OF
[Copyright, 2009, Mike P. McKeever, San Francisco, CA., All rights reserved. Permission is hereby granted for reproduction in whole or part with attribution in any electronic medium. For print reproduction, contact the author at mpmckeever@earthlink.net]
This section of the MIEPA website presents video links for Economics 2.0, Dodging Disasters, Part 1 and Part 2 as well as the scripts used in each for a discussion of a new organization to perform SWOT [strenghts, weaknesses, opportunities and threats] analysis for the public interest of the Unites States.
SITUATION REPORT
In the years after World War II, the economic performance of the US economy has been a given. We assumed that we have an economy which is strong enough to support our military and diplomatic initiatives in national security matters. After all, we defeated Germany and Japan and rebuilt both countries with aid and loans.
Some of that thinking still exists today even though the facts are suggesting that the USA can no longer assume our economic strength as a given. As recently as 2001, the CATO group suggested that economic goals should not be part of national policies. [Cato Policy Analysis No. 409, August 1, 2001]
Although a few commentators (1) have observed that we really should pay closer attention to the national security implications of economic matters, so far no one seems to be doing so.
1) Brookings in July 2008 from Lael Brainard writes that the present interconnectedness of the world's economies makes it critical to include economics in national security issues, but that policy and politics lag behind. Association of the United Sates Army, Gordon Sullivan in 09-30-2008 states that the economy is linked to security. the Task Force on the Future of American Innovation states in November 2006 that we must be innovative to be competitive in today's global economy. NBER considers economic national security to consist of the costs of supporting defense and anti-terror programs [http://www.nber.org/workinggroups/ens/ens.html]
Here is the video link to Part 1:
HI EVERYBODY. MY NAME IS MIKE MCKEEVER. MY FAMILY HAS BEEN HERE SINCE THE 17TH CENTURY AND I HAVE BEEN STUDYING ECONOMICS SINCE 1960.
I’D LIKE TO TALK ABOUT THE FUTURE OF THE AMERICAN ECONOMY.
I DON’T MEAN TO SAY THAT I HAVE A CRYSTAL BALL, BUT SOME THINGS ARE PETTY CLEAR.
ONE OF THE THINGS THAT’S CLEAR IS THAT THE CURRENT SYSTEM DOESN’T WORK VERY WELL.
IN JUNE OF 2009 WE ARE HEADING FOR A RECORD 10% UNEMPLOYMENT RATE – THAT’S THE HIGHEST SINCE 1982 AND THE GREAT DEPRESSION.
IT’S SO BAD THAT IT’S STARTING TO AFFECT OUR ABILITY TO FIGHT WARS AND MAINTAIN THE AMERICAN DREAM.
THIS LITTLE TALK HAS TWO PARTS
FIRST – WHAT IS WRONG
SECOND – HOW TO FIX IT
FIRST, LET’S LOOK AT WHAT IS WRONG TODAY
PRESIDENT OBAMA INHERITED A MESS
RECORD BANK FAILURES
HUGE DEFICITS
TWO WARS
CREDIT FREEZE
HOUSING MARKET MELTDOWN
PRETTY MUCH WE WERE HEADED FOR A HUGE RECESSION
SO – HE DID THE STANDARD THING WE DO IN RECESSIONS
HE SPENT MONEY THAT WE BORROWED BY SELLING T-BILLS
AND, HE RESCUED THE BANKS AND THE AUTO COMPANIES
HE RESCUED THE BANKS TO KEEP CREDIT FLOWING SO THAT BUSINESSES COULD STAY OPEN
HE RESCUED THE AUTO COMPANIES TO SAVE JOBS
SO FAR, THE ECONOMY SEEMS TO BE RESPONDING POSITIVELY AND I HOPE IT WILL CONTINUE
ALL THESE TROUBLES SHOULD NOT BE A SURPRISE.
