David Axelrod’s Talking Points

By Simon Johnson

David Axelrod was on the Diane Rehm show this morning – a great opportunity to connect with listeners who will actually stop what they are doing and pay attention, at least for a short while.  He was awful.

He had even the most basic facts wrong – it’s not “8 million people have lost their jobs” but rather “more than 8 million jobs have been lost” since December 2007.  He rambled – it was hard to see his point, particularly in the introduction.  But most of all, there was no narrative – why exactly did we have a recession, why has it been so bad, and why aren’t the jobs coming back?

Without a narrative, how can anyone make sense of the past 18 months?

Axelrod can choose his narrative – and obviously doesn’t need to agree, for example, with the view that the financial system became dangerous and now needs to be reined in – but he has to say something coherent.  You can’t just make isolated points like “the fiscal stimulus helped” or (even more confusing) “we’ll now address the budget deficit.”

There was really no explanation for why the economy has become such a difficult place for so many people.  How did we go from apparent prosperity in 2007 to the deepest recession of the past 50 years?  And how are we going to get the jobs back?

Blaming things on the Republicans in some vague sense (e.g., tax cuts) also doesn’t make sense to people.  If you want to get partisan, you have to connect the dots in a convincing manner – otherwise people will (rightly) tune out.

Does the problem here lie with the economic briefing that Axelrod received before going on air?  If so, changing those responsible would be an obvious first step.

But the issue may be deeper – or higher up the administration.  It is entirely possible, based on what we are seeing and hearing now, that even Axelrod and other members of the political wing of the White House don’t really understand what happened (the big banks blew themselves up) – and why they are now so powerless to do anything about it (after being rescued, the banks fought hard to block effective change).  The credit system remains fundamentally damaged and unfixed; this undermines expectations for the future in many ways and slows the recovery of jobs.

95 thoughts on “David Axelrod’s Talking Points

  1. How did we go from apparent prosperity in 2007 to the deepest recession of the past 50 years?

    How did I go from apparently being most witty and charming man alive last night to lying in a gutter with a horrible hangover this morning?

  2. I agree with your observation that the White House team really doesn’t understand what happened. I’ve been an Obama supporter, but am deeply disappointed with his handling of Wall Street. I think it begins with the financial team around him, which includes Wall Street moles like Larry Summerfield and is amplified by a President who doesn’t seem to have a basic grasp of economics. The President’s new goal of doubling exports in 5 years further illustrates this ignorance as it is both unrealistic and fails to address the twin issues of balance of payments and unemployment. Too much of, and an ever increasing percentage of the value of exports are merely re-shipped imports. What we have to address is how to increase our value-added portion of exports to increase jobs and eliminate the annual balance of payments deficit.

    In the end, the President needs to excercise leadership and upgrade his financial team. That’s a tough job in the middle of multiple crises, so it probably won’t happen.

    The sad thing for our country is that this confused and somewhat compromised team is the better alternative to a thoroughly corrupted and dogmatic Republican approach.

  3. Simon, I have heard Axelrod on other shows and he is incoherent. One would think a president as articulate as Obama would not have such a weak mouthpiece. I couldn’t agree more that the situation needs to be laid out in specific terms, with logical arguments. And one need not have an economics degree to get it – God knows I don’t and I manage to connect the dots – I think the situation can be summed up for middle America in terms we can understand, without being talked down to.
    A friend invited me to watch a dressing down one of the liberal talking heads gave a Republican senator on MSNBC who was toeing the party line on stimulus and unemployment insurance extensions. While I vehemently disagree with the senator’s POV, the talking head did us no favors by acting like Rush Limbaugh. We must refute the knee-jerk talking points with real, legitimate, straight-forward facts, starting with the fact that the new numbers out today show why it is even harder to find a job, as job retraction has increased, not decreased. Sen. Kyl, et al, who say the unemployed are merely slackers who are parasites on the arse of the REAL producers, need to be proven to be the liars they are, and not by shouting them down, but by using solid evidence of our argument.

