The surest way to corrupt a youth is
to instruct him to hold in higher esteem
those who think alike than
those who think differently.
Nietzsche
Robin Gibbs of the Bee Gees Dies At 62
How can you mend a broken heart? In my April 21 post I asked for my blog readers to say a prayer for Robin Gibb (Robin's fraternal twin Maurice had died several years earlier of an intestinal blockage, which ironically also had recently become an issue for Robin). Robin was courageously fighting his battle against cancer and had fallen into a coma; he subsequently awoke from his coma and gave an optimistic thumbs up. But cancer is ruthless and today won the battle for Robin's body, but not his soul.
I have written a lot of in memoriam pieces over the life of the blog, but never has one hit one as personally as this one. After the Beatles had run the course of their red album days, the Bee Gees became, in my opinion, the best soft rock artists over the better part of the following decade. I remember singing "Words" with the rest of my high school choir; "Run to Me" remains among my 5 all-time favorite hits, a song a college geek longed to sing to his unrequited crush.
I cringe at seeing the Bee Gees described as "the disco group": the Bee Gees were mainstays on the rock/pop/adult contemporary charts long before they reinvented themselves in the disco era. In fact, I'm more likely to play the older material; more recently, I've put "World" (not to be confused with "My World") and "First of May" on heavy rotation. (My favorite tracks during the disco era? "Nights on Broadway" and "Tragedy". But for those people who believe the Bee Gees started with "Jive Talking", there's a wonderful medley of their earlier material below (I think it comes from their later 70's live album which features the single "Edge of the Universe"))
If anyone is confused by the identities of the Gibb brothers, Robin is clean-shaven and the lead singer with the vibrato voice. Older brother Barry (who invented his trademark falsetto gimmick during the disco era) was the other lead singer; Maurice mostly played in the background and joined in the divine chorus harmonies.
Robin joins Maurice and Andy in heaven, and the heavenly choir is just that much sweeter. My thoughts and prayers are with Barry, Robin's widow Dwina, son Robin-John and other survivors.
Sunday Talk Soup, Bain Capital and Paul Ryan
First, I was surprised on Meet the Press by guest Jim Cramer's comments; this seemed like a different person than the one whom back in 2007 called Romney the "best business man in North America", heading the best consulting company, noting how he had once interviewed with Romney for a job in 1984 (see embedded video below). At times during the discussion it seemed like Mike Murphy, a GOP political adviser/consultant whom once consulted for Governor Romney, Senator McCain and other notable GOP governors or US Senate candidates, was the reluctant one on the panel trying to defend Romney's record.
I should note that Jim Cramer has more recently distinguished his support for Romney as a politician from his assessment as a businessman. It would not surprise me that just as Fox News has a policy against its commentators endorsing candidates (although Sarah Palin pushed the boundaries, signaling her backing of Newt Gingrich's candidacy), that NBC has a similar policy (but there's little doubt where Chris "thrill going up my leg [for Obama]" Mathews or any of the progressive MSNBC talk show hosts stand).
At the time I'm writing this, I have been waiting for the MTP transcript to be published, when Daily Caller published the relevant sound bite from Cramer I was looking for:
I think that the specifics [of the Romney jobs ad] are good. In other words, people recognize that that [Keystone] pipeline would have created jobs. But, at the same time, Romney’s known as a job destroyer, not a creator. I just don’t think that this will stick. I think Bain sticks. I think the idea that you bring in Bain, which is what happened in the ’80s, they fire a lot of people, and that’s how they get prosperity for the rich, and that is a more resonate theme than anything Romney has come up with.Let me start off with the beginning of the Cramer soundbite. This is a predictable soundbite, but I'm frustrated that the Romney campaign hasn't tackled the bigger issue. Recently I published a commentary on the Green River formation (the world's richest oil shale reserves in a 3-state area, largely untapped due to environmentalist analysis paralysis). The commentary included a summary of a relevant speech from George W. Bush which also addressed regulatory roadblocks for expanding oil refinery capacity. We have oil pipeline capacity issues as well; I've also described about an oil storage glut at Cushing, OK (see here and here), about a differential between West Texas and Brent oil prices.
Obama and his crony Democratic obstructionists have been routinely giving the same old same old tired, weak arguments (e.g., for at least 2 decades) that it takes years for new finds to make their way into one's gas tank, that oil companies are sitting on land they aren't drilling on (so why give them more). All of these are rationalizations that don't stand up under scrutiny (e.g., the "unproductive" areas of a lease are an artifact with how the government leases tracts).