IN FACT SOME ECONOMIC WRITERS WERE WARNING OF A HOUSING BUBBLE IN 2006, AS SEEN IN THIS CLIP FROM PETER SCHIFF:
[HERE WILL BE A VIDEO FROM PETER SCHIFF OF 1.5 MINUTES - http://www.youtube.com/watch?v=wU9BaAGENpo]
NOW I DON’T MEAN TO ENDORSE EVERYTHING HE SAYS, BUT WE NEED TO LISTEN TO AND EVALUATE DIFFERING VIEWS ON THE ECONOMY.
SO, WHAT ARE THE NEXT SURPRISES – THAT IS THE QUESTION
WELL, THE ANSWER IS THAT THERE ARE A LOT OF POSSIBLE DISASTERS OUT THERE
AND, NO ONE KNOWS WHICH ONE WILL BECOME THE NEXT BIG SURPRISE.
ALSO – THE CURRENT RECESSION MAY GET WORSE, THERE IS NO GUARANTEE THAT IT IS FIXED
FOR EXAMPLE, IT IS PRETTY CLEAR TO ME THAT THE MAIN REASON FOR THE BANK FAILURES IS THAT COMMERCIAL BANKS ARE ALLOWED TO SELL INVESTMENTS.
LET ME EXPLAIN – A COMMERCIAL BANK IS A BANK THAT TAKES IN DEPOSITS FROM YOU, LIKE YOUR CHECKING ACCOUNT, AND LUMPS THEM TOGETHER TO MAKE ME A LOAN TO BUY A HOUSE
BASICALLY, THAT’S A SIMPLE BUSINESS WITH A LOT OF REGULATIONS AND PROTECTIONS FOR DEPOSITORS
ON THE OTHER HAND, AN INVESTMENT BANK IS A BANK THAT TAKES OWNERSHIP OF A COMPANY – SAY A RESTAURANT CHAIN – AND SELLS SHARES IN THE RESTAURANT CHAIN. THAT IS A COMPLETELY DIFFERENT BUSINESS THAN A COMMERCIAL BANK.
WELL SINCE 1999 A BANK CAN DO BOTH THINGS – MAKE LOANS AND ALSO SELL INVESTMENTS
FUNNY THING IS – THEY COULD DO BOTH THINGS IN 1929, JUST BEFORE THE GREAT DEPRESSION.
F. D. R. SEPARATED THE DIFFERENT BANKS IN 1932 AND THEY STAYED SEPARATE UNTIL 1999.
I THINK THAT BANKS ARE LIKELY TO FAIL AGAIN UNLESS COMMERCIAL BANKS - LENDING BANKS – AND INVESTMENT BANKS ARE SEPARATED AGAIN.
AS OF NOW, THEY ARE STILL TOGETHER
IT’S A CATASTROPHE WAITING TO HAPPEN
MAYBE IT WON’T HAPPEN – IF CONGRESS CHANGES THE RULES
BUT, I PREDICT IT WILL HAPPEN IF THE RULES ARE NOT CHANGED.
HERE IS THE BIG QUESTION
HOW DO WE FIND AND FIX THESE PROBLEMS.
THAT’S THE NEXT SECTION
THAT’S THE END OF PART ONE – THANKS FOR WATCHING
Here is the video link to Part 2:
HI EVERYBODY
HERE IS THE SECOND PART OF THIS TALK ON DODGING DISASTERS
HOW DO WE AVOID THEM? WHAT ARE THE SPECIFIC STEPS WE SHOULD TAKE?
OF COURSE IT IS EASIER TO FIND PROBLEMS THAN IT IS TO SOLVE THEM – ESPECIALLY WHEN WE ARE TALKING ABOUT PROBLEMS THAT HAVEN’T HAPPENED YET.
SO THESE SOLUTIONS WILL NOT BE PERFECT.
BUT – AND THIS IS THE IMPORTANT POINT – WE HAVE TO TRY.
IF WE DON’T TRY, WE WILL GUARANTEE FAILURE.