  4. Mr. Simon Johnson wrote:

    “David Axelrod was on the Diane Rehm show this morning – a great opportunity to connect with listeners who will actually stop what they are going and pay attention, at least for a short while. He was awful…He had even the most basic facts wrong – it’s not “8 million people have lost their jobs” but rather “more than 8 million jobs have been lost” since December 2007.

    It is entirely possible, based on what we are seeing and hearing now, that even Axelrod and other members of the political wing of the White House don’t really understand what happened”

    June 24, 2007 – Chicago Tribune

    “He’s as good as it gets,” (Axelrod) says Mark McKinnon, the chief media adviser to President George W. Bush. ”


  5. Nice post Sandi, the answer is not to replicate (hysterics) what the other party is doing (GOP), the answer is to educate.

  6. “One would think a president as articulate as Obama would not have such a weak mouthpiece.”

    Obama is articulate, but his understanding is not matched by his ability to express his views. Axelrod has always impressed me as a mediocrity in a suit, who looked brilliant when he was winning a campaign… credit where credit is due… but has never expressed an idea or world view worth listening to. He’s all operations, tactics, and deals. Same with Gibbs. No big picture.

    We’d all like to believe that at least the big man at the top had a few big ideas, but I think it is increasingly clear that he too is smart, but vapid. His ideas about finance, capital, governance and regulation are not his, but rather imported from the world of … yes… finance and capital.

    His modus operandi, to get elected and to govern, has been specifically to cozy up to Wall Street, promise them the world, and use them as a lever against other industrial sectors. But surprise, Wall Street only cares about itself and not about Obamas governing agenda, and CERTAINLY not about re-regulating the economy or increasing the level of social justice and democracy in our polity.

    Obama is right that to govern you need to align yourself with some power centers in society, and he’s done that…. Wall Street yes, and he’s tried to do the same with the Senate and the military, giving it one more war to fight in Afghanistan.

    But he has failed to use the alliances he has forged with power, to exert power against other sectors. Maybe he can’t, and maybe he wouldn’t even if he could. But what is clear is that Obama’s presidency is becoming a failed presidency. His allies in governance have taken what he has offered, but not given in return.

    Obama has not used a vision or ideology to organize his Presidency, and so the nation drifts along in the grip of mega financial interests, steered (or simply silently watched over) by mediocre men like Axelrod, in the grip of its major power centers, defense, Wall Street, the vast Washington lobby and law machine, thinking things aren’t so bad for us here in the D.C. bubble, while the pain just increases among everyday folk.

    It’s a failed Presidency in the making, and deservedly so given Obama’s performance so far, but what will come in 2012 from the Republicans is likely to be far worse.

  7. Both the Democratic and Republican parties are as bankrupt of ideas as the American middle class is of money.

    We will never get out of this mess with tweedle-dum (the R’s) and tweedle-dee (the D’s) falling over each other in their efforts to do the bidding of the banksters.

  8. Axelrod is not an economist; he’s a political tactician and a PR mouthpiece.

    Pay no attention to the man behind the curtain. . .

  9. So far, one of the best “big picture” summaries of what is wrong with our financial system came from Jon Stewart during his interview last year with Cramer where he referred to the Wall St casinos. Maybe Stewart could do the job?

  10. I wouldn’t be so sure Obama, Axelrod, and the rest of them don’t know exactly what happened 3 years ago, or that they know exactly why the “steps” that have been taken haven’t improved the economic conditions for the majority of us.

    It’s difficult to face voters and tell them the trillions of dollars that have been spent or stolen weren’t spent to help them, but the financial elites who couldn’t bear the reality that their bad bets were suddenly worthless.

    70% of our GDP is the real economy. The other 30% (and growing) is “contributed” by the financial sector. The real stimulus was given to this 30% to recapitalize financial institutions, and, as such, will not lead to jobs or an overall improvement for regular American citizens.

  11. In 1933 Hoover and Roosevelt knew the cause of the crash. It was tax policy leading to wealth concentration. Hoover raised the marginal tax rate to 65% and Roosevelt raised it further to 90% where it stayed until the 1960’s. This lead to a great middle class, and American power until the current century. Reagan reversed all this with the tax reform act of 1986. Bush further lowered the marginal rate to 25%, where it stood in 1929. We now have, like Mexico, wealth concentration, and no money for consumer demand, in a vicious cycle.

