Friday, June 8, 2012

(You Ain't Nothing But) Fine, Fine, Fine

You may have heard that Barack Obama said that the private sector is "doing fine" during his press conference today. I was one of the thousands (it seemed) who immediately tweeted on it...so here's the deal.

In context, what Obama said was that state and local governments are a drag on the economy, while the private sector is doing fine. The first part of that is true, but the second half, even in context, is still both wrong and a gaffe, in my book.

We're already seeing some immediate pushback from some of the press that others are going after this one unfairly (see David Weigel, not an Obama apologist, here), but I think that's wrong. Yes, the private sector is creating jobs -- but not nearly enough to get back to normal unemployment. And that's almost certainly true even with a very generous estimate of the effects of the public sector hits (hits which, as regular readers know, I think are a very big deal, and I'm happy to see the president pushing the point). It seems to me that defenders of the president are making a real mistake if they try to argue that he was correct and that the economy is "fine" other than state and local government jobs. After all, Obama's jobs proposals are intended to help the not-really-all-that-fine private sector as well as state and local governments.

The flip side of this is that gaffes, especially in June, aren't going to matter. It's not even likely that Obama will suffer a temporary hit in the polls from this, but it's as certain as these things can be that it won't affect voters in November. Oh, the Romney campaign is sure to make sure that everyone hears this one, but no one is going to care unless they already are looking to punish Obama over the economy -- and for people in that category, if this didn't come along something else would have done just fine. In other words, we're exactly where we were before the press conference: what matters is the actual economy, not how Obama or Romney talk about it.

So: real gaffe, doesn't affect November outcome. Everyone okay with that?

33 comments:

  1. Eh, I have a hard time seeing how this rises even to the level of "gaffe," although I have no doubt that the Republican noise machine will paint it as such. For the past two years, private sector job creation has been pretty much exactly as it was during the good part of the Bush years, from 2003 to 2007. If the private sector isn't "doing fine" now, it hasn't been "doing fine" since Bill Clinton was president.

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  2. Yeah I'm okay with that. But I think on the gaffe scale its actually pretty low. A real "gaffe" is saying "There's been no Soviet domination of Poland" type stuff. Saying the economy is "fine" might not be the best talking point, but how is he suppose to describe in in one word, suboptimal? not-good-enough-but-better-than-it-could-be? If he said "folks are hurtin'" or something like that Romney would yell anyway. And indeed, saying its "fine" is a lot better than "good". More than anything, I think this is an example of how twitter, blogs and the internet are pushing things even beyond the "24 hour news cycle", obscure things are going viral at a rate that is measured almost in minutes not hours. Jennifer Rubin is probably screeching into her voice recognition software at flank speed as I write this and I'm sure this will be a big thing all weekend like "etch-a-sketch" or "polish death camps" but it will have no effect in November.

    Getting on to the more important issue of "Wrath of Khan" I would also say that from a story telling stand point one of the greatest things about it is how they take a very old genre, the nautical/submarine movie and update it for a sci-fi setting. One of the best things about the battle sequences is how they draw so much from those great old submarine movies like "Run Silent, Run Deep" or "The Enemy Below". Battles defined by careful patience, the battlefield being more psychological rather than physical, stuff like that. I think that is a great tool for storytelling that I wish more folks would use; taking a old system of drama that works well and reapplying it to something new. One of my favorite SNG episodes is the "Drumhead" and its a great example of this, it doesn't seem like a Star Trek episode at all, its a great courtroom drama with people wearing jumpsuits.

    I think we should limit terrible performances awards to major characters, there were some pretty awful minor aliens, especially in the original series. I'm thinking that big lizard thing Kirk has to fight on that planet by making gunpowder as being number one in terms of minor rolls.

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    1. What he meant to say was the private sector is doing much better than it was but not as good as it would be doing if Congress passed my jobs bill.

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    2. You've earned a job at the WH Press Office. Please report to work early Monday morning. Good summary, seriously.

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  3. As a card-carrying member of the "You-can-take-yer-111th-Congress,-the-WH-is-about-leadership-and-Obama-ain't-great" club, I find this meme not only not controversial but it actually increases my sympathy for Obama a little.

