Obama's Words (Still) Speak Louder Than Actions

"In the military, as in any organization, giving the order might be the easiest part. Execution is the real game." - Russel Honore.

President Obama's soaring speeches essentially got him into the White House. His DNC 2004 keynote speech first won him national attention.  Then a couple of "Hope and Change" oratories with mix and match phrases were key to his 2008 primary and general election victories. He also has a great sense of humor, which makes his White House Correspondents Dinner addresses and appearances on Jon Stewart and Steven Colbert shows like on Dec. 9, '14 worth watching. His policies haven't appeased most Republicans but they're quite centrist and track majority opinion fairly well. So what's his biggest problem?

His weakness per my March 2013 post is in poor implementation, neglecting routine administration, and not anticipating and addressing problems before they become critical.  When faced squarely with a crisis or challenge Obama marshals his faculties and resources to rise to the occasion. That's how he outplayed Hillary Clinton in 2008, dealt with Hurricane Sandy effectively in 2012 just before his re-election, recovered from the awful start of the HealthCare.gov website, and so on. But the Executive-in-Chief should execute well in general, not just in firefighting mode.

The President cannot do everything, so he needs to pick the right people to work under him, track their performance, press them to improve where needed, and replace them quickly if they don't. Obama here is no worse - and probably better - than "heckuva job, Brownie" G.W. Bush.

But he falls well short of Bill Clinton whose operational excellence was a largely unsung and under appreciated aspect of his presidency. Not only did the cogs of the day to day government machinery run smoothly then, but major programs took off without hiccups. Examples in health care are the Clinton launch of children's health insurance program and the overhaul and immense improvement of the Veteran's Health Administration (VA).

And how is Obama doing now, as compared to his earlier years? Significantly better in some aspects. Examples:

• In health care he finally dispensed with Kathleen Sebelius and appointed the far more competent Sylvia Burwell as health secretary. The lackluster CMS chief Marilyn Tavenner is also gone. A post 2013 team along with Accenture now running HealthCare.gov has immensely improved operations including enrollments under ACA (Obamacare). 
• Janet Napolitano is gone as Secretary of Homeland Security, replaced by a much better Jeh Johnson since December 2013. One change I personally noticed is the much quicker processing of international flight passengers at our JFK and Newark airports. The hour plus long lines have now decreased to a wait of 20 minutes or less.
• U.S. postal services have improved some services, e.g., with insurance and tracking already included in Priority Mail packages.  More outlets like Staples now sell products and accept postal packages. 

There are still visible shortcomings, ranging from the trivial and irritating ones I see in my daily domestic life to those of national importance. Examples:

• The streams of unwelcome phone calls from marketers, including robo-calls on Do-Not-Call registered land line and mobile phones has become even worse. The FTC seems totally unresponsive to complaints, and this has made marketers more brazen in flouting this one very welcome law passed in the G.W. Bush presidency. Even authentic information about U.S. based scammers and violators contained in complaints seems to disappear into a black hole. Although the FTC is an independent agency, its Bureau of Consumer Protection works closely with the Department of Justice. So the Obama Administration through Eric Holder's Department of Justice can and should get them to go after violators much more vigorously. Let's see if Holder's chosen successor (currently nominee Loretta Lynch awaiting Senate approval) turns out to be better in this regard.
• U.S. post offices still don't display prices for common services like rates for domestic and international mail and packages. You can ascertain these piecemeal at automated stations, but these should be displayed for quick information and comparison. Why isn't this done on now so inexpensive electronic displays that can be readily updated when rates change? Plus the USPS is still losing money. A competent administrator should be improving efficiency and reversing past giveaways in pensions and benefits instead of trying to curtail services, like Saturday mail delivery.
• Highly paid West Coast dock workers in a labor dispute are crippling the supply chains for many American businesses and hurting our economy. Yet Obama's administration is dragging its feet on ordering an end to this work stoppage. In contrast, the Canadian government moved to end a rail strike there, prompting the management and the union to quickly resume operations and agree to arbitration. 

In foreign relations there are lapses in policy as well as execution pertaining to the Middle East and Ukraine:

• An Oct. 9,'14 Reuters report describes Obama's rejection of proposals of his senior advisers to intervene in Syria and Iraq that allowed ISIS to expand. Though liberals may defend his initial restraint, there's little excuse for the poor execution of his subsequent decision to intervene militarily, support forces against ISIS, etc. 
• Obama's hesitance to help Ukraine militarily in countering Russian backed separatists has contributed to Ukraine's rout and loss of strategic towns in recent battles. He argued against supplying lethal weapons on the grounds that this will further antagonize Russia and kill off peace talks.  I'd have expected an effective administration to at least be feverishly positioning such arms for rapid transfer and deployment if peace fails, and to be covertly training Ukrainians in their use. After all, Russia and the separatists have repeatedly violated prior agreements. Instead, the Middle East problems of US military help coming too little, too late seems to apply to Ukraine as well. 

Some of these outcomes could have been different under a better Secretary of Defense. Obama has at least appointed the well regarded Ashton Carter as the new Secretary who emphasized competence and effectiveness after being sworn in.

In sum, the Obama Administration functions better now than till 2013, though there is still ample room for improvement in his remaining second term.  I also hope that his successor after 2016 is more into good governance from the start.

Execution Vs Policy

In his second term President Obama's Administration should do a better job of day to day administration in which some of his departments fell short.  But first some background.

When Snowstorm Nemo dumped two feet of snow in our town of Danbury CT on Feb. 9 we had a couple of pleasant surprises.  First, our local roads were quickly and efficiently cleared thanks to Mayor Mark Boughton's workforce and similarly our highways by state crews under Gov. Dannel Malloy.  Second, unlike in past storms we didn't suffer major and widespread power outages. This may be partly due to better preventive operations like cutting trees threatening overhead power lines.  Gov. Malloy replaced the power company's management in Oct. 2011 when 70% of the state's homes lost power for several days, and he pushed for better preparedness against future storms.

 The point is, both Republican Mayor Boughton and Democrat Gov. Malloy enjoy high approval ratings and support from the same set of voters among us.  It's not so much because of their policies as for their efficient execution and running a responsive day to day administration.  In a Democratic leaning Danbury I've seen Mayor Boughton win with two thirds of the vote over his Democratic opponent in the past three elections, and deservedly so. 

At a national level good execution was a big reason for President Clinton's success and popularity.  For example his administration transformed veterans hospitals (VHA) from "dangerous, dirty, scandal-ridden" institutions to ones delivering "the highest quality care in the country."  In general I just remember feeling that the branches of federal government though imperfect ran more smoothly and efficiently during his tenure.

President George W. Bush on the other hand (in Paul Krugman's words) had a reverse Midas touch - everything he touched turned into crud.  It wasn't just his wrong decision to invade Iraq, but the faulty planning and execution of the war and its aftermath that turned it into a costly debacle.  Who can forget the "Heck of a job, Brownie" handling of Hurricane Katrina?  Unlike Clinton, GWB tended to appoint cronies based on personal relationships and ideology rather than on ability, which compounded his lack of natural ability to govern effectively.  The financial crisis of 2008 had complex roots including policy failures by the Fed's Alan Greenspan and Clinton's Secretary of Treasury Robert Rubin's earlier deregulation leading to risky bank behavior.  But there was an execution aspect as well, like allowing Lehman Brothers to collapse like it did leading to a domino effect.  To be fair though, GWB made some amends by appointing William Gates as Secretary of Defense, and Ben Bernanke as Fed Chairman.

In India one of the most admired (and controversial) leaders is Narendra Modi, the long serving Chief Minister (equivalent to Governor in the US) of Gujarat state.  He is widely regarded as a Hindu zealot suspected of encouraging the 2002 anti-Muslim riots that killed 790 Muslims and 254 Hindus.  Yet it's his efficient and clean administration with a progressive outlook that has raised Gujarat's fortunes and made even secular minded voters look upon him favorably as a possible future Prime Minister of India.  In contrast, I agree with much of the philosophy and ideals of Congress Party's Sonia Gandhi with Prime Minister Manmohan Singh. But the ineptitude and corruption pervading their administration has alienated even staunch supporters of their Party.  