  12. Good analysis. This was the perfect moment in history for another FDR, but we didn’t get him.

    I doubt what is coming from the Republicans will be elected in 2012 or even that the GOP will regain control of either house of Congress in 2010, maybe even 2012. So what will happen? More of the same. Some increase in power for the GOP, more obstructionism and continued drift. I think history suggests that people have to get much more miserable than they are now for a social explosion to occur — maybe I am wrong.

  13. I simultaneously agree and disagree with both of you. You are correct that our arguments should come from reasoned, well thought out lines of logic, and anyone speaking about them should be able to explain these lines of logic at the drop of a hat. HOWEVER…

    The hysterics and the emotion-filled rhetorical blasting work. Look at how vehemently the followers of the talking heads just cheer every time the tough talk starts. I say that a good speaker for this cause should be able to go to a more educated audience with logic and reasoning, but when dealing with talking heads and the largest parts of the public, should be capable of leveraging the emotional argument toward swaying their view to his.

    Basically use the techniques the media uses as a necessary evil to push your well-reasoned agenda. Don’t appear as a robot driven only by logic (though it may well be your thinking underneath), but a warm, feeling human being connected to the audience’s concerns, emotions, and desires.

  14. He’s an advertising guy. He sold a product. He used really old propaganda tricks to do it. Sorry, that’s just the way I saw it at the time and how I see it now. He’s still trying to sell products. That’s why it doesn’t make sense or seem coherent. It’s why we have a fearmongering catfood commission going after social security the same way Bush/Cheney did.

  15. I teach narrative and I have been seriously concerned that the Administration does not understand how to create, control, and propagate a narrative.

    They have a good sense of policy and they are trying to do a good job. But connecting with the American people is not the same as thoroughly developing policy and covering agenda points.

    They need to determine what their narrative is (this includes having a set of values they can clearly explain and apply consistently). Then they need to understand each and every public appearance as pedagogy. They must teach the narrative, and everyone must participate: unified message.

    You know when your narrative has cut through the noise machine because you can measure it. How often are your phrases and ideas and values repeated in the media? Measure, measure, and pick the appropriate values. Then repeat, repeat, repeat. Don’t move on until your metrics are hit.

  16. Here’s what scares me. I don’t think unemployed are slakers or parasites, but I do think our education system (and the political incentives that shape it) have for decades supported way too many people studying arts, history, language rather than math, science, business, economics. While there are always exceptions to the rule, most gradutes are woefully unequiped to enter the workforce and compete in an increasingly competitive (and fluid) global market. If you ask me, that’s the root of the problem.

  17. lark wrote:

    “I teach narrative and I have been seriously concerned that the Administration does not understand how to create, control, and propagate a narrative.”

    Despite their appearance, it is difficult to instil such subtle virtues in creatures who are essentially human sharks, they treat you as either foe, food, or to be avoided.

  18. I agree with Simon’s assessment about Axelrod. My worry is that they are all like that. Larry Summers cannot articulate a vision and a clear narrative either and he is supposed to be the brightest economist around. Romer is the only one worth listening to.

  19. Utter nonsense. It’s absurd that people can still espouse such ignorance so late in the game.

    Read this for the latest–and by “latest,” I mean the most recent of countless examples–word on why facts are utterly useless in political debate, whether they are true or not.

    How facts backfire
    Researchers discover a surprising threat to democracy: our brains

    I hope you are not in charge of sales for your organization. If so, the next time you are out droning through another fifty-page PowerPoint of product features that clearly “proves” your offering is better, your fellow employees should get busy registering for unemployment.

  20. Could it be that maybe, just maybe, Axelrod Obama and the entire team do not possess a real understanding of the private sector and what makes the US economy hum (e.g. small businesses)? Reading the comments the prevailing opinion seems to be Obama et al have good to great ideas, they just can’t seem to express them sufficiently well enough for the country to understand.