According to Congressman Bishop (R-UT):
According to the Institute for Energy Research (IER), in 2011 oil production on federal lands declined from 2010 levels by 11 percent and natural gas production on federal lands declined by 6 percent. However, there was a 14 percent increase for oil production on private and state lands and a 12 percent increase for natural gas production on private and state lands. Natural gas production on federal lands in FY2011 declined by 27 percent from its FY2009 level, when it peaked at 6.82 trillion cubic feet, while natural gas production on state and private lands increased 28 percent during that same period of time.Is it that federal land are "less equal" than state/privately-held lands, or does it simply reflect the fact of onerous regulatory barriers to production on federal lands, especially under a Democratic Administration? Obama wants to have his cake and eat it, too: he effectively raises the cost of production on federal lands, the law of supply and demand works, and then he disingenuously bashes the natural resource companies for the consequences of increased regulation!
So Obama plays innocent when we felt earlier this year the effects of the oil supply squeeze (it's the oil companies, oil speculators, global demand, ...) But he has arbitrarily restricted offshore exploration off blue/purple state coasts, he imposed an illegal moratorium in the aftermath of the BP oil spill, overturned by District Judge Feldman (whom received death threats in the aftermath and was accused by the Left of being in a conflict of interest (based on obsolete information at the time of the case assignment)), etc. Part of the problem is that it is far easier for Obama to make a reckless, unsupported anti-business charge than to explain how the invisible hand works, basic business and economics, etc.
The one takeaway, from the above argument, is how analogous the process is to the development of pharmaceutical drugs, in terms of how many drug concepts finally make it through FDA approval to the marketplace.
But now let's go back to Cramer's astonishing statement; I'm undecided whether Cramer is simply playing devil's advocate, but in fact at no time does he repeat his gushing praise of Romney as the best businessman. (I believe that he also was critical of Romney's position regarding the auto bailout.)
I don't think Romney needs my defending his Bain record, but let me address the point anyway. PART of Bain's business involves leveraged buyouts; they also engaged in some venture capital deals. Quite often the target of an LBO is saddled with a failing business target with high labor costs; note that over time, as productivity improves, fewer workers are needed to sustain sales of a fixed number of widgets. Many of the leveraged buyouts involved companies with failing business models; Bain, in fact, LOST money in most of its earliest LBO's.
A business is motivated by a number of factors, but over the long run, it has to be profitable. To extend its range and supply of goods and services, say, in new geographic regions, it may need to enlarge its otherwise overextended work force. Job growth follows business growth, not vice versa. There is risk involved in investing in a failing business (e.g., excess capacity in a maturing market--say, the paper industry or document delivery in the digital age). The effect on job growth in the LBO is a mixed bag; in the early stages, the number of jobs may very well decrease. However, lowering item cost of goods sold is a first step in rebuilding market share and some rehiring may occur, I would expect Bain or other companies look to diversify a company's offerings beyond commodities into value-added offerings. But the point is less about growing jobs than perform life-saving services on a company: maybe saving a third of employees versus losing 100%. Venture capital, resulting in new companies like Facebook, obviously has a more direct effect on job growth: you have to establish corporate headquarters and key managers, production employees, etc. However, a number of start-ups fail (e.g., the product fails, another company beats them to the marketplace and market-leading share, etc.)
How would I handle the Bain question as Romney?
- Romney Is Not the Employer-in-Chief. Romney needs to explain that as President, the best things he can do is to establish free market policies and reverse direction from the Big Government bubble, providing a pro-growth context enabling businesses to grow and and thus employ more people. These steps include: (1) decrease the level of uncertainty due to public policy analysis paralysis and/or business-adverse posturing on taxes, ObamaCare, the environment, and labor; (2) get the federal government living within its means and not competing with the private sector for investment dollars, including, but not restricted to, consolidating and/or privatizing redundant government operations, capping government budgets, flattening government bureaucracies and reforming chronically underfunded employee benefit liabilities; (3) streamline any necessary government review processes (environment, oil exploration permits, prescription drug approvals, patents or copyrights, etc.); (4) simplify the convoluted tax and regulatory regimes; (5) vigorously establish and sustain free market and free trade policies; and (6) reform unsustainable entitlement liabilities.
- Bain Capital and State Gubernatorial Experience Makes Romney Uniquely Qualified to Tackle Government Budget Issues.
- Romney's Bain Capital Success Across Businesses Gives Him a Distinct Perspective on How Government Impedes Business Growth and Success.
- The Bain Capital Record Sharply Contrasts Against Obama's Leadership Style: Romney is more decisive, responsive, results-oriented, proactive, sharply analytical, innovative; he is pragmatic, able to reach consensus across the aisle but at the same time will resort to his veto authority over spendthrift legislation. He is willing to take on tough responsibilities and decisions.
Companies enter into bankruptcy and emerge all the time. There is absolutely NOTHING that Obama did that couldn't have been done faster, more efficiently, more fairly and WITH ZERO RISK TO THE TAXPAYER, in the hands of the private sector. That's what Romney meant when he said that he would take credit for the idea of a managed bankruptcy. All that the government did was defer the day of reckoning (and no doubt the Obama Administration then used those taxpayer loans to extort a settlement in favor of its union allies, a blatantly unethical abuse of executive power).