DOING NOTHING IS NOT AN OPTION.
WHEN WE LOOK AT OTHER COUNTRIES WE FIND SOME IDEAS. FOR EXAMPLE, MANY COUNTRIES HAVE SOMETHING CALLED A MINISTER OR A SECRETARY OF ECONOMIC DEVELOPMENT.
THAT JOB IS TO LOOK AT THE RELATIONSHIP OF SPECIFIC COMPANIES AND THE OVERALL NATIONAL INTEREST.
THAT SECRETARY HAS THE JOB OF LOOKING AT POSSIBLE FUTURE NATIONAL PROBLEMS AND MAKING SPECIFIC RECOMMENDATIONS FOR INDIVIDUAL COMPANIES WHICH MAY PREVENT A NATIONAL CATASTROPHE.
THE OBAMA ADMINISTRATION HAS APPROACHED THAT ACTIVITY IN A FEW SPECIFIC CASES, BUT THERE IS NO OVERALL AND COORDINATED EFFORT TO GO FORWARD WITH THIS CONCEPT.
FOR EXAMPLE, THE TREASURY AUTO TASK FORCE RECENTLY BECAME INTIMATELY INVOLVED WITH BOTH GM AND CHRYSLER WITH THE OBJECTIVE OF PREVENTING HUGE JOB LOSSES IN THE AUTO INDUSTRY.
IN THAT EFFORT, THE GOVERNMENT LENT ABOUT 150 BILLION DOLLARS TO BOTH COMPANIES AND TOOK OWNERSHIP OF 60% OF GM STOCK. THE GOVERNMENT DID SO ONLY AFTER THE COMPANIES PRESENTED A BUSINESS PLAN THAT ASSURED THE TREASURY THE COMPANY HAD A GOOD CHANCE OF SURVIVING AND BECOMING COMPETITIVE IN THE MARKETPLACE.
I AM PRETTY SURE THE TREASURY TOOK THOSE ACTIONS BECAUSE IT WAS IN THE NATIONAL INTEREST TO DO SO.
SO THE QUESTION IS: WHY THE UNITED STATES DOES NOT FOLLOW THE EXAMPLE OF OTHER COUNTRIES AND ESTABLISH A SEPARATE SECRETARY OR MINISTER OF ECONOMIC DEVELOPMENT?
WELL, THERE IS NO 100% ANSWER TO THAT QUESTION, BUT I HAVE AN IDEA.
WE HAVE A BELIEF THAT FREE MARKETS ARE THE BEST MEANS TO ADDRESS THESE QUESTIONS. OTHER COUNTRIES DO NOT SHARE THAT IDEA WITH THE SAME INTENSITY THAT WE DO.
BECAUSE WE THINK THAT FREE MARKETS ARE THE BEST SOLUTIONS, WE ARE RELUCTANT TO INTEREFERE WITH THOSE MARKETS UNLESS WE FACE AN IMMINENT CATASTROPHE.
BUT, WE CANNOT AFFORD THAT LUXURY ANY LONGER. THE WORLD’S ECONOMIES ARE SO CLOSELY INTERTWINED AND ARE STRETCHED SO TIGHTLY THAT ANY ECONOMIC DISRUPTION CAN HAVE HUGE CONSEQUENCES.
HERE’S A TWO MINUTE VIDEO SHOWING BARACK OBAMA IN MARCH OF 2008 DISCUSSING ‘RULES OF THE ROAD’ IN A FREE MARKET ECONOMY [http://www.youtube.com/watch?v=cSuT5zN2SPI – MIN 1.49 TO MIN 4.21]
WELL, HE’S RIGHT. WE NEED CLEAR RULES.
WE CANNOT AFFORD THE LUXURY OF AN ECONOMY WITH TODAY’S LACK OF DIRECTION.
THE QUESTION IS: HOW DO WE ESTABLISH SUCH A DIRECTION.
THE ANSWER IS THAT WE CREATE AN ORGANIZATION WITH THAT GOAL.