    I don’t think that’s the case at all. I think you have in Axelrod, Obama et al a group of largely academics or career government bureaucrats who do not individually or collectively understand (or, perhaps, care) how jobs are created in this country. Blame the banks, blame Bush, blame a lack of communicating things right….not going to work when what is truly needed is a long hard stare in the WH mirror.

    The economy is stalling because small/medium sized businesses are not hiring…in large part because they are anticipating higher healthcare costs, higher taxes, more redistributionist policies from Washington, making the marginal cost of that next tool & die machine or employee greater than they want to take on at present. It’s really quite simple.

    Get out of the ivory towers and talk to as many small and mid-sized business owners would be my advice to everyone.

  21. Okay, I’ll say it: They (the Obama Admin’s front men – whether Geithner, Summers, Axelrod, or others) are either “idiots” or in collusion with the bankster-boys.

    As I see it, there is no other viable explanation for the complete mishandling of the financial/economic crisis.

    BTW, I’m interested in seeing Obama’s math & science grades and/or scores. I bet they are in the C to F range. He may be an orator, but he is definitely not a a systems or scientific critical thinker.

  22. What I can’t quite wrap my mind around is how all the social explosions that I can realistically see happening in the US seem to take on a right wing color.

    Here we have an economy failing because of a failure of government action, a failure to move toward democratic socialism, and yet those most hurt by what is going on are drawing right wing conclusions and absurdly accusing Obama of being a socialist. Not only do they not recognize the need for government to regulate and counter balance the corporations, they seem to think that Obama DOES believe this to be the case.

    How utterly deluded is it really possible to be. I believe the answer is “very deluded” and this is the mental and political pathology of the United States.

    I predict a Republican President in 2012. Obama is not organizing the anger, and the Tea Party and Fox News have demonstrated that they can organize the anger, and they will bring it to the ballot box. Those they organize will have no idea that they are voting for their own subjugation beneath the corporate boot. The most we will likely be able to say is that they perhaps intuited that Obama wasn’t offering much of an alternative.

    Maybe I’m wrong too. Surprise me Obama. I don’t expect to be surprised.

  23. One reason the administration doesn’t level with the American public about how we arrived at this economic nightmare is that the Republicans have begun the chant that “Obama keeps blaming Bush for all his problems.” Repeatedly explaining how the Bush policies caused this unholy mess is now being seen as simple deflection from the bad job Obama has been doing at fixing things.

    If Obama actually spoke truth to the American people he would be telling them one thing after another that they don’t want to hear, such as it took three decades to get into this mess and it’s liable to take at least a decade to get out of it. Meanwhile jobs will return only slowly; living expenses, health care expenses and education expenses will continue to rise; public services will decline, and the deficit will continue to grow. Meanwhile the financial sector will continue to operate like a rigged casino, reaping billions in profits, and large corporations will continue to hoard cash. The American people do not want to hear bad news for any extended period of time, and they’ll end up shooting the messenger instead of stringing up the truly guilty parties.

    It’s a lot like community leaders refusing to tell the public that there is a plague in the land in order to avoid panic and chaos.

  24. “And how are we going to get the jobs back?”

    Outsourced jobs will most likely not come back!

    If you look around at your office, you will find that most stuff around you contains oil.

    Creating stuff without oil as an element of construction not only decreases oil consumption, it will give you a competitive advantage over competitors who have been living in denial or have been repressive in regards to the fact that peak-oil is coming to a location near you pretty damn soon.

  25. QUESTION: You wrote that Henry Kissinger’s memoirs “give the impression of a middle-level manager who has learned to conceal vacuity with pretentious verbiage.” You doubt that he has any subtle “conceptual framework” or global design. Why do such individuals gain such extraordinary reputations, given what you say about his actual abilities? What does this say about how our society operates?