I have ZERO sympathy for either Big Auto or Big Labor. It was embarrassing to open up Consumer Reports and see few, if any American models made their top 10. To pass along high labor costs, Big Auto kept ceding one smaller-margin auto market (e.g., small cars) after another to the foreign competition, preferring to focus on more expensive, less gas-efficient truck and SUV models. They painted themselves into a corner: they soon discovered that if the Asians could manufacture a high-quality smaller car, the Asians could also manufacture a high-quality truck or SUV, probably with lower cost structures, able to compete on price; the American automakers also found when gasoline increased to $4.50/gallon, nobody wanted to touch gas-guzzlers. Suddenly everyone wanted a high-mileage gas hybrid, a technology Detroit ironically and arrogantly laughed off years earlier; Detroit (with the exception of Ford) found itself with the wrong products at the wrong time. It's not like we hadn't seen, e.g., an oil embargo before, lines at service stations and gasoline price spikes. It's not that Detroit wasn't aware that the US, despite abundant but undeveloped oil reserves, was heavily dependent on imported oil, and there were other economies (including China) competing for those resources.
I think that bankruptcy was necessary to shed unsustainable labor packages; obviously, the auto company management had to be replaced. There has been speculation on whether the private sector would have stepped in. No question, yes--but once the government intervened, it became more difficult. The US has one of the largest markets of car buyers, and some downsized version of the companies would have likely emerged once the unsustainable labor contracts were set aside. It's all speculative, of course, and certainly Ford and domestic plants for foreign-make automobiles would have been able to ramp up capacity versus having to compete against government-funded competitors. I have faith in the Invisible Hand. I don't believe in the moral hazard of government bailouts.
Just a brief note here: I could swear that NBC ran an ad for the abysmally-selling Government Motors Volt
Finally, I thought Paul Ryan did well in his face-offs on Fox News Sunday and Meet the Press. I'm still puzzled why others have not speculated on Kay Bailey Hutchinson as Romney's potential Veep, but I'm impressed by Marco Rubio and Paul Ryan as being ably to bring the case against the Obama Administration. I have to say, though, that I don't think Paul Ryan's reforms go nearly far enough. Dick Durbin (D-IL) did make a valid point about Paul Ryan voting against the Bowles-Simpson recommendations (in short, Ryan was not happy with the exclusion of so-called healthcare reform from the talks); however, Durbin is on weak ground here as Obama himself did not pursue Bowles-Simpson, and at least one Democratic Senator also voted against Bowles-Simpson. I disagree with Ryan's vote, not on substance but on pragmatic grounds. I think Ryan's and Bowles-Simpson's budgets are largely comparable with considerable overlap, and I think any delay of a bipartisan compromise is just analysis paralysis. No doubt ObamaCare has to be addressed at some point but I would have voted for a compromise that comes close to my own plan.
Obama and European Socialists Co-opting the Term 'Growth'
I have a pet peeve about Obama's attempts to claim ownership of terms like "balanced". The use of the term "balanced" in the minds of most people suggests a compromise where both partisan sides give up some things they want. Obama's idea, however, is hardly "balanced". What Obama means by "balanced" is class warfare tax hikes now and some deferred reduction in the growth of spending, not an absolute reduction of spending year-over-year. He's also hijacked the concept of "shared sacrifice"; it turns out 'shared sacrifice' doesn't mean that federal budgets are cut across the board and everybody pays more, but Big Government thinks it can invest better than the private sector's multiplier effect.
So now we have "growth" (which Obama and the Europeans imply is "economic growth"); what these social liberals/progressives or socialists are really talking about is failed Keynesian economics as usual:
Instead of reopening Merkel's "fiscal compact", they are expected to complement it with a new "growth pact". Berlin has already signaled it is open to several ideas favored by Hollande, including more flexible use of EU structural aid, a bigger role for the European Investment Bank and the introduction of "project bonds" to foster investments in infrastructure like transportation and energy networks.
As for Hollande, French economics has gone straight downhill since Frédéric Bastiat. I think, unfortunately, Chancellor Merkel, facing some recent adverse elections inside Germany, never mind the recent debacles in France and Greece, is having to scramble, with an increasingly strident anti-austerity/populist, anti-German wave across Europe. There is only one thing I know for sure: however Big Government tries to micromanage the economy, it will fail--it will simply muddy the water and defer an authentic recovery. What Europe really needs to do is embrace free markets and free trades, not try to replicate the same type of errors underlying the historic failure of Hoover and FDR.
Musical Interlude: My Favorite Groups
The Rolling Stones, "Shattered"
