#53 Squaring the Circle

On November 5, 2010

Hello Everyone,

In my last commentary three weeks ago, I wrote:

Incessant and hypocritical demands by “small government” advocates that the federal government “create jobs” – while simultaneously “keeping its hands off” our free enterprise system, avoiding further stimulus, and reducing the public debt – cannot accelerate [a reduction in the unemployment rate and economic growth.]

And, there is precious little the federal government, regardless the party or non-party in power, can do to make it happen tomorrow or to sustain it. May I have the temerity to add that there is something in me that hopes – however faintly – that the House is returned to Republican control, with Tea Party backing, in November. Perhaps only then will the electorate come to understand, in time for the 2012 elections, that no party can perform magic.

And, so it came to pass. Having slept on it, I am feeling even better about this turn of events for a number of reasons.

First, the Republicans have gotten their fondest wish, but now what? They can continue their cynical (dare I say unpatriotic) monolithic “just say no” tactic. As Senator Mitch McConnell, the Republican leader said recently, “the single most important thing we want to achieve is for President Obama to be a one-term president.” If they continue to pursue this do-nothing control approach, their control of the House will be short-lived.

Second, even if the Republicans take their responsibility to govern seriously – focusing on job creation for all, not job destruction for this president – it will soon become apparent to the voters that there are no silver bullets, or red bullets or blue. The unemployment rate will remain stubbornly high for some time to come. This will not be good for the Republicans come 2012.

Third, if the Republicans are deceived by their own chicanery into believing that repeal of the health insurance reform law is the voter’s top priority, rather than jobs, they will be delectably hoisted on their own petards two years hence. It is likely that they will misinterpret or over-interpret this year’s election results.

And lastly, we have seen the so-called Tea Party for what it is. A short-term phenomena just like its namesake. Under the presumed leadership of former Governor Palin, most of the high-profile Tea Partybacked candidates lost – including Christie O’Donnell in Delaware (defeated by Chris Coons, an Amherst alum like me); Sharron Angle in Nevada; Carl Paladino in New York; and John Miller in Palin’s home state of Alaska. Sure, Rand Paul won in Kentucky, but I imagine that he will prove to be a libertarian novelty in the Senate, if he sticks to his ideological guns. And, Marco Rubio won in Florida with less than a majority as Crist and Meek took more than 50%.

I suspect that the media will also fail to own up to their collective mistake of obsessing over the passing Tea Party apparition. They also have a tendency, and incentives to, misinterpret and over interpret temporary phenomena.

All in all, I am encouraged by the outcome. Some of the big-spending business types (Fiorina and Whitman in California and McMahon in Connecticut) lost, too. Collectively, the electorate has more common sense than the paid observers would have us believe.

I’ve written before, as a former investment banker and investor, that daily stock market reports drive me nuts. Those reporting invariably claim, for instance, that the market “went down today because Wal-Mart reported disappointing earnings.” Baloney. No one knows why the market went up or down today, or any other day.

The same undoubtedly holds true for politics. All this talk about these mid-term results being a repudiation of the President’s policies is pure speculation. Unknowable, really. My guess, and it can only be that: voters are primarily frustrated about unemployment, real or potential, slow economic growth and the debt burdens they individually bear, for which most refuse to accept responsibility. Like Gov. Jindal, they desperately demand that the despised federal government fix it. But, it can’t. Not, quickly anyway.

Conservative commentator David Brooks said after the election: There is a lot of projecting going on here. Exit polls show that independent voters are more likely to be really alarmed about the deficits. They are also more likely to want to protect Social Security and Medicare and all the other things that create the deficits. So a lot of the upset about Washington is really projection of our own problems onto the Capitol. If the American people are not willing to square the circle, how can we expect our leaders to do that?

Remember my commentary on cognitive dissonance? But, I have confidence in the long-term common sense of American voters. They will continue to vent their frustrations for awhile, but will ultimately “square the circle.” I’m sure President Obama already has. I particularly like an observation I heard recently, I know not where: the framers ingeniously designed our government to respond to “the will, not the whim, of the people.”

Please, as always, pass it on.

Chuck

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