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July 14, 2010
Fareed Zakaria Expects the Problem to Become the Solution
In the July 12, 2010 Newsweek's "Obama's CEO Problem," (print edition), Fareed Zakaria laments that American corporations are sitting on $1.8 trillion dollars in cash and not spending it in the economy. He spoke with many business leaders and they are concerned about the uncertainty surrounding the recent financial collapse and the new laws and regulations emanating from Washington.
In the article he writes "Most of the business leaders I spoke to had voted for Barack Obama. They still admired him. Those who had met him thought he was unusually smart. But they all thought he was, at his core, antibusiness."
Earth to Fareed! The CEOs you spoke with do not represent the core of American business, the small business people. The real business people in this country would not likely get a chance to meet the president. Few of them voted for Obama and even fewer are suicidal enough to support a man who is "at his core" anti business.
Fareed's problem is understanding the difference between Wall Street and Main Street. Almost every action of this administration has managed to kill jobs and growth. If you truly want to see the corporations and businesses free up their cash to stimulate the economy, it will take far more than conciliatory gestures from the White House. I would recommend:
1. Immediately extend the Bush tax cuts indefinitely.
2. Repeal the health care bill.
3. Do not pass the current financial reform package. We need clarity in regulation not more government interference. You may want to include the government agencies at the center of the collapse, Fannie and Freddie, in a reform bill as well.
4. Take Cap and Trade off the table. Kill it.
5. Announce that the card check bill is dead. Political payoffs to unions is not a ticket to promoting investment.
Stated more simply, undo everything the president you so admire has done for the last 18 months.
Fareed adds his opinion, "Now, let me be clear. I think there is a strong case for a temporary and targeted government stimulus."
No, Fareed, there is not such as case. The stimuli enacted so far have not worked and doubling down on a failed policy is not a case for success. As Arthur Laffer wrote recently in the Wall Street Journal ("Unemployment Benefits Are Not Stimulus" July 8, 2010), if the dollars spent on the failed stimulus policies had instead been directed at an 18 month tax holiday for everyone we would have spent less money and unemployment would be near 2.5%.
Fareed, like so many, mistakes eloquence for competence. Some of our worst policies have been enacted by some of our smartest leaders. Smart people can rationalize some of the worst ideas.
It doesn't take the smartest to enact wise polices. It takes an open mind free of blind adherence to bad ideology and free of the hubris that discounts experience and common sense.
It takes a leader other than the one we have.