How NOT to respond

After discovering the compromise version of the U.S. economic stimulus bill, I took a look at it specifically to see if the protectionist provision better known as "Buy American" was still in there. As it was, I went to send off messages to my Congressional delegation to inform them of my opinions.

It turns out that I found out about the compromise version after the House had passed it (don't we already know the pitfalls of trying to rush legislation?), thanks in part to a delay in my college postal system (I just received last Wednesday's newspaper today), but I still sent messages to my senators urging them to vote against because of the provision. I just got a response back from one. At the beginning, I saw: "I recognize that many Virginians still have concerns about the need for a stimulus package." The rest of the email made no reference to my main issue, the Buy American provision.

If you ever become an elected official or an intern of an elected official, at least make sure that your canned reply at least discusses a constituent's concerns before sending it off to give at least an illusion that you care what he or she thinks.

"Better to be thought a fool, then to open your mouth and remove all doubt."

Economics and history

There is a saying: those who do not learn from history are doomed to repeat it. Another maxim that is mostly true would be that we do not learn from history. The chief lesson that has failed to be learned, I would say, is that history is still important. People deceive themselves if they think otherwise, although they will often attempt to rationalize their deceptions with "it's different now." To quote that French philosopher: "plus ça change, plus c'est la même chose"—the more things change, the more they stay the same.

A classic example of this can be seen in the current economic situation. There is a close analogue that has happened in recent years, the Great Depression (of the 1930s). People may tire of this comparison, but it is still a very valid one nonetheless. Both have similar observable effects: there was a long increase in asset prices before the crisis, followed by a quick and severe financial crisis (involving, in part, a restoration of asset prices to normality) which quickly became an economic crisis.

People may reasonably disagree on the causes, but certain actions taken in the early years of the Great Depression had lasting consequences. Perhaps the most important action was the passage of the Smoot-Hawley Tariff, which set off a blitz of tariff retaliations that seized world trade. Economists (1028 of them, in fact) were against it then, and the Depression is proof of the dangers of protectionism. Yet the United States Congress is at it again, with the "Buy American" provision in the stimulus package that would be both difficult to enforce and the starting salvo in a round of retaliation.

Another key factor that history has told us is the price of government volatility of action. We have already seen the mighty effects of seemingly arbitrary actions: the financial markets quickly fell apart as a result of the U.S. Federal Reserve deciding not to bail out Lehman Brothers. Fortunately, it seems that arbitrary action has fallen out of favor in recent months, in favor of just helping everyone at once.

The final historical lesson I wish to point out is the danger of acting too quickly. Government legislation moves slowly in large part due to debate. To act quickly is to cut off debate, which would imply that the proposed bill in question is mostly correct. In that assumption lies a great deal of danger: it is the hastily-written bills passed with little debate that have the greatest propensity to become bad laws.

The next administration

In about 12 hours (from the time I wrote this sentence, in any case), Barack Obama will take the Oath of Office to become the 44th president of the United States. As I previously mentioned, I did not vote for him, nor am I particularly ecstatic to see him take office. I am now going to take the time to predict what will happen during his administration.

Predicting the future is generally fraught with dangers. Three hundred sixty-five days ago, no one expected that Freddie Mac, Fannie Mae, and AIG would all have to be bailed out by the government, or that the investment bank would cease to exist as an independent agency. No one would have imagined on seeing oil prices pass $100 a barrel at the beginning of the year that they would collapse below $40 a barrel towards the end. Yet that doesn't stop me from trying.

The new president will take office with a dreary backdrop. Financial markets panicked last September and are still recovering. Unfortunately, in their slide down, they also took down economic output. This year will be a bad year in economic terms, although I would be surprised if we weren't managing out of it by the end of the year, providing politicians aren't stupid.

Foreign policy promises to be a big issue. The lame duck days of the Bush presidency saw an attack on Gaza by Israel. No matter how you view it, it is undeniable that the conflict will have to be resolved during the next four years. I predict, however, that, yet again, it will be no closer to resolution in four years than it is today. American foreign policy is generally so pro-Israel that the United States would struggle to be seen as a neutral arbitrator in the decision.

I don't see much for positive news in the other major areas of foreign policy. In four years, I think the United States will still have a sizable presence in Iraq, American and Iraqi politicians' claims notwithstanding. The condition in Afghanistan will continue to worsen as other NATO forces rethink their stays there and pull out. Obama will be unable to effect much change in the major African countries that are having problems: Congo, Zimbabwe, Sudan, Somalia, Nigeria, and Côte d'Ivoire; I don't expect to hear anything more than the normal stern words on the matter from him.

"Green" will be the new fashion of the next administration. Obama and Congress will pass a few new laws to try to cut emissions; both will be beholden by interest groups to ease up on some of the stuff, producing gaping loopholes. This will be a golden opportunity the politicians to explain how much smarter they are than scientists: expect more ethanol subsidies and production mandates (despite the fact that corn-based ethanol is at best carbon-neutral (there, I said it) and is known to cause problems in other areas of the environment: increased water and fertilizer usage, aggravating already untenable environmental situations). Many of these goals will likely be broken.

In terms of major domestic initiatives, the front will be mixed. Obama will push heavily for universal health care in his first two years; Republicans will likely fight tooth-and-nail on several components. There probably will be something of the form passed before mid-term elections, but it will come late and be quite watered down. Less contentious issues, such as increased funding for "infrastructure" will make it through. Fiscal austerity might be rediscovered in the latter half of his first term, but it's iffy. Neither tax reform nor Social Security reform nor Medicare reform will pass, although Obama might make a halfhearted attempt at one of these. Most political capital will be spent on the universal health care issue.

Government being what it is, the Democrats will see losses in the mid-term elections. More surprisingly to many, though, I predict that Obama will fail to win a second term. Why? Obama campaigned primarily on a platform of change; a platform which he will fail to achieve. Many new (i.e., young) voters will become disillusioned and not turn out for the subsequent election. Also note some facts: until the financial markets fell to pieces in September, Obama, despite having considerable media advantage and benefiting from a strong anti-incumbent sentiment, was pretty much statistically tied with McCain. In four years, there will be no economic malaise as a backdrop, the anti-incumbent sentiments will be turned against him (although probably weaker than in more recent history), and the Republicans will have pulled themselves together. As pundits like to point out, no party has quite the knack the Democrats have for snatching defeat from the jaws of victory.

Yes, my views of the next administration are pessimistic. They're also probably colored by my disagreement with the incoming party's politics. But they are just predictions, and they can be wrong… or they could be right. Who knows?