    CHOMSKY: Our society is not really based on public participation in decision-making in any significant sense. Rather, it is a system of elite decision and periodic public ratification. Certainly people would like to think there’s somebody up there who knows what he’s doing. Since we don’t participate, we don’t control and we don’t even think about the questions of crucial importance, we hope somebody is paying attention who has some competence. Let’s hope the ship has a captain, in other words, since we’re not taking in deciding what’s going on. I think that’s a factor. But also, it is an important feature of the ideological system to impose on people the feeling that they are incompetent to deal with these complex and important issues; they’d better leave it to the captain. One device is to develop a star system, an array of figures who are often media creations or creations of the academic propaganda establishment, whose deep insights we are supposed to admire and to whom we must happily and confidently assign the right to control our lives and control international affairs. In fact, power is very highly concentrated, decision-making is highly concentrated in small interpenetrating elites, ultimately based on ownership of the private economy in large measure, but also in related ideological and political and managerial elites. Since that’s the way the society effectively functions, it has to have political theology that explains that that’s the way it ought to function, which means that you have to establish the pretense that the participants of that elite know what they are doing, in our interest, and have the kind of understanding and access to information that is denied the rest of us, so that we poor slobs ought to just watch, not interfere. Maybe we can choose one or another of them every few years, but it’s their job to manage things, not ours. It’s in this context that we can understand the Kissinger phenomenon. His ignorance and foolishness really are a phenomenon. I’ve written about this in some detail. But he did have a marvelous talent, namely, of playing the role of the philosopher who understands profound things in ways that are beyond the capacity of the ordinary person. He played that role quite elegantly. That’s one reason why I think he was so attractive to the people who actually have power. That’s just the kind of person they need.


  26. Of course it is, of course it is.

    Everything is back to normal. Ignore the man behind the curtain. These are not the droids you are looking for. Ignorance is strength.

    Think happy thoughts!

  27. Well, it is very clear now that TPTB are letting the country (world?) fall apart intentionally, else we would have been rolling out massive programs to restructure banking, employment. Baloney organizations like “New Deal 2.0” aren’t going to do the job. Everything seems to be going like slo-mo clockwork.

    1) Pump up the bubble using greed
    2) Prick it by undermining faith in CDO’s.
    3) Stomp the air out of it with lots of books and blogging and newspaper articles
    4) Generate fear, fear, fear.
    5) Create cowed populace
    6) Send in the messianic new fascists leaders in socialist clothing
    7) Build that lovely new infrastructure.
    8) Monitor and control the populations on a more granular level than ever before possible.
    9) Justify it all: more egalitarian society; economic stability; no more wide-area warfare; better, more integrated healthcare, etc. etc.

  28. On a related matter …

    So the ground-breaking innovation created by Milton Friedman and free-market ideology is that dishonest, unethical, self-serving misconduct (eg, lying, cheating, stealing, manipulation, self-dealing, fraud, avarice) followed by the evasion of all personal accountability is the formula for material gain. Actually, I am not sure this is anything new or innovative. Dante’s Divine Comedy comes to mind. In particular, Part I the Inferno and the fourth, eighth and ninth circles of Hell.

    The eighth circle of hell in the Divine Comedy is reserved for corrupt politicians, thieves, alchemists, counterfeiters, perjurers, grafters and their minion. Read and cringe.

    “Corrupt politicians are are immersed in a lake of boiling pitch, which represents the sticky fingers and dark secrets of their corrupt deals …

    PS: It’s possible politicians do not understand what happened when the big banks blew themselves up or how to fix the economy. But it might be a very different story when it comes to health reform.

  29. did we really ever recover from the 2001 recession? its hard to say that we really did. because in fact the only evidence of that was that it appeared better. but I think it was only an appearance. instead, it was all papered over by loans. we were exporting jobs back then, and it only got worse. now we are paying the piper for that

  30. There are, in my huble opinion, 3 types of politicians:

    The ones who make things happen;

    The ones who watch things happen;

    The ones who say “what the hell just happened??”

    I’m sad to say that the party I voted for this time seems to be composed of numbers 2 and 3.

    For the Dem leadership to have Axelrod in front of the public is a good indicator of how naive and clueless they are.