    Look. Why is the private sector "not fine" where unemployment is concerned? (Absurd levels of cash on their balance sheets). Why won't they deploy that cash? (If they're not convinced that a new hire will translate to greater revenues than the labor cost, they won't do it). Does POTUS have a role here? (Yeah. To convince those companies to jump in, the water's fine).

    I can't help picturing FDR in the late 30s, during one of the many fits of the Great Depression, reassuring the people that "things were fine" in one of his fireside chats. Lacking tv, or twitter, or the intertubes, the common people probably looked at their families and were like "Hm. Maybe things really are fine? Doesn't sort of seem that way here, but who knows, maybe FDR is right?"

    In summary: Obama +1. The ease of doing the POTUS' job, in this era: -1.

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    1. CSH - Would you invest your own money with someone who made business decisions based on the President's election year assurances? Things aren't great out there and the problem has more to do with the actual economic conditions than a simple lack of will.

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    2. Unlike other past years of economic distress, the American corporations are enjoying relatively large profits and are sitting on trillions of dollars in cash in their American accounts and trillions more in their overseas subsidiaries -- largely gained through self-serving transfer price accounting that racks up profits in the foreign subsidiary.

      If Obama and Geithner and Krugman won't say it, I will: there is an "investment strike" going on, apparently aimed at helping the Republican campaign of economic sabotage and obstructionism. Our problems are indeed about more than a simple lack of will, however a calculated policy of refusing to invest in America is a fairly large problem the American private sector could decide to change if they really wished to.

      And unfortunately I have inherited some investments that are kept with these clowns.

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    3. Unlike other past years of economic distress, the American corporations are enjoying relatively large profits and are sitting on trillions of dollars in cash in their American accounts and trillions more in their overseas subsidiaries -- largely gained through self-serving transfer price accounting that racks up profits in the foreign subsidiary.

      If Obama and Geithner and Krugman won't say it, I will: there is an "investment strike" going on, apparently aimed at helping the Republican campaign of economic sabotage and obstructionism. Our problems are indeed about more than a simple lack of will, however a calculated policy of refusing to invest in America is a fairly large problem the American private sector could decide to change if they really wished to.

      And unfortunately I have inherited some investments that are kept with these clowns.

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    4. philosophical - Holding cash is typical in times of economic distress. It's not some partisan conspiracy, it's only a symptom of the slowdown. If it were a conspiracy, then liberal investors have been handed a huge opportunity to buy into the opportunities Republicans are passing up on.

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    5. To your first rhetorical, Couves: would I invest my money in someone who made business decisions on a President's election-year assurances? Almost certainly not.

      However, if the infamous and elusive animal spirits would begin to revive economic activity, that would be a reason to invest. Can a President's reassurances help jump start said animal spirits? Traditionally, I'd say yes.

      (Of course, this all assumes that corporations have not "priced themselves out" of full employment after years of goosing margins at the cost of a vibrant workforce. I fear that's ultimately the case, but that's for a separate discussion).

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    6. Also - to PhilosophicalRon, and also somewhat JazzBumpa below - it seems to me you guys infer too much malfeasance on the part of these corporations. Couves is right - if certain companies are purposely avoiding hiring people to make a political point, other, more liberal companies will go ahead and hire, and be at a competitive advantage. I'm pretty confident there's no company in the world, not even Koch Industries, that cares about ideology more than competitive advantage.

      So the total cash on the balance sheet is a red herring IF business conditions are such that it cannot be deployed profitably. Suppose your company is considering hiring a manager at $100 K/year, fully loaded that comes to $200 K per year. They can spend that money or let it sit. If they let it sit, they get some nominal rate of return in marketable securities, basically, nothing happens.

      If they spend it, they incur $200 K of additional cost flowing through their income statement. Suppose their operating margin is 80%. They'd then need to find $1,000,000 of additional revenue to keep themselves whole.

      You can say that companies that care about keeping themselves whole are insensitive or uncaring or whatever, but the cost of declining margins is angry investors or losing your job, or worse -

      - an incredibly slimy-looking Mitt Romney showing up at your doorstep with his fellow vultures from Bain Capital, offering to help you make yourself whole again.

      In conclusion, if you're going to question these companies' motives, its important to at least understand what goes into their thought process. For me, the system is totally f'ed up, sure, but its not big companies' fault.

      (Its ours).

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    7. CSH (6:25) - Ok, so you're obviously not going to be induced to invest based on the President's assurances, so why would anyone else be?