People standing for elections and the voters deciding amongst them tend to set more store on policy declarations and the likeability factor ("whom would you more like to have a drink with").  Their ability to execute takes a back seat or at least isn't evaluated in depth.  That's fine for legislative roles since Senators and Congressmen are charged with setting policy and laying down laws, but not so much for Presidential and governor races.  After all, for elections to the "Executive" branch of government, shouldn't the ability to "execute" well be a crucial criteria? 

This brings me back to the Obama Administration whose score card in implementing laws and execution has been mixed.  President Obama seems more into speeches and broad ideas, without Bill Clinton's knack of keeping tabs on implementing laws, administrative efficiency and effectiveness.  (Obama fans may dispute this by pointing to his personal involvement in those drone kill lists, but I distinguish that one bit of micromanaging from general emphasis on administrative effectiveness.)  Obama's remoteness means that the performance of his departments depended on who he chose to head them. 

One reason I rooted for Hillary Clinton in the 2008 primaries was her better grasp of the issues (which also helps in administering well) and her being the other half of the Clinton team of 1992 - 2000.  Obama made her Secretary of State where the attack on an unprotected US mission in Benghazi is an exception to her overall sterling performance.  Obama also got Bin Laden of course, and did solidly in continuing the appointments of Secretary of Defense Robert Gates and Fed Chairman Ben Bernanke. His other good choices in his first term were Leon Panetta for CIA and later Defense, and Arne Duncan for Education.  He did well in areas under national spotlight like restoring the effectiveness of FEMA and responding to Hurricane Sandy on the eve of his re-election.

In other departments his choices left something to be desired, and Obama so far hasn't matched Clinton's ability to spot and tighten under-performers whose actions are less in the  news.  While minor in themselves these add up to how his administration impacts the everyday lives of ordinary Americans.  Here are some examples including what I've seen and experienced at first hand:

• FCC and the do-nothing Do Not Call registry.  George W. Bush did something right when in 2003 his administration started the Do Not Call registry to save us from those nuisance marketing calls. Getting on that list is easy and over three fourths of Americans have registered for it. The penalties of up to $11,000 and $16,000 per violation should be enough to deter offending marketers.  The problem is that the FTC and the FCC who are supposed to act on complaints of violations do so little about it.  Consumer complaints have poured in with 212,000 in April 2012 alone, but the enforcement penalties have been a measly $5.6 million to date in the most prominent of violations. I've personally filed scores of complaints after digging out the identities and contact information of the callers (no easy task as they know they're violating the DNC) and heard nothing back.  What's the use of having laws if the FTC as well as the FCC does so little to enforce them?  I see robo-callers and marketers increasingly emboldened and flouting the law, and get half a dozen of these calls on many days.  I'm glad FCC Chairman Jules Genachowski is leaving.  Now if only Obama can get his successor to better mind day to day enforcement in parallel with those "bigger" anti-trust and policy issues.

• Homeland security and airport entry.  I marvel at the speed at which the hordes of incoming international passengers are processed at Mumbai and Delhi airports in "third world" India.  They have about 40 immigration counters open, and even with several planeloads arriving simultaneously the longest I've had to wait in the last half a dozen visits has been 40 minutes.  In Europe and the Middle East it's been much faster - never longer than 10 minutes.  In contrast, the last four times I've entered the US at JFK or Newark airports the wait has been at least an hour, even though the number of incoming passengers is a fraction of those in India.  The reason?  They seem to consistently have too few agents at the counters, with most of these closed. I've felt particularly bad for women with babies and young children who had to struggle through this as there is no separate quicker processing for them.  Surely the Homeland functionary sitting in Washington DC who oversees airport entry could have video feeds from the processing halls of all major airports to see these long lines.  It speaks poorly of Homeland Security Chief Janet Napolitano and her deputies who directly supervise this.  My complaints and suggestions in this regard have been met with stock responses from underlings of the very official at these airports who is responsible for such laxity.  

• US Postal Services (USPS).  We have excellent mail carriers for our home, as is the staff at our local post office.  But here are some experiences pointing to management miscues.
•  Our local post office no longer displays prices of standard products like first class mail, priority mail, express mail, international mail or passport processing.  True, you can find them at the automated kiosk or once you talk to a postal clerk but there's often a line for both of these.  So it wastes time when you cannot think and plan in advance while waiting in the line and slows customer processing from the post office's viewpoint.  The only rates I see are of overpriced stationery products like envelopes and boxes that you can buy for a third of the price at Staples or Office Depot.
• Three years ago I went to our area's 24/7 automatic postal station after regular manned working hours to buy stamps for mailing some letters to India.  But the menu of choices on the kiosk screen did not include mailing to foreign destinations, nor dispense stamps for an amount I wanted to specify.  So I had to go back home, look up the rate information on the internet and use stamps at home before dropping off the letters.  The problem? A glitch in their software upgrade that may well have affected automated stations in many parts of the country.  This problem persisted for several weeks, if not months.
• To lower costs a lot of USPS mail boxes have been removed all over the US in the past years, so they're typically a couple of miles apart in our Danbury area.  That's fine.  The one closest to our home by the roadside is a drive-up with a protruding slot in which we can drop off letters without needing to get out of the car.  It was damaged 4 years back and replaced with one without the protruding lip (that costs may be $50 extra) so that everyone using it had to park and get out of the car to use it.  It took them two years to affix that lip and I'm thinking of the hundreds of thousands, if not millions of times users had to be inconvenienced in this time. 
• When our daughter Rubina was getting married I went to a privately run authorized post office which was open later than our main office in Danbury. I showed the agent our wedding invitation cards being mailed within and outside the US.  He determined the postage due, sold the stamps, helped affix these and accepted the cards for delivery.  Ten days later some of these came back to our address (apparently from some sorting facility) for insufficient postage.  Because they were square in shape, not rectangular, they asked for 17 cents extra.  So the mail sorters acted at odds with the counter sales person working for the same organization, wasting our time and effort in the process. 

There's hope.  When Obama first entered the White House he didn't have any executive experience unlike Clinton who had been governor of Arkansas.  Now with four plus years under his belt Obama can do better in performing the "ordinary" but important role of government.

Voter, Blame (Or Pat) Thyself

Cynicism pays.  Mitt Romney doesn't seem to be hurting from switching positions in the blink of an eye to whatever his audience of the moment wants to hear.  All his "then and now" video excerpts  played by Jon Stewart in the Daily Show and by other media haven't stopped his upward momentum in popularity.  With two weeks to go before elections he's pulled even with (or even slightly surpassed) Obama in national polls.  Pundits on average have Romney's chances of winning the election improving from less than one in four a month ago to almost even now (though NerdWallet still has him only at 29% today.)

And then we have India where corruption, the role of money in politics, inefficiency and populism has severely affected economic growth. Prime Minister Manmohan Singh with a clean image is called an underachiever by Time in its July 16 issue for failing to check corruption around him, and to stick his neck out for reforms.  With a few notable exceptions it looks like elected leaders of whatever party or political platform are on the take.

Looking at India and the US as examples, are the virtues of democracy as great as they're cracked up to be?

"Even the worst democracy is better than the best of dictatorship." Thus said then Prime Minister Yousuf Gilani of Pakistan in Feb. 2010 and I've heard this sagely intoned in our polite circles in India for decades. 

Really? Will average Chinese citizens trade places with their Indian counterparts, including the growth rates over the past quarter century that have made the Chinese thrice as rich?  A June 21, 2011 article in Business Insider lists the most economically successful dictators of the past century, and generally left their people a lot better off than before.  England's golden age was in the 16th century when Queen Elizabeth I reigned (1558-1603) wielding absolute power, seeding the idea of benevolent despotism. 

Still, the odds favor democracies.

