Obamacare will mean to them. Unfortunately for reform proponents, however, whenever there is talk about specifics a firestorm of controversy and partisan division erupts. In other words, the proponents can't be vague and they can't be specific.

In his campaign for the presidency Mr. Obama did an excellent job of selling himself, but he has failed to truly sell anything else. It's becoming clear he is not a good salesman, teacher, or persuader. He has attempted to sell what's unbelievable. That's not good salesmanship. If I were one of his supporters I would be extremely frustrated with him. The recurrent problem with selling Obamacare is that there are far too many aspects that, to put it mildly, strain credulity.

The so-called "public option" is a prime example of why everyone ought to be extremely skeptical of Obamacare. In a Labor Day speech the president said "I continue to believe that a public option will improve quality and bring down cost." On an almost daily basis, however, the public option has been an on-again-off-again proposition. This might cause a person to wonder, is it important or isn't it? In his speech to the joint session of Congress Mr. Obama said that the public option is simply "a means to an end."

Although none of the specifics of Obamacare are clearly defined, the idea behind the public option is that it would supposedly be a way to add a new kind of competitive pressure to private health insurance companies. The public option would be a new government-run, government-owned health insurance company.

I've been studying economics for almost 50 years. I have never before heard of anything vaguely resembling the case being made for the public option. I would be interested to see an example of a government-run, government-owned institution that puts competitive pressure on private companies, causing them to provide lower prices and better service. Is it the existence of the U.S. Postal Service that causes UPS and FedEx to keep costs low and service high? Where are the examples of government institutions being run more efficiently than private companies? The experience most people have is just the opposite.

There are already well over a thousand health insurance companies in existence. It would be hard to argue that our health insurance problems stem from a lack of competition. In some states there are only a handful of available companies. That's primarily the result of burdensome regulations, mandates and limits on interstate competition. Economists have called competition the "patron saint of consumers." More competition is definitely a good idea, but attempting to make the government a competitor is a weird way to accomplish that objective.

I have no idea where this totally novel idea came from or why anyone thinks it would work. It's an idea I had never even heard of until a few months ago. Nevertheless, it has become a make-or-break issue for many Obamacare proponents. The proponents need to explain exactly how it would work and why it is of such paramount importance.

Would this new government-run health insurance agency be self-supporting? If it had access to public funds, how could private companies compete with it? It would not be a level playing field. The president has told us repeatedly that if we're satisfied with our current health insurance, we can keep it. If a subsidized public option drives most private insurers out of business, however, that option will go away. The main reason there are so few private schools is that they have to compete with public schools that provide a similar product free of charge.

The public option is a totally untested shot-in-the-dark. It is perhaps the best indicator that Obamacare proponents are willing to overhaul one-sixth of the economy on little more than a wing and a prayer. At this point the public option could be described as a "faith-based" proposal.

Mr. Obama and other Democrats have said many times that their preferred version of health care reform is the so-called "single payer" system similar to what Canada, Britain and France now have. They recognize that, at this point, however, a single-payer system is a political impossibility. It's that reality that is the real impetus behind the public option.

Whenever the public option itself begins to look like a political dead end, they run some other half-baked idea up the flagpole. "May I offer you single payer? Not interested? Would you buy a public option? No? Would you buy a health insurance co-op? Not that either? Could I interest you in a public option trigger? No? Surely, then, you could agree to an insurance exchange." They're beginning to look silly, desperate and floundering -- more like a Saturday Night Live skit than someone wanting to redesign a sixth of the economy. Do we really want a comedy team in charge of our health care?

Another example of the too-good-to-be-true nature of Obamacare is Mr. Obama's promise that it will reduce the overall cost of health care and will not add to our already massive deficit. There are obvious reasons why much of the public is not buying that claim.

We're told repeatedly that there are 47 million Americans without medical insurance and because of that they are receiving inadequate medical care. (In his speech to the joint session of Congress Mr. Obama put the number at 30 million uninsured Americans.) The dilemma is you can't improve the medical care for 47 million (or even 30 million) people without spending large amounts of money.

As much as they might like to, politicians cannot repeal the laws of supply and demand. If demand is increased significantly, there will be upward pressure on prices. Lawmakers can attempt to cap prices if they want, but that will only lead to shortages. Improving the health care for millions of new people will require a significant increase in the number of health care professionals. How is that going to be accomplished? How is going to be paid for?

Mr. Obama has also assured us that his plan will not lead to rationing. That is another impossible promise. In one form or another, every economic good has to be rationed. There is no good or service that can be available to everyone in unlimited quantities. The rationing device we rely on in most cases is the price system. Flexible prices balance supply and demand. If you choose not to rely on the price system some other rationing mechanism has to be put in its place.

Remaking the health care sector is probably the biggest domestic issue ever undertaken by the government. Something that massive and historic should only be attempted after careful analysis as well as deliberate, serious, and open debate. Mr. Obama has not had discussions with Republican lawmakers since April. He has taken a "my way or the highway" attitude. Rather than take alternative proposals seriously and respectfully, he has demeaned and ridiculed anyone who's not on board with his own particular prescription for reform.

One undeniable aspect of government solutions to problems is that the "cures" are extremely inflexible. Technology, our culture and the economy are all changing at an accelerating pace. Even if an answer is right today, it isn't necessarily right tomorrow. Politically imposed rules and bureaucracies all suffer from chronic rigidity. Government imposed regulations necessarily take on a "one size fits all" character. Bureaucracies treat people not as individuals but rather as categories. Is that really the direction we want to go with health care?

Consider, for example, how the federal government attempted to deal with agricultural problems in the early years of the Depression. Their "solutions" were based on what we now realize was a complete misreading of the underlying problems. Nevertheless, their ill-advised programs are still with us more than 75 years later. There have been numerous attempts by presidents from both parties to end or modify such programs as agricultural price supports, all to no avail.

Creating a whole new set of rules that will significantly change one-sixth of our economy is an undertaking far more difficult than the advocates of health care reform seem to grasp. Neither Mr. Obama nor the congressmen involved are experts on the health care industry.

Politicians have a fatal urge to oversimplify reality. Problems and shortcomings of our health care system are exceedingly complex with an endless list of origins. Politicians arrogantly assume that in a relatively short period of time they can design solutions that will make the whole system function more efficiently. Whatever "solutions" they impose on a complex system will make some problems better and some problems worse. More often than not, politically imposed "solutions" create far more problems than they eliminate.

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Thhis article originally ran in the North Coast Journal, September 17, 2009 - Ron Ross Ph.D. is an investment advisor at Premier Financial Group in Eureka and author of The Unbeatable Market.