      With Fed interest rates at zero and no real response from the economy, I think we have serious economic problems beyond a simple lack of "animal spirits," which we've seen none of since the housing bubble (or the tech bubble before that). Most of our policies seem aimed at reviving a zombie housing/stock market economy so that consumers will start spending (and borrowing) again. We have to let the economy completely bottom-out so that it can reset investment priorities (based on what actually brings value, both at home and abroad -- not the preferences of any particular political faction.) It’s tough medicine, but if Obama wanted to truly break with Bush-era policies, that’s what he would have done.

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    8. Couves, seems to me you can endorse Obama's attempt to rouse the animal spirits, without necessarily thinking it would work. I was thinking last night about the incredible amount of bloggy "pulling back the curtain" yesterday, and how the lack of Wizard-of-Oz factor in POTUS makes it perhaps the least attractive 'presidency' around.

      Suppose you were tuned into the GE conference call after a disappointing earnings report, with the stock dropping that morning. Imagine an ambitious and confrontational young analyst gets on the line to ask a question. "Mr. Immelt," he says, half nervously, "What's up with your Days Sales Outstanding? Its been going in the wrong direction for several quarters and now picking up speed. Are your big customers in trouble?"

      An awkward silence ensues. You know, Immelt knows, everyone knows, that the analyst has a large stack of reports concluding exactly that. Nevertheless, Immelt launches into typical corporate-speak, he talks about expanding the pool, and developing world customers coming up to speed, etc etc etc. Its all total bs, everyone knows it, but does Immelt get called on it, either during the call or after?

      Typically not. Thus, while by hype being POTUS is a more powerful, influential role than CEO of GE, as reflected by traditional measures of being an 'influencer', its quite a bit worse.

      Maybe that's why no one worth a damn wants the job.

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    9. CSH - Sure, if your point is that it's just typical political bs and everyone does it... of course when you play the political game poorly, the opposition will call you on it, which the Republicans did.

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    10. Chuckle. Nobody worth a damn wants the job CSH? That seems rather sweeping. I agree that Obama can be a mass of disappointment, and Romney wears like a wool suit in August.. But not worth a damn? Who would be worth a damn? More to the point, what difference would their worthiness make if not joined by legislators, judges, and executive appointments of similar worth?

      Even more to the point, all the greatest presidential leadership in the world will not do a bit of good without a citizenry ready to be led. In keeping with the Watergate retrospective, I am reminded of the one powerful scene in Oliver Stone's Nixon movie. It is a piece of apocryphal balderdash, to be sure, but still. Nixon is standing in front of a portrait of Kennedy and says, "The difference between us Jack is that when they looked at you they saw what they wanted to be, when they look at me they see what they really are." Three hundred million Nixons, and nary a Kennedy or Roosevelt or Eisenhower to be found. A frightening thought, but likely a true one.

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    11. So...if you'll all indulge me my daily Colvin, let's say that executive leadership, like any other skill, can be learned and mastered with ~10,000 hours of disciplined work. Let's further assume that the job of US President requires high-quality executive leadership - probably more than any other.

      In 2008 we hired for that job a guy who, by all indications, was exactly ZERO hours into his 10,000-hour journey toward executive management excellence. While Obama has many salutary traits, I believe that even the 10,000-hour skeptics recognize that Obama was in over his leadership head when he assumed his current job.

      Further, I think we'd all agree that Obama is much better at these things today than he was in 2008; its likely that when he's not on the links he's gaining executive management skills fairly rapidly. Perhaps he's not a 10,000-hour executive, but he's likely up to a couple thousand hours, which probably fits with our subjective sense that he's still not exceptional but not as bad as he once was.

      And that raises a question: why don't 10,000-hour competent managers seek, or are triaged to, the Presidency? Part of the answer is in Anastasios' comment above - the polity is a way lamer constituency than a corporation. The analyst in the Immelt hypothetical is likely put off by Immelt's bs; he ostensibly writes a watered-down note downplaying his concern. I'm sure Obama spun the "fine" quote. I'm also sure that even his most fervent supporters didn't buy the spin for a second.

      What exceptional executive would want to lead those who won't be led?

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    12. Eh. I think the big thing that I want presidents to have are first-rate political skills, broadly defined. Yes, it's in some sense an "executive" job, and surely more now than it used to be, but it's above all a political job.