Corruption and misuse of power can flourish in any political system, but democratic checks and balances like a free press and independent judiciary can better restrict the most egregious behavior.  An Oct. 26, 2012, NY Times story describes $2.7 billion of wealth amassed by the once humble family of Chinese Prime Minister Wen Jiabao.  Compare this to Robert Vadra, Sonia Gandhi's son-in-law and Priyanka's husband whose wealth grew in 3 years from $100,000 to "just" $60 million.  And consider that Robert Vadra's alleged misdeeds are being widely reported and criticized by Indian media, while a tight lid is kept in China on any adverse news about its leaders.

Democracy has another thing going for it - people choose their leaders and hence are responsible for their own plight.  Chance still plays a role, of course.  Two prime ministers, Narasimha Rao who started economic reforms and his successor from the opposing party A.B. Vajpayee, were better than expected, and India thrived.  Mr. Manmohan Singh isn't terrible but he fell short of his high promise.  In US recent history Presidents Bill Clinton and George W. Bush probably represent the opposite ends of the performance spectrum.  

Still, in past presidencies and the coming general elections of Nov. 6, US citizens decide on their leaders, for better or for worse.  There's no one else to blame or congratulate for that choice, whether it's made with eyes wide open, or out of ignorance.  Does there have to be a lot of the latter for the Republicans to win?  After all Republican stances on important issues like taxes, health care coverage and the social safety net are less favorable to the middle class (and the poor of course) than Democratic ones.  In the NY Times on Oct. 24 Nicholas Kristof describes how Obama's economic policies trump Romney's.  Instead of USA's steady if modest recovery under Obama, Europe style austerity measures favored by Romney and Republicans would have led to Europe style economic crisis.  Yet Republicans can only clinch elections with substantial middle class backing.

Election propaganda and voter ignorance of course play a role, but more complex factors may matter more.  Man does not live on bread alone, and factors beyond material and physical benefits may turn the scales to explain why many in the middle class identify with Republicans. 

Are Romney supporters oblivious of his duplicity, especially the 95% who lose out in Republican intent to "broaden the tax base" while lowering taxes for the richest? Some are, though many more may simply overlook it because his party's platform is closer to their disposition on social values, religious zeal, immigration and racial issues, etc. 

In a few days we'll know who and what wins out.  And with the US being a great democracy our voters will get to live with their choices.

Arming And Coddling Our Criminals

Democrats and Republicans both provide comfort and help to our violent offenders. 

The Democrats (actually the Liberals who closely identify with them) have made jail terms shorter and more pleasant for felons.  They've had the death penalty abolished in 17 states and Washington, D.C., and cheered its erosion in the remaining 33.  The 12 killed and 58 injured by James Holmes in a Colorado movie theater have created headlines and the guilt or deliberate intent of the shooter is never in doubt.  Yet an insanity defense is almost certain and it will be many years if ever before this guy gets the ultimate punishment.  Something he would have dodged with certainty if he had chosen the "right" state - one of those 17 merciful ones - to stage his crimes.

Still, violent criminals everywhere should be heartened by the overall statistics.  There are about 14,000 murders committed in the US every year, and only about 43 of the guilty are eventually executed.  So the odds are very good that killers even if they're caught will spend their lives in prisons with decent food, stay, entertainment and health benefits, thanks to liberals' efforts and court directives by progressive judges.  Not to mention the opportunity to bask in media publicity and star in shows like "Lockup Raw."

About two thirds of our murders are committed with use of firearms.  And this is where the NRA backed Republicans are key to ensuring that our criminals are well supplied.  Some precautions like background checks are rendered meaningless when you can avoid them in gun shows.  But as remarkable is letting assault weapons like AK 47s or hand guns with high round magazines be owned for self-protection under the 2nd Amendment.  There have been ample studies like this one of Feb. 2010 in News Medical about how guns in homes do far more harm than good to the owners themselves, leave alone other victims.  Mere facts can't compete of course with the NRA's "Founding Fathers" rhetoric. If it was valid 200 years ago (when slavery and subservience of women was also the norm) many Americans think that alone is a good enough reason to continue such practices. 

There were several media laments about how Obama uttered platitudes but did nothing substantial after the Colorado massacre to force gun control.  But this close to elections I don't blame him.  A large chunk of independents or undecideds can be turned off by such a measure, and those who favor it may be upset, but they'll never switch to Romney.  And conversely, the same may hold though to a much smaller extent for Romney to stick to the NRA playbook. 

After the elections there should be a serious overhaul.  In September 2009 I suggested key changes to our criminal justice system, though these may shock Liberals as well as those on the hard right.  An articulate and astute President supported by some key Congressional leaders with similar qualities from both parties could make this happen.  They can win broad acceptance and acclaim from the "non-fringe" populace, and find alternative sources of campaign funding and support to replace some they'll lose from their extreme base.  See how many of these proposed changes you agree with.

We Are Gullible And Easily Manipulated

The title of this post is my understanding in plain words of the essence of behavioral economics, particularly as applied to politics and public discourse.  A series of studies have validated this view that people often don't realize what's (fairly obviously) in their best interest and hence undermine it.

It explains for example, why more Americans disapprove rather than approve of the 2009 health reforms (inadequate and marred by compromise as they were) that overall better their lot.  Or how so many Americans fall for Tea Party tax ideals that basically favor the top 1% at the expense of the 95% (even if not all the 99%.)

Now The Economist in its March 24, 2012 article "Nudge, Nudge, Think, Think" describes how forces for public good can use behavioral economics to manipulate people back to collectively bettering their lot. The article informs how the two authors of "Nudge" are helping governments and socio-political campaigns. Cass Sunstein, has been recruited by Barack Obama to the White House. Richard Thaler has been advising policymakers in several countries including Denmark, France and, above all, Britain, where David Cameron has established a Behavioural Insights Team, nicknamed the Nudge Unit.

Prof. Richard Thaler has since my University of Chicago days in the 1990s been engaged in a vigorous and running though largely good-natured debate with his "efficient markets" colleagues.  The latter who dominated our University's financial ideas say that investors as a whole make completely rational decisions based on their self-interest. Can there be irrational investors who pay more or sell securities for less than what they're worth according to publicly available information?  Sure.  But according to efficient markets theory there are enough rational counter parties to benefit from their stupidity to drive the prices back to the "correct" level.

The University to its credit brought in Thaler and others to enrich its diversity of economic ideas instead of stacking its faculty ranks with just its renowned efficient market theorists.  Thaler's thinking has increasingly gained traction in academic, financial, social and political circles.

Behavioral economics is of course a double edged sword and special interests have been using it to dupe people into supporting their causes even at the expense of the general populace.  Now genuine reformers in politics and government can harness the concepts to swing the pendulum back towards gaining popular approval for the best public interests.

Obama: Centrist or Weakling?

President Obama made most of the concessions to Republicans and Tea Party hardliners that have led to the debt ceiling deal that averted a US default. He gave way to most demands of the Tea Party faction of the Republicans - deep spending cuts and no revenue increases by raising taxes or closing tax loopholes for the rich. The Democrats had little choice but to go along or else crash the US economy.

But they are not happy.  In his Aug. 1 NYTimes column "The President Surrenders" Paul Krugman scathingly explains why Obama's capitulation is a catastrophe in both economic and political terms.  Joe Nocera in his companion "The Tea Party's War on America" talks of this group and the Republicans taking the country hostage and being rewarded with near-complete capitulation by Obama.  Even William McGurn in the right wing WSJ today calls the accord a "conservative victory" and a "striking achievement." 

There is a difference between a Bill Clinton type centrist who compromises and someone who is reluctant to take a stand, and when forced to do so repeatedly backs away to become the appeaser in chief. Emboldened by their successful brinksmanship Republicans are likely to take Obama's (abject) pliability for granted in future negotiations on key issues.  That said, I've a couple of additional observations:

•  The US government may not be "of the people" or "for the people" in the sense that the Administration and Congress are adequately acting in the interests of the populace, rather than key special interests. That's why approval rates for Obama are at 45% and of Congress at an all time low of 14% according to the latest CNN/ORC poll. But the US government is still "by the people."  Voters put Obama in office in 2008 (particularly those supporting him against Hillary in the primary) and elected many Tea Partiers in 2010.  So at least Americans are fully responsible for the state of their national economy and polity, unlike people living in countries with repressive regimes.