IT WILL BE A NEW ORGANIZATION.
HERE’S WHAT IT WILL DO. IT WILL DO TWO THINGS.
1. IT WILL PROVIDE ASSESSMENTS OF PROPOSED LEGISLATION AND PROGRAMS OF THE IMPACTS ON THE NATIONAL ECONOMIC INTEREST.
2. AND, IT WILL SUGGEST NEW LEGISLATION AND PROGRAMS TO ADDRESS POTENTIAL PROBLEMS
MOST OF ALL, IT WILL BE INDEPENDENT OF POLITICAL INFLUENCE
WHILE THE NEW ORGANIZATION [NEWORG] CAN BE HOUSED IN A NUMBER OF PLACES, PROBABLY IT IS BEST AS AN INDEPENDENT INSTITUTE.
WHAT ARE SOME OF THE ISSUES NEWORG SHOULD APPROACH CAREFULLY?
A. - – MARKETS ARE GREAT AT CREATING WEALTH BECAUSE MARKETS OFFER SUCCESSFUL BUSINESSES GREAT REWARDS. NEWORG WILL PRESERVE INCENTIVES.
B. - COMPLEX EVENTS – IT IS CRITICAL THAT NEWORG HAS A WIDE FOCUS SO THAT A WIDE RANGE OF ISSUES IS COVERED
C. - BUSINESS GOOD WILL – MOST BUSINESS MANAGERS WILL ACCEPT REASONABLE AND NECESSARY REGULATIONS BUT WILL BALK AT EXCESSIVE OR ARBITRARY RESTRAINTS. NEWORG WILL RETAIN BUSINESS GOOD WILL.
D. - SEPARATION OF POWERS – THE CONSTITUTION REQUIRES THAT CERTAIN PROCEDURES ARE FOLLOWED. NEWORG WILL FOLLOW THOSE PROCEDURES.
E. - PUBLIC INTEREST – OVERRDING GOAL IS TO ENSURE THAT THE PUBLIC INTEREST IN ECONOMIC EVENTS IS REPRESENTED.
WHAT ARE THE FACTORS ENSURING SUCCESS
NEWORG STAFF NEEDS AN UNUSUAL RANGE OF UNDERSTANDING
1. -ENTREPRENEURIAL EXPERIENCE – STAFF NEEDS THE ENTREPRENEURIAL EXPERIENCE OF LOOKING AT THE WIDEST POSSIBLE RANGE OF QUESTIONS, CHOOSING THE MOST CRITICAL 2 OR 3 AND THEN GETTING THEM 80% RIGHT.
2. - ECONOMIC EDUCATION – AN OBVIOUS REQUIREMENT. A BROAD ACADEMIC APPROACH IS PREFERRED TO A NARROW SPECIALIST OR QUANTITATIVE APPROACH.
3. - PUBLIC RELATIONS SKILLS – ANOTHER OBVIOUS REQUIREMENT SINCE MOST OF ACTIVITY WILL BE ‘JAWBONING’ AS OPPOSED TO WRITING LAWS
4. - BUREAUCRATIC SKILLS – NORMALLY SEVERAL AGENCIES WILL BE INVOLVED IN EACH INITIATIVE
5. - VISION – STAFF MUST BE ABLE TO TRANSLATE CORE AMERICAN VALUES INTO SPECIFIC RECOMMENDATIONS
6. - DATA SKILLS – STAFF NEEDS TO IDENTIFY AND MONITOR KEY INDICATORS AS WELL AS BROAD TRENDS TO CATCH ANOMALIES
MY PERSONAL GOAL OVER THE NEXT YEAR OR SO IS TO OBTAIN FUNDING FOR NEWORG AND TO BEGIN WORKING IN THE NATIONAL INTEREST.
THANK YOU FOR WATCHING THESE VIDEOS.
YOU CAN TRACK PROGESS AT WWW.MKEEVER.COM
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