      And I'd say that Obama's improvement in office is less noticeable than Clinton's, or perhaps also W.'s.

      What I'd like is for someone who has been a governor and a Member of Congress, and seven or eight other things, and also is relatively young. But that's a combination that you can't have.

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    13. Or who cannot be led, CSH. After all, anyone at GE who crosses Immelt will find that the CEO has immense and effective personal powers ready to be used in the enforcement of discipline. But POTUS, not so much. Let us say that Obama had a disagreement with Pelosi. She might simply say, "thank you, Mr. President, but I do not take orders from you. I listen to the voters of my district and the members of my caucus, and come down to it they don't take orders from you, either.". If a President Romney were to disagree with John Boehner, the response would be exactly the same, but not so polite.

      One can talk about Roosevelt and Eisenhower and Johnson, but the fact is that they started with much greater consensus than any recent President has had or is likely to have, both in Washington and in the country as a whole. And they still had people openly defying them with impunity. POTUS is an immensely powerful office when the country is behind the President and the Congress cooperative. In those situations, lack of executive ability makes surprisingly little difference. Minus such a situation, the most talented executive in history Isaiah find his abilities do amazingly little good.

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    14. Isaiah? Is God speaking through the autocorrect? Beats me.

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    15. Ok, so Jonathan, Anastasios, I take your points, I was engaging in a bit of hyperbole in overstating the importance of executive management to a President (though hyperbole gets the good comments in reply, fwiw). The following related thought occurred to me today, as always, ymmv:

      Have you ever worked in a large, publicly-held concern that went through a management shakeup, either new C-level executives or new GMs in your division? Everyone dislikes the new people, because that represents moving my cheese, or somesuch. When you gather at the watercooler, folks grumble about the change, and they fish for however-negative-data about the new people their fellows are willing to provide.

      No one ever admits this, but the thing everyone is seeking is to find out whether the new folks aren't that good, and in particular, whether they can be rolled. By which I mean, whether the lowly employees can keep doing what they enjoy at the company, which stopped being a value-add a long while back, which a competent new management team would surely terminate.

      I readily admit that management excellence, though real, is a murky concept. We talk a lot, however, about the dysfunction in the Republican congressional delegation. Aren't we, essentially, complaining that the Republicans are rolling the Democrats in general, and Obama in particular, with impunity?

      Is it possible that the diagnosis is focusing on the wrong symptoms?

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    16. I tend to be skeptical of those who claim that Democrats are getting rolled by the Republicans.

      But other than that, I think I'll bow out, because I just paused to finally read through the last >50 comments in "Long Arc" (plus the Sunday questions, plus a couple of other short thread I hadn't got to), plus it took forever tonight to find a birthday person for tomorrow. Not that I'm complaining, mind you. As usual, I just want to thank everyone for making the comments section value-added around here, and I just wish I could participate a bit more.

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    17. Just sake of argument: when we think of incompetent employees 'rolling' senior management in a poorly-run company, we may think of Tom Smykowski and his "people skills".

      Could we describe Tom as an employee who does what he wants, that's in his interest, and that provides laughably no value to the company? Is that not roughly the complaint with the dysfunctional Republicans in Congress?

      Per Anastasios' comment above, I agree that a President has to negotiate to get those like Tom rowing forward, much moreso than a CEO does. Nevertheless, there's enough similarity there that I thought it was worth throwing against the wall to see if it would stick.

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  4. So: real gaffe, doesn't affect November outcome. Everyone okay with that?

    Sure. But here's a question: Do you believe McCain's similar gaffe in 2008 ("The fundamentals of the economy are strong") had an effect on the outcome of that election?

    Conventional Beltway wisdom seems to hold that McCain's "fundamentals" gaffe did have an effect on the outcome, if only because it confirmed what many voters already suspected: that McCain was out of touch, especially on the economy.

    So if that's the case, what makes Obama's gaffe any different?

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    1. I don't think McCain's "fundamentals" had much of any effect on the actual outcome of the election.

      But, I will point out that in 2008 the economy was collapsing all around us. In 2012 we are not in a desperate tail-spin. We are adding private sector jobs each month.

      So... that's different.