• As a corollary to the above the US won't get political accountability if the voters remain befuddled about who's responsible for their plight.  Despite the Tea Party and Republicans plunging the nation into a contrived debt crisis an ABC poll today shows Americans lashing out at both parties.  68% and 67% of them disapprove of Republicans and Democrats respectively.  Paul Krugman partly ascribes this to the media, deriding its false sense of balance in his July 28 NYTimes column for tending to blame both sides equally no matter who's actually at fault.  Still, there's enough information out there for Americans to judge their leaders and vote in their own best interest, but many don't. Take the Tea Party that vehemently opposes tax increases even for households making over $250,000 a year.  It should logically attract only the 2% of Americans who are above this threshold, yet over 20% belong to this group.

• Obama's actions may have weakened Democrats and given away too much of the store for average Americans, but they haven't affected his own re-election chances.  To Democrats and a majority of independents he'll likely be the lesser of two evils when faced with a Republican nominee elected by an increasingly radicalized GOP.  There's also no viable Democratic primary challenger or a third candidate (like NY mayor Michael Bloomberg) on the horizon yet.  So to the GOP rhetoric about making Obama a one term President and the above ABC poll showing him at par nationally and behind Mitt Romney in the key state of Pennsylvania, time will tell. But I'd place my odds on seeing him in office, with or without a spine, till 2016.

Landmark Half-Measures

This is just the latest of the Obama (and Congress) half-measures that have been widely labeled as "historic", "unprecedented" and "landmark".  I'm referring to the Financial Reforms Bill signed into law on July 21st.

It started with the $800B economic stimulus package of Feb. '09 that Paul Krugman warned even at the negotiation stage as being very inadequate,and reiterating these concerns after Congressional agreement. His fears of a stalled recovery have been realized.  Next we had the Afghanistan surge of troops, but with delays and declaration of a withdrawal starting in July 2011 - signaling intentions to embolden the enemy though leaving some leeway.  Then of course there's the health care overhaul of Mar. '10 but without even the public option, leave alone the far more appealing and cost effective "Medicare for all" (aka "single payer") push.

Which brings me back to the financial reforms law.  It is huge and complex, yet leaves almost all the important safeguards against a meltdown to be put in place through subsequent regulations by government agencies.  That's great for bankers and their lobbyists who can get all the loop holes and escape clauses inserted while working with regulators.  If they can win over hundreds of lawmakers, why not a few dozen regulators behind closed doors?  Krugman points to further timidity by the Obama team - they are even dithering over nominating an obviously great fit like Elizabeth Warren to head the new consumer financial protection agency.

But that's not all.  Regulations can be changed by successive administrations, without further legislative oversight.  That means that even if the present crop of  regulators do their job well and insert the right checks and balances, all this can be undone by a future Bush clone who assumes the Presidency.  Knowing this, even the Republicans beholden to bankers and supporting them may not be quite so upset with the new law.  And as seen in the current crisis, it can take many years for the negative consequences of lax oversight to surface, while banks can start to profit almost immediately.

This means that a future regime that loosens regulations that unfairly helps banks can benefit from their patronage.  Yet such an administration can quite possibly escape (or at least get the benefit of the doubt for) the blame for planting the time bomb that causes a financial disaster on a successor's watch.  

Other instances of the Obama and the Congressional Democrats collectively lacking courage are in enacting effective energy legislation, and perhaps immigration reform.  In energy we couldn't even have the weak cap and trade system passed, leave alone a stiff gasoline tax that can fund alternative fuel development as espoused by Thomas Friedman for years.

My take even on Obama "victories" is generally of his doing a lot when cornered into having to act, yet without doing enough.  It's almost like trying to save half the patient.  And it's not a question of being a centrist, but being ineffective.  I believe his taking the lead and acting more vigorously and decisively on contentious issues would help rather than hurt the Democrats in the 2010 mid-term elections.  It would not only rally his disheartened Democratic base, but also win the respect of more independents. 

But some initiatives did work well.  The response to the H1N1 "swine" flu epidemic was good overall, and overestimating the demand for the swine flu shots and the resultant oversupply was much better than if they'd underestimated it.  On the gulf oil spill the Obama team could have acted faster and forced more skimmers to be mobilized, including those from other oil companies.  But it did force BP to pay into a $20 billion fund despite Republican condemnation and appointed Kenneth Feinberg to administer compensation (with luck speedily and impartially) from it.   

Hopefully they can build more upon these types of successes in the time to come.

The (Lack Of?) Mind Of The Voter

Both Democrats and Republicans have die hard core constituencies. They each average almost a third of the voters, with the proportions varying in Blue and Red states, and rarely stray from their party. Both parties can rely on these bases, so long as they to turn out to vote.

In Republican Scott Brown's surprise victory over Martha Coakley for the late Ted Kennedy's Senate seat it was the swing of independent voters towards Brown that made the difference. This was unexpected in a solidly Democratic constituency when most voters knew about the high stakes involved in giving Republicans the 41st "filibuster enabling" Senate vote.

What led to this voter behavior? Pundits talk about dissatisfaction with the economy and lack of jobs, anger at a do-nothing government (even though Republicans as a block were largely responsible) and anxiety over "bad" health reforms. I've this to add:

• Trivials can matter a lot. Scott was out there campaigning vigorously. He was in front of the cameras. He is telegenic. Martha was lax. She celebrated her Christmas at home and shunned "standing in the cold" at Fenway Park. She flubbed with some silly sports comments. She took voters for granted. So they punished her.

• Do not underestimate voters - part 1. That is, underestimate their ability to make wrong judgments or outright mistakes. Americans re-elected George Bush in 2004. I supported Joe Lieberman in 2006. Democrats chose Obama over Hillary in 2008 (okay, I couldn't resist this cheap shot.) They do that - just take it in stride.
• Do not underestimate voters - part 2. That is, underestimate their ability to blame the wrong people. The economic and jobs debacle was created in GWB's time (with some roots going as far as in Clinton's time.) AIG was bailed out along with Wall Street players with 100% coverage of counterparty commitment also during the Republican era. Obama's administration and Congress opted for too small and misdirected a stimulus package despite Paul Krugman's early and repeated warnings because of solid Republican (and some Blue Dog) obstruction. Ditto for the long and torturous evolution of the convoluted health reforms bill. But voter anger is rewarding the bad guys.
• But there are hopeful lessons, including from elsewhere. In India voters are often ignorant and seem irrational. Convicted murderers, bandits and thugs have been elected as Members of Parliament. In some states corrupt and inept governments are successively elected for decades at a stretch. Voters frequently are driven by very narrow considerations (like caste) that don't reflect their larger interests and longer term preferences. But in the last election last year even they seem to have rewarded the Manmohan Singh / Sonia Gandhi Congress government for trying to do the right thing. People are the same. If Indian voters with a 66% literacy rate and under 1.5% of US per capita income can ultimately "get it", then why not US voters?

So it's good for the Obama administration to read the Massachusetts outcome to adjust strategy and message as Bob Herbert suggests in his NYT OpEd today. But they shouldn't be spooked away from bold policy initiatives. Obama said as much in his State of the Union speech today, and we'll know soon enough how much he means it.

Clunker Mania and its Aftermath

Stubbornness sometimes pays off. For years I had resisted getting rid of our 1992 Chrysler Town & Country minivan. It served as our (and occasionally our friends') spare car, and my father's car whenever my parents came visiting. It was also good for hauling five plus passengers or bulky home supplies when needed.

Then this Cash for Clunkers (CARS) program was launched last month. Anita and I happily traded in our minivan for a fuel efficient SUV, getting a $4,500 rebate from Uncle Sam in the process.

Nationally in the US, this $3 billion taxpayer funded program has benefited automakers, dealers and about 700,000 buyers like us. The implementation by the government could have been a lot better, especially in avoiding internet outages and speed of processing claims. But overall this was a huge success and has boosted the recession-hit auto industry. This clunker mania also drew in many shoppers to dealerships who did not qualify for rebates, but were enticed to buy cars anyway.