    I think there should be an investigation to see if, and how many, of the democratic party leadership (lower case intentional-they don’t deserve caps) are secretly in the pay of the RNC. And no, I’m not paranoid….I’m just….uh….paranoid.

  31. Agree the causes are not understood really by anyone in totality other than S*** happens. But LT policy was a key component of the problem including FN and FH getting way out of hand including buying lots of private subprime, MH and MF securities to get “unit credits” for low income housing, housing policy in general reached its obvious and ultimate conclusion after a very long cycle, poor regulatory responses from FN/FH single regulator to the Fed not realizing there was a housing bubble and banks BS were loaded with real estate risk, too smart regulators that believe illusions like VAR etc. without looking at aggregate gross leverage levels and the change in 1980s of only tax exempt interest being mortgage giving rise to the subprime market via home equity loans. Don’t even get me started on the SEC which is totally populated by lawyers without much market knowledge (Madoff??). The 2007 prosperity was an illusion built on a sand pile of credit.

    The new bill doess’t do much to correct any of this and it will happen again the question is when. We had a large systemic bank failure 20yrs ago without any of the bogey men of this crisis present other than the constant of bad loans, some obvious greed and chicanery and leverage. Those never go away as they are human conditions. In fact the bogey men of this crisis saved the credit system last time. For credit to heal securitization needs to make a comeback in much larger size however demand for credit is not high. People know they need to delever and we better let them because it is a natural condition.

  32. Nouriel Roubini to Obama on issues: Treat Americans like ‘adults’

    Wed, July 14, 2010 3:15PM EDT – Globe & Mail – excerpt

    Nouriel Roubini, the New York University economist who predicted the financial crisis, urged President Barack Obama today to give Americans the straight goods on what needs to happen to boost the economy. “We have to recognize that Americans are adults,” Mr. Roubini said in a radio interview with Bloomberg. “Then we have to speak to them straightforward about the risks and challenges that we have, rather than kicking the can down the road.”


  33. SARose wrote: “One reason the administration doesn’t level with the American public about how we arrived at this economic nightmare is that the Republicans have begun the chant that “Obama keeps blaming Bush for all his problems.”

    Yup, and the Admisistration ought to be saying “you’re damn right we are, and here’s why….and go down the list with some outrage in their voices.

    But who would do that: Barack “Gentle Ben” Obama, Harry “10 Cents A Dance” Reid, David “Duh” Axelrod, Ben “Braveheart” Bernake, Bobby “White Flag” Gibbs ????

    Jeez, Pelosi has more testosterone than all of them put together, and she’s a woman!

    FDR, Harry Truman, and Lyndon Johnson must be somewhere spitting fire, or weeping for the pathetic party the Dems have become.


  34. Maybe he doesn’t have a narrative because they don’t have any coherent story with reasonable causality. It’s all just “greed” and “deregulation” as if greed is some force that ebbs and flows and regulations are just “r” where more is good and less is bad.

    And since the “financial reform” doesn’t come close to addressing anyone’s concerns from any side of the ideological spectrum, there’s really no story that can be told other than these hyper-aggregate, generic blob talking points.

  35. Why leave out Timmy “Wish I Could Dress Like a Sheikh” Geithner? Or Rahm “Primal Screamer” Emmanuel?

  36. I left Timmy out because he doesn’t like to come out to play, and Rahm, because he’s not allowed out to play. Their afraid he’ll be biting the heads off the chickens at the dinners.

  37. “FED out of tools” article on Huffin’ and Puffin’ site is about to test the limits of twit-er power to noise out intelligent conversation…

  38. When your boss’s grasp of the soon-to-be-passed “financial reform bill” is expressed like this –

    “We can’t allow a financial crisis like this one that we just went through to happen again. This reform will prevent that from happening.”

    – what can you expect of a purely political butt-boy like Axelrod when speaking of economics? Axelrod is aux de pond scum, operational filth of the very worst kind. Its people like Axelrod focused as they are on achieving day-to-day political advantages for the the lice they serve that more or less personify the putrefaction that is at the core of American social and public life. A more important question is why Simon Johnson would want to confer significance on him.