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    2. I'd point out that in 2004 the dems ran adds remarkably similar to those anti-McCain adds. I remember, feel free to correct me anyone, an add with a record player on repeat in abandoned factories replaying a similar sounding Bush quote to McCain's later quote, something along the lines of the economy is "steady and strong". We all of course know who won the 2004 election. The big thing to remember is elections are fought on issues more than rhetorical styling or intricate arguments and the important thing is the public's view of that issue. If a party wants to attack a candidate on an issue there are a myriad of ways to do this and a myriad of ways to respond but the important thing is whats being talked about, not how its being argued. Thus since Iraq was a disaster it hurt McCain as he and his party were a huge supporters of the war and all the ways he defended his stance were far less important than the overall unpopularity of that war. Hence why gaffes are largely irrelevant, what matter is the public's stance on an issue not they rhetorical way politicians defend or promote their records or ideas.

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  5. The statement did result in one more thing:

    A laugh-out-loud chuckle when Mitt Romney accused someone else of being out-of-touch.

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  6. The sad thing is that I could probably pick out at least ten sentences in Obama's last ten public statements that I wish everyone "heard" and that got this kind of attention. But of course, that's not the way things work. If a fart slipped out while Obama was giving the best speech since Gettysburg or "I Have a Dream", the story would be about the fart (which is one reason both Abe and MLK went bean-free in the critical hours before the speeches). Mitt Romney has lied about 20 gazillion times (according to Steve Benen, but he's probably missed a couple), and has said some outrageous, and outrageously stupid, things, but of course they don't get this kind of attention either (except from Benen and others who pay attention, meaning, effectively nobody).

    To me, this is clear evidence that campaigns and "narratives" and "gaffes" don't matter nearly as much as they seem to to political junkies and reporters, and also illustrates why it's so difficult for the President, or anyone else, to actually move public opinion in a rational direction by making rational arguments. The world just doesn't work that way. And as strange as it may seem, I don't blame "the media" for this, or even stupid voters. There is simply no way to get 50 or 100 million people on the same page, deliberating over facts and analysis like eager college students and reaching rational decisions as a result.

    So, the biggest news will be the stupidest news, and meaningless gaffes will burn brightly and then fade into obscurity. I'm just grateful that God invented the DVR so I don't have to watch political ads.

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  7. I don't think it's anywhere close to being a gaffe. If you look at the corporate cash situation, instead of employment, the private sector is doing fabulously well. They have over $2 trillion in their coffers on shore, and according to Thom Hartman, another $3 trillion overseas.

    And corporations don't give a hirsute rodent's hindquarters about employment. Employees are things to be used and consumed, just like any other resource.

    This is just an example of Obama uttering a truth the right doesn't like. And the reason they don't like is that it came from his foreign-born, nazi, commie lips.

    JzB

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    1. Corporations have lots of cash because they're not investing. That's not a sign of economic health, quite the opposite.

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  8. Calling this a gaffe reaffirms the Republican noise machine; disconnects jobs from 'government jobs,' where the recent losses have been.

    We're talking about teachers, librarians, road crews, sanitation crews, here. The staff at the place where you go to renew your license. These are real jobs, and their loss has a real impact on our quality of life; just at the point where our lives intersect government.

    Worse, the loss of those workers means that their functions are less effective, reaffirming the meme that 'government's bad,' and should be drowned in a bathtub.

    Republicans want to disassociate unemployment and the public sector; they're trying to have it both ways. These kinds of 'gaffes' become propaganda to that end. Obama's point was an important one, job loss in the government sector has serious economic consequences. The loss of effectiveness and productivity has important consequences. The erosion of trust in government that results has important consequences.

    Failure to point these things out would be not only a gaffe, it's the path to ever greater political dysfunction.

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    1. Here's more, courtesy of Robert Wright at The Atlantic:

      http://www.theatlantic.com/national/archive/2012/06/maybe-the-private-sector-is-doing-fine/258311/

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  9. In this morning's New York Times business section, the lead sentence on Paul Lim's "Fundamentally" investing column reads as follows:

    "One bright spot in the lusterless recovery that started in 2009 has been the performance of the private sector."

    Given the Sunday Times' printing schedule, this was almost certainly written before Obama's comment on Friday. (There's no reference anywhere in the column to Obama.) So maybe Paul Lim just committed a gaffe, too. Or maybe Obama was right.

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