What now? Consider three factors. First, some pundits have predicted that with the ending of this program the sales of autos will slump. Second, a lot of owners of old sedans are feeling left out. That's because only the old cars and light trucks with a rated gas consumption of 18 mpg or less qualified for the rebate, and this excluded most sedans. Third, some eligible clunker owners couldn't buy a new car because of shortages of popular fuel efficient models due to the enthusiastic response to the program.

The following steps by the Obama administration and Congress can address all these issues:

• A new version of the program raises the mileage ceiling for clunkers so it includes many more sedans. Say, the EPA mileage ceiling for clunkers can be raised from 18 mpg to 21 mpg. This will create a second wave of new car buyers, as well as help those who were eligible but couldn't complete their transactions under the just ended program.
• At the same time the rebate per vehicle can be slightly reduced so that the same public funds cover more cars. For example, the rebate can be $3,000 for the new car's fuel economy improvement of 6 mpg or more (4 mpg for new SUVs), and $2,000 for 4 - 6 mpg (2 - 4 mpg for new SUVs.)
• The implementation should be considerably improved this time around. With even halfway decent capacity planning there was no reason to have website crashes or overloads. Just 700,000 claims with each file of a few MBs size were being uploaded over a period of several weeks. Any decent data vendor could have made many times such capacity available even at short notice. The same applies to human claims processors using back of the envelope calculations, especially now, with the benefit of hindsight.

Another aspect bothers me, though I've no solid solution. Some experts have decried the requirement that the engines of the old traded vehicles be disabled to take them permanently off the road. This in a macro sense is a destruction of value since some of these vehicles may have many years of useful life left. It is worse if the vehicle in question now happens to be a car with somewhat better fuel efficiency than the existing 18 mpg threshold.

Can we spare such cars, and only require them to be converted so they can use compressed natural gas (CNG) that is much cheaper and less polluting than gasoline? This conversion is very popular in India and costs $1,500 - $2,000. Can such converted used cars be allowed to be exported to countries like India, so that the US owner bringing them in gets a much higher trade in value, in addition to the government rebate? That can draw more owners of less old cars to avail of the CARS program and buy new vehicles. But I haven't thought this through and it needs more study.

Another Look At Howard Dean

I was underwhelmed by Howard Dean's Democratic Presidential bid in 2004. Even before the Iowa primary and his much publicised "scream" (a total non-factor for me) Dean was my fourth preference, behind Wesley Clark, John Edwards and John Kerry, in that order.

I had paid inadequate attention to what Dean had to say and thought he leaned too far left on some issues at that time. But as 2008 rolled along I was impressed by his articulation of Democratic values and even-keeled stance as DNC chairman during the Hillary - Obama primary slug fest. And now he's been making direct, succinct and insightful comments in TV news shows on health reforms, including on the issue of the public option that he strongly supports.

In the Morning Joe program on MSNBC he offered this very interesting perspective on death panels and why Obama seemed to be backing away from the public option ahead of a Senate vote. He said this was a way to get a bill past the Senate with 60 votes when Democrat senators like Ben Nelson and Kent Conrad are sabotaging the public option provision. This provision can then be re-introduced through a "reconciliation process" with the House of Representatives bill that then needs only 50 votes to pass. If that's truly what Obama has in mind then I won't be so hasty in judging him.

Others have also noticed how Dean is such an effective voice for health reforms and for batting down misinformation by opponents. Here is a YouTube clip by a group called The Young Turks showing how Dean counters three arguments against key reform provisions. The commentator wonders why Dean isn't the Health and Human Services Secretary. Now that he's done being DNC chairman I hope he gets to assume another high public office. And yes, if I could revisit 2004 he'd be my top choice among those presidential candidates.

When Free Choice is Terrible

Thank God for the Republicans for opposing this. And may be some centrist Democrats, including the recently inducted Sen. Arlen Specter. I thought no sane, objective person could support the proposed Employee Free Choice Act (aka "card-check".) Yet it is favored by Jagdish Bhagwati and even more so by Paul Krugman, both outstanding economists. Apart of course by Obama and most Democratic lawmakers as a matter of political necessity to appease unions that helped in their election.

Despite its noble sounding name this deliberately misnamed Act subverts workers' free choice about whether to unionize or not. Instead of voting by secret ballot, this Act also requires unions to be formed and recognized if half or more of the workers in an establishment sign pledge cards in support of this. So say, Tony Soprano style thugs knock on workers doors, stare across the dining table and hold the pledge card for workers to sign. Those who refuse can be intimidated, and everyone knows who is unwilling, leaving them open to retaliation down the line, or ostracism by fellow workers, or other unpleasant consequences.

So how do Krugman & Co. favor this over a free and fair vote by secret ballot? They essentially say that the means however imperfect justify the end, which is more unionization. This in turn will improve the lot of workers by extacting concessions from employers, and better redistribute wealth, thus narrowing the gap between the classes. If such ends justify the means, how about allowing the poor to extort money from the rich, or burglarize their homes to achieve redistribution?

Thankfully, it looks like card-check won't be able to clear the Senate with a filibuster-proof majority. Though many people take it as a given, I question the value of unions in many situations, or at least the premise that the pros outweigh the cons.

Unions to me are the most needed when through collective bargaining they are a counterweight to (mostly tacit) collusion by employers to keep wages and benefits below what would prevail in a free market. One example is of US hospital chains that were hit with a lawsuit over colluding to keep nurses' salaries artificially low, despite a national shortage of nurses. Another is of players' unions in professional sports (even though players may be super-rich.) They bargain with a handful of sports team owners that collectively decide on salary caps or player pay structure. But such employer collusion is relatively rare, and generally illegal.

Other pluses of unions include workplace safety, health and social benefits that they can win from employers through collective bargaining and the threat of strikes. I'm certainly for such health and safety measures, but for most of them they are better realized through passage of broader laws applying to all, instead of individually won through unions with the most leverage for their limited set of workers. Thus we have OSHA, or the Workmen's Compensation Act, and even the Minimum Wage Act and can go further along this route.

On the downside unions can severely distort free market efficiencies, hurt consumers who are forced to pay higher prices, and reduce the international competitiveness of US goods and services. Unions are at least as much to blame as the management for the woes of the Detroit Big Three automakers. Wal-Mart opposes unionization (hopefully with entirely legal means) at a high cost to its image and political capital because it understands the threat to its competitive position.

Then there are illegal strikes like the 1981 Air Traffic Controllers strike, the 2005 New York city transit strike and fake "sickouts" by pilots and other airline staff. Except for the controllers whom Reagan rightly fired, the workers get away with holding the public to ransom and breaking laws aimed at protecting essential services. These, and even the legal 2008 American Axle strike where a few UAW workers crashed GM production seem like acts of collective extortion rather than collective bargaining.

Still, in a free society and functioning democracy I realize the need to allow the creation and existence of unions, even if (like trial lawyers) they do more harm than good. Only they should be created where workers exercise genuine free choice through vote by secret ballot, not through the charade of a deceptively named law.

Change They Don't (Want Us To) Believe In

I was surprised to see these two articles by reputed and brilliant professors in "my" University of Chicago Booth School of Business. One argues against capping CEO / executive pay in taxpayer bailed out companies, and the other against the government spending as part of the Obama fiscal stimulus plan.

The first by Steven Kaplan appearing in a Feb. 17 Op-Ed in The Chicago Tribune warns that "Restricting bank executives' pay would stall recovery." He acknowledges that high and flawed financial incentives were at the root of high risk-taking and illusory profits that brought down these banks, and that the massive taxpayer bailout justifies "some" government say in executive compensation. But he then asserts, "Even though $500,000 is a lot of money, banking executives have a different salary market. They would find the compensation low, and that is likely to create four problems:

• Banks would avoid accepting government assistance unless the situation is grave. Only the worst firms would accept government help.
• Many executives would leave the "bailed-out" banks for jobs that pay more, and the best employees would leave the troubled firms at exactly the wrong time.
• It would be difficult to hire new executives because the best ones would choose other opportunities.
• Stronger firms that have accepted federal money would give it back to avoid the restrictions.

All these factors would slow the recovery of the financial system."

I find these arguments to be deeply flawed. To his first and fourth points, most banks seeking and continuing to receive government help, even the so-called stronger ones, have little discretion in the matter. They know full well that their failure to do so will expose them to a ruinous bank run or its equivalent with depositors. Their leeway can be further curtailed by imposing regulatory capital requirements that forces them to seek timely government help. Further, the push towards better governance and heightened awareness of potential conflicts of interest will make vigilant bank boards compel their management to do the right thing.

Mr. Kaplan's second and third points are anchored on a "greed is best" premise that the most suitable executives for bank turnaround are lured by outsized financial awards alone. But it is this brand of managers and the existing compensation structure that substantially contributed to the crises in the first place. They stood to make enormous fortunes by fudging numbers, taking massive gambles with other people's money and limiting themselves to short-term "on my watch" perspectives. Instead, we need managers who want to establish their legacy of building or rescuing great institutions. A lack of outsized compensation structure is more likely to attract these types of managers, encourage sounder decisions and reduce their temptation to gamble. Just compare the CEO salaries and the fortunes of Japanese and US automakers. Or consider if hiking the annual pay to a billion dollars will really get us a much better US President.

So I largely disagree with Mr. Kaplan though there is ambiguity in the stimulus amendment limiting top executive pay as reported in a Feb. 14 CNN story. That can lead to some loopholes and confusion even if the measure is directionally correct.

The other article is a Jan. 21 Op-Ed in the Wall Street Journal by Alberto Alesina of Harvard and Luigi Zingales of Chicago Booth. They repeat the Republican refrain of stimulating the economy by cutting taxes, homing in on the complete elimination of capital gain taxes in 2009, and to the exclusion of government spending. Here's a quick counter to their main contentions:

a) Regardless of it starting as a financial / credit crisis, the US economy obviously now fits their description of a "bad equilibrium." That's where layoffs and job loss fears lower consumer demand that makes firms cut back that causes more layoffs that... They concede government spending can change this "bad" equilibrium into a "good" one, yet they still oppose it.

b) Their proposed solution of tax cuts (eliminating all capital gains for investments "begun" during 2009, etc.) is an extension of the Bush efforts for the past eight years. Where did that get us? Plus they want to make all capital expenditures and R&D investments tax deductible. Wouldn't that mean losing a lot of government revenue on the bulk of such expenditures that the companies would have incurred anyway, incentive or no incentive?

They see their role here "... to courageously propose the right economic policy, even when it is unpopular." I wouldn't call it particularly courageous for business academics to write in support of the finance industry and business interests that directly or indirectly sustain them. My friend RS wryly alluded to this equation as one hand washing the other.

To be fair RS thinks highly of Luigi Zingales and his writings in general, and considers this particular WSJ Op-Ed by him to be an anomaly.

Other writings by the Chicago business professors are more insightful and objective, including those relating to the current state of the economy. For example here's a good commentary in the Feb. 12 New York Times by Doug Diamond, Anil Kashyap and Raghuram Rajan on the Geithner Plan. They express reservations about elements of the plan, in particular the public-private partnership to buy up toxic assets, though they don't come up with an alternative. That's why I find Paul Krugman (alas, not of Chicago) to be better. In his Feb. 22 Op-Ed in the New York Times (among other writings) he makes a clear and cogent case for the temporary nationalization of banks. I'd like anyone opposing his proposals including the Chicago crowd to address his arguments head on.

Surprising Detractors Of Economic Recovery Plan

Yesterday in the Wall Street Journal I saw a full page ad by the conservative Cato Institute slamming the whole concept of Obama's economic recovery plan. This (apparently repeat) ad is signed by hundreds of economists and financial academics.

Denying the need for the "right" government stimulus plan seems so preposterous that I expected the signatories to be clueless economists from lightweight institutions. Or charlatans and political hacks who are selling debunked ideology for their narrow ends.

But I see Nobel laureates and prominent figures from top universities like "my" University of Chicago in this list. They include two renowned professors who were on my Ph.D. dissertation committee, and one of these professor's son-in-law who is a top academic in his own right. Why they have signed on is beyond me, as I totally subscribe to Paul Krugman's rationale of the need for massive governmental intervention to get us out of this economic crisis. Krugman actually argues that the current economic stimulus plan is too small and misdirected towards Republican causes to do the job.

On the Cato website there is more of this criticism of Obama and the Democratic efforts. On the lower right of this web page there is a YouTube presentation with sleazily deceptive arguments against the Obama / Democratic approach. Reagan's virtues are extolled while Obama's approach is likened (of all people) to that of George W. Bush whose overspending drove the economy to ruin.

I can't address all of the Cato fallacies here. But some comments:
(a) Heavy spending (and ill-conceived at that) in GWB's time could not counteract bad governance and lack of oversight that landed us in this mess.
(b) Japan's "lost decade" of stagnant growth in the 1990's is widely ascribed to its failure to quickly overhaul its ailing banks and credit infrastructure. That was a necessary condition that didn't happen, for other measures (like public spending on infrastructure) to work. Keep this in mind the next time you hear a Republican mouthing off on Japan's lost decade in spite of spending 6 trillion yen on infrastructure.
(c) We therefore need better governance and more regulation to complement a heavy fiscal stimulus.
(d) I'd heed Krugman and drop this nostalgia for Reagan. Even the "supply side" linkage that Republicans like to make between tax cuts and revenue increases in the Reagan era is misconceived.
(e) Reagan's nearer term focus and budget deficits created cumulative problems that haunted his successor.
(f) In the debate on stimulus options tax cuts have the value of immediacy as they get more money across to the consumer quickly. But the recession-wary consumer may save rather than spend most of it (a personal virtue but it defeats the objective of a stimulus.) Government projects and continuing grants to cash-strapped state and local governments on the other hand will spend the allocations dollar for dollar.
(g) To my knowledge none of the Cato signatories warned against the consequences of insufficient regulation of mortgage lenders, or deplored Alan Greenspan's role in opposing such regulation. Nor did they see the housing crisis and the bursting of the bubble coming. Krugman did all three and years ago, way before it happened. So to me he deserves his 2008 Nobel prize (officially given for unrelated research done decades earlier) as well as greater credibility than the Cato crowd.

While our University of Chicago is synonymous with the ideas of free markets and deregulation we had plenty of faculty teaching and researching the concepts of necessary government oversight and intervention, public goods and anti-trust responsibilities. I'm perplexed to see so many respected economists including some of my U. of C. professors having signed on to the Cato ad. I hope they have better arguments than the YouTube presentation on the Cato website.
Meanwhile, today's (Feb. 10) issue of The Journal has the more nuanced views of two other U. of C. economists, Nobel laureate Gary Becker and Prof. Kevin Murphy. In "There's No Stimulus Free Lunch" they concede that government stimulus measures can create net jobs and expand GDP, especially during a recession. At the same time they warn that such benefits will dissipate once the economy recovers and works closer to full capacity, and that such measures carry a price.

No one is arguing against that, or we'd have a permanent stimulus budget for every past, present and future year. The stimulus package is being worked now to fix our present recession and job losses. And that part about it not being absolutely "free", the question is, do we want to starve by forsaking a substantial lunch just because it carries a small price, or to go for it since the benefits far exceed the costs?

Choice of Palin has Sealed McCain's Fate

To turn an old saying around, it's far better (for Obama) to have a foolish opponent than a wise friend. And McCain has totally obliged.

Forget GWB's abysmal ratings. Forget the economy. Forget the Iraq war. Till the end of the Democratic Convention McCain still had a more than even chance of occupying the White House. His biggest card was the split among the Democrats, and Hillary supporters just wanting an excuse to vote for him.

Basic politico-economic theory and conventional wisdom both required him to veer to the center. Any of the speculated VP choices would have been fine - Tom Ridge, Joe Lieberman, even Mitt Romney and just may be Tim Pawlenty, as they all had their respective strengths.

A stance that would dilute the pro-life message, raise the prospect of restoring taxes for the ultra-rich, call for more regulation and expanded healthcare would turn off the hardcore right, but not enough to withdraw or switch support, when they see Obama as the alternative. Yet McCain could this way pick up a lot of the disgruntled Hillariites, and the undecided and independent voters.

But then he went ahead and picked Sarah Palin. What was he thinking? That just because she has the right plumbing (as a Hillary supporter put it to me) she'd get the Hillary women to back the ticket?

In addition to her obvious lack of experience she's so far to the right as to be almost a caricature of the ideology that's distateful to Democrats and most independents. McCain seemed smugly happy about the surprise he had pulled off, and about her almost rapturous reception by the hardcore right. "Trust McCain to shake things up" said a lackey on TV as Sarah's introduction started just ahead of the Republican Convention. But you need to shake things up when your outlook is bleak and the current course seems to be failing, and not when you have so many strong cards in your suit.

There are of course many other deficiencies in his campaign. When the economy is the number one concern you don't see a single economist of repute among his advisers. Ditto on other issues. The negative ads are horribly conceived and destroy his clean guy image without getting an effective message across. But these blunders I think pale in comparison to Palin (pun intended.)

The end result is obvious now, with McCain trailing Obama by 8 points nationally just six days before election day. Hillary supporters and independents have been shocked back into Obama's camp, and talk of voting against Obama out of spite has all but evaporated. I had anticipated this as my comments of September 1st and September 15 (when McCain was still doing well in the polls) on my August 1st post show. To a large extent McCain's choice of Palin is indicative of the quality of his decision-making as President. The maverick has turned ultra conservative, which I see as an act of misplaced expediency and even cowardice. McCain is paying the price and has only himself to thank for it.

I'm guessing Obama is silently but ardently thanking him too.

Offshore Drilling And Poor Journalism

I often wonder at the failure of these US multi-billion news agencies to address the most basic questions that arise from the very news that they cover. Here is an example.

For the past couple of months we've heard arguments flying back and forth about lifting the ban offshore drilling around the US. Given the skyrocketing crude prices and that we're not going to avoid importing oil 10, 20 or 30 years out, I'm now all for it. Safety and pollution concerns are now very low, and we don't have the same wildlife refuge conservation considerations in offshore drilling as in ANWR.

The Democratic leadership (till recently including Obama) have opposed lifting the ban. They say that it won't help in the short term, and that oil companies have plenty of offshore areas that they can use first.

The first argument is silly - does it mean Congress and government should only limit itself to the most short-term measures? But the second argument about idle leases merits serious consideration, and no news agency that I know has asked the oil companies or Republicans to respond to this specific point, and then reported upon it. Instead the election coverage on energy issues by the likes of CNN is an endless blather of cross-talk among candidates, their surrogates and political pundits.

One place where I found a partial rebuttal to this "use idle leases first" argument is on this QandO blog. In short it says that leases take a very long time to work, are held up by many procedural steps, and require a lot of capital investment that is costly or hard to come by. It's only a partial rebuttal because it doesn't fully answer the question: if the oil companies have their hands so full that they can't get through these existing leases, then where will they find the capacity to explore the new areas?

Still, at least this little blog tries to answer this most obvious of questions. That's a lot more than has been done by the large and sophisticated media outlets.

All is not lost. Some new programs with welcome depth are coming on air. My favorite is CNN's Fareed Zakaria's GPS (Global Public Square) that started a few weeks ago and covers central global and foreign issues.

Does A President Need Principles?

A good thing about the upcoming elections is that either presidential candidate will be a huge improvement over Bush. The race is surprisingly close at this point, given Obama's highly successful foreign tour, favorable press coverage and inspiring speeches as compared to McCain's gaffes and senior moments. Many more voters view Democrats favorably as compared to Republicans. Obama is an inspirational speaker with quick wit and charm. He is also highly intelligent and organized.

Yet according to CNN's "Poll of Polls" today Obama is at 47% to McCain's 44% with 9% undecided. What gives?

One reason McCain is so close may be that he is still widely thought of as decent and principled despite his share of flip-flops. The Washington Post today carried a long article about how emotion and ambition have always guided McCain's behavior. But even such negative coverage may only humanize him and not tarnish his overall standing with voters.

Obama appeals to the idealism of his enthusiastic supporters with his message of change and hope. Yet in his life there seems little or nothing of principle he's done, or made sacrifices, that compromised his own interests.

Then there have been his rapid switches on issues after winning the Democratic nomination. These move him to the center or even into Republican territory, like his wooing of evangelicals and decrying a Supreme Court ruling against the death penalty in non-homicidal cases.

Such tactics while smart help shape perceptions. Half the voters (myself included) think Obama will do or say whatever gets him elected or furthers his personal interests. But even assuming that is true, how much does it matter? It largely depends on what the candidate hopes to achieve by becoming President.

The significance of being the first black / minority President shouldn't be lost on Obama. Here is his chance to go down in history as a great leader with path-breaking accomplishments. If that's his objective then his actions and decisions driven by pure self-interest will largely converge with what is good for the country. He will surround himself with good people, and take decisions on their merits in the national interest to secure his legacy.

Companies seek the smartest and most capable CEOs who are not necessarily nice guys. The system of compensation, rewards (and punishments in case of wrongdoing) tries to align the CEOs' self-interest with that of the companies.

This private company analogy can apply to Obama even if his incentives for being a good President are different. So while Obama has his core following of wide-eyed admirers it will be interesting to see how the preferences of the more skeptical swing voters unfold in the coming months.

McCain's Strategy: Stupid Or Ultra Smart?

At first I thought John McCain has lost it. But now I'm not so sure. I'm referring to his behavior and policy stances after securing the Republican nomination, and particularly after Barack Obama became the official Democratic nominee.

Every veteran of two party politics should know about the "race to the center" strategy. This is also formally taught in introductory game theory courses in the economics department of the University of Chicago, where Obama's advisor Austan Goolsbee is a professor.

The theory here is for mercenary politicians to take more extreme right or left positions during the primaries to win support of their respective bases, and then each moves to the center to try to win most voters in the general election. By "mercenary politicians" is meant those who are simply focused on winning, and untethered to internal commitments or prior promises.

Obama has all this down pat. That's why you saw him gallop towards supporting the death penalty even for some non-homicidal crimes; courting evangelicals; qualifying troop withdrawal commitments in Iraq; lecturing blacks on personal responsibility; and so on. He may ease off the pace of transition a bit because of left-wing reactions, but his base is pretty much in the bag and you know where he's heading. Even Jesse Jackson's much publicised private diatribe against Obama actually helps drive some undecided whites into Obama's fold.

But what about McCain? He seems firmly stuck on the right of even where he has been in the past several years on issues ranging from (a lack of) women's reproductive rights to taxes to healthcare coverage. Moreover, he flubs his speeches and country names, and is the anti-thesis of Obama's eloquence. He's well behind Obama in the opinion polls. So he seems to be following a really dumb and ineffective game plan, right?

That's possible, but there's an alternative explanation. After all McCain has some of Karl Rove's closest associates advising him. Obama is a formidable opponent but one thing that can work for McCain is Hillary's disaffected supporters who can either vote McCain or not vote at all.

Obama can heal the divisions simply by taking on Hillary as his running mate, and though I had my doubts it looks like she's amenable to this. The only thing is, with all the bitterness during the primaries process, he's apt to choose her only if he feels he needs her. But what if he were confident that he could win without her? Then he'll choose someone else, and that's the only way for McCain to beat him.

If that's the calculation then McCain should let Obama get substantially ahead in the polls till Obama chooses his running mate, someone other than Hillary. Only after that should McCain turn to more centrist themes and go full throttle in his campaign. His earlier rightist stance will endear him to the Republican base who contribute to his campaign. This base will also be more understanding of his late shift to the middle if he's lagging in the polls and "has" to adjust positions to catch up with Obama. Also, McCain's tepid campaign style and listless speeches earlier on will lower expectations, which will make it easier for him to beat them in the all-important debates and final run-up to the elections.

So back to the question: Are McCain and his team being absurdly foolish or brilliantly clever? Their subsequent actions, say after the Democratic convention, may supply the answer. At this time it is hard to tell.

Hillary For 2008, Or Is It 2012?

It's three weeks before the Ohio and Texas primaries, so Hillary still has a chance to reverse the Obama tide. She is more qualified, and voters may just grasp this in time.

She currently faces "momentum" and herd instinct (aka peer pressure) that disproportionately influences younger people, which is working for Obama. He also has the African Americans favoring him by 80% or more, without a backlash among other Democrats.

But I also see something that I touched upon in the third bullet point of my January 5th post. This is Republicans who have no intention of choosing Obama in a general election nevertheless voting for him in the primaries simply to undermine Hillary who's more likely to beat McCain. I've long suspected this to be one of the reasons for the unusually large turnouts in Democratic primaries that favor Obama. This is why I strongly favor closed primaries in all states, open only to voters registered for that party way earlier.

Instead, the Democratic primary of Ohio is open (or semi-open which is essentially the same thing), as is that of Texas. Most TV networks are curiously silent about this. But a couple of days ago Dick Morris who's now a bitter enemy of the Clintons talked on Fox News about this manipulation by Republicans. He did this to support his prediction that Hillary will fare worse than expected in both these states. He may well be right.

There's little Hillary can do about this so where does she go from here? In the days ahead she certainly needs to reshape her message. For example, she should change those "35 years of experience" and "ready to be President on day one" lines that were weak and off the mark to start with. She's now looks to be doing this and stressing her more significant advantages, like her substance over his rhetoric, or achieving solutions instead of just making good speeches.

Beyond that, how should she act once she wins or loses the nomination?

If Hillary wins she should immediately ask Obama to be her running mate. Whatever her personal feelings about him, she now needs him as part of the "dream team" to unify their bases, including the youth and the African American vote. For his part, Obama should accept. The VP stint will give him the standing and the experience to become an odds-on Presidential favorite in subsequent elections, when he'll still be young. It is actually in his interest to accept the VP slot much earlier, if the Democratic primaries outcome looks to be headed to a stalemate by end of March, or early April.

And what if Obama wins the nomination, or looks to be certainly headed there with committed super-delegate support? Then Hillary and Bill should say nice things about Obama, call on the entire Democratic party to support him, and then both retire from the scene for the remainder of 2008. If Obama offers Hillary the VP spot, she is better off graciously declining him. She has nothing to gain. After eight years of an Obama Presidency she will be less electable at age 68, and any missteps by the Obama Administration in the meantime will rub off on her.

More than this, contrary to the sayings of pollsters and TV pundits, I expect Obama to lose to McCain unless McCain says or does something very stupid. You saw it for the first time here - in case of an Obama - McCain matchup without Hillary in the picture, I predict Obama will lose by five points or more.

In that case Obama post-2008 will be little more attractive than other general election losers: Dukakis after 1988, Gore after 2000, Kerry after 2004 - you get the idea. In the past 60+ years I recall only one instance when a prior general election loser won subsequently. That was Richard Nixon in 1968, who won in unusual circumstances after Democratic frontrunner Robert Kennedy was assassinated. So here's my take in case Obama wins the nomination now: Hillary should just wait for 2012 and hope the Democrats choose better then.

Reagan Amidst The Democratic Race

I've always been underwhelmed by Reagan and wonder why he's so lauded by the Republicans. I was in India for most of the time he was President (that is, till August 1987) but read enough about international and US affairs to form an opinion about him even way back then.

His admirers say he "defeated" the Soviet Union and "won" the Cold War though they're quite vague about how he did it. Outspent the communists in an arms race? Dragged down the Soviets in Afghanistan by building up the Bin Ladens and the precursors to the Taliban against them? Some of these explanations for Reagan's supposed success sound quite bizarre. I think he was mainly lucky that enlightened leaders like Gorbachev realized the value of market driven systems and Democracy, and their reforms overlapped with Reagan's tenure. True, he didn't do anything stupid like GWB may have done in launching military adventures to re-unite the communist block against the US and halt their reforms. But that's hardly saying much.

On the domestic front, Reagan's policies were even less creditworthy. His tax cuts and build up of deficits created a temporary boom that borrowed against the future and pushed economic woes in the lap of his hapless successor, George H.W. Bush. I couldn't understand the Reagan nostalgia, but didn't have the words to articulate this. Then last year I came across this March 19, 2007 column by Paul Krugman in the New York Times which (to paraphrase Hillary) found my voice. He's since written many columns that drive the point of Reagan's fake legend home.

I'd have expected a literate and well-read person like Obama to have seen all this. So I was quite surprised like many others to see Obama compare Reagan and his Reagan years favorably to the Clinton years. I can understand his taking pot shots against Bill Clinton in order to get at his wife Hillary (I've always been skeptical about Obama's "clean campaign" promises) but this is the worst way to do so. Last night in the CNN Presidential debate in South Carolina Obama tried to qualify what he had said earlier, but it isn't enough. His comments prompted Krugman to write another column yesterday (January 21, 2007) about debunking the Reagan myth.

Last night Obama also took a cheap shot at Hillary mentioning he was doing all those grand things in the community while she was sitting on the corporate board of Wal Mart. Hillary returned the favor by referring to his work for a Chicago slum lord who is a campaign contributor. The exchange was unseemly and I may be prejudiced but Mr. (purported) Clean is the one who started it, and she'd have suffered if she had not retaliated.

So far Obama seems to be having it both ways on the racial front. He's winning the African American support simply because of skin color (even though ironically he doesn't share any of the typical African American history) and skillful references to issues like the Jena 6. Think about it - if all else was exactly the same, would Oprah have endorsed and campaigned for him the way she did if he was white? At the same time his other supporters don't yet seem turned off either by his subtle play of the race card, or by his lack of substance.

The polls show Obama will sweep South Carolina because of the African American vote, and I'd expect the Hillary camp to be braced for this. Hopefully, she'll be able to recover adequately for Super Tuesday on Feb. 5th when over half of the total delegates will be elected.

Thank You, New Hampshire

I was pleasantly surprised by the Democratic election results last night in the New Hampshire primaries. Most pundits and polls had predicted a huge win for Obama, so it was good to see that NH voters did not ape Iowa. Hillary's slender victory has obviously huge implications though her path to nomination is still uncertain.

I also welcome the McCain win in NH on the Republican side. He's my favored candidate on the Republican side though well behind Hillary because I do not share his stances on taxes, healthcare or choice vs life issues.

A nice graphic created by daughter Rubina for the New York Times today shows the detailed profile of New Hampshire voters supporting both the Democratic as well as Republican candidates.

While I'm happy about Hillary in NH, here are my other comments:

• I regard Obama to be superficial (especially compared to Hillary) even though he's a great talker. Still, I'll give him his due. His concession speech last night was gracious, as were his comments on today's news shows. This is something Hillary can emulate. And yes, someone who can speak so well without notes as Obama has to have good clarity of thought.
• Why is Hillary so keen to project confidence in the outcome of the primaries? I was turned off to see her campaign manager babble about how they expected to win NH on the eve of the elections because of the enthusiasm of the crowds who greeted her. Hillary in news show appearances also said something about how she was the only one predicting victory when all others didn't. I think it'll be more honest and also better in winning voter goodwill and sympathy if they admitted to their worries and anxiety, and then said how gratified they are by the outcome. Doesn't political psychology 101 say that it is good to play the underdog, lower expectations and then beat them? That's accepted wisdom in debates, so why not in poll outcomes? Over-confidence and a I-knew-it-all-along refrain comes across as arrogant, while a little humility wins voter sympathy and support.
• Hillary's emotional moment and her fighting back tears was a genuine and unplanned act, in my view, despite allegations to the contrary in some of the media. It seems to have won over voters for her, which supports my contention above. Few people doubt her strength, so she doesn't have to hide her emotions to prove it. So many in the media say that she comes across as so much warmer and likable in smaller private gatherings. I hope she opens up more in public appearances as well from now on.

The outcomes are wide open. Thanks to you, NH, exciting (and hopefully happy) days are ahead.