  39. “One would think a president as articulate as Obama would not have such a weak mouthpiece.”

    You say that the President is “articulate” – and he may be. But I believe that more than anything else the man is a master of rhetoric.

    Articulation and rhetoric are not the same thing, but the distinctions are fuzzy.

    Articulation is the description of something in a clear, precise and concise manner.

    Rhetoric is to advocate a point – even if only subtly by suggestion – and to persuade the listener or reader to sympathize. The boundary between the two can be difficult to define.

    Personally, I believe that the genius of this President is that he is a brilliant rhetorician: at the same time that he persuades people to his point of view he also persuades them that he is simply being articulate and objective, thereby creating a powerful combination of advocacy and the appearance of rationality and objectivity at one and the same time.

    It takes either a native skepticism or a combination of intellect and understanding of logic to reveal where rhetoric and truth diverge. (For myself, I rely on the former; I leave the latter to Simon, James, et al.)

    All the administration is giving us is a sales job, pure and simple. It’s up to us whether to accept it or not.

  40. Obama is articulate? I have listened to him speak(off-the-cuff) scores of times. In every instance his speech is thoroughly perforated with more uhs, ahs and ums than my daughter conjures when she is trying to hide her complicity in some mal-adventure.

    Obama evades all direct answers with blowhard verbal diarrhea at every opportunity.

    I have recordings of thousand-plus-word answers to questions that were simply begging for a yes, or a no. And he almost never gets to the yes or the no; as a means of deception.

    Obama looks down his nose at everyone, dropping the “folks” word as if it shows his connection with the “regular folks” he apparently despises.

    He is pure charlatan, with a fundamentally socialist, Marxist, muslim core, as he stated repeatedly in his pathetic book, Audacity of Hope.

    In twenty years of attending the vicious Jeremiah Wright harangues, this liar states that he never heard Wright condemn America or the “white man”.

    Absolute bilge water.

  41. “It is entirely possible, based on what we are seeing and hearing now, that even Axelrod and other members of the political wing of the White House don’t really understand what happened (the big banks blew themselves up) – and why they are now so powerless to do anything about it (after being rescued, the banks fought hard to block effective change).”

    And so it probably is. I don’t think the fact that those boom years were fuelled by ridiculously overvalued instruments has penetrated all that deeply. The reason that’s so may be quite stark. A tacit admission of that fact would lead inexorably to the conclusion that the wealth created was illusory. That illusion lasted only long enough for the suits to walk out the door with their bonuses and commissions intact, the house of cards they’d created swaying uneasily in the breeze generated by their exit.

    The resulting collapse sent what’s left of the real economy into a crater. Climbing out of that crater is not the same as sitting on a pile of over-valued assets convinced you’ve conquered the financial universe. Those days are gone.

  42. Simon, very good point. We seldom, recently, have believed that the Adminstration and Congress are thoroughly unequipped, or rather unequal to, determining, intellectually the causal relationships existing in this deeply scarred economy, or, in fact the larger global economy. The country has, since the Great Depression, and literally until the end of the Clinton Administration, been such a strong economic engine and economic world power, that it could get away with political answers to its fiscal problems, since they never, until recently, got beyond the scope of politically bases solutions. We have reached the point where politicians are just chirping away, more and more loudly, the party line, which has become amazingly old, stale and distracting to those of us who know that this country’s solutions require complex thought and action to overcome. So, we get what we have, as epitomized in the Axelrod interview, that is essentially nothing but irrational political blather punctuated with naked half truths. Of course, this is exactly what the leaders of any good plutocracy do. They act sincere, spout lots of useless dogma, and hold out their hands precedent to the next election with lots of promises to act in accordance with the dictates of the polls shrewdly avoiding serving the broader public.

    This is a prescription for this country to repeat what happened to the Roman Empire (as a good example, but not the only one). There are only two possibilities if this continues: a people’s violent revolution or a Constitutional Convention to bring the public back in control of our government (public financing of campaigns, term limits, lobbying limitations, etc.). Either avenue is frightening because of the vast unknowns awaiting us in the outcome. But, without a major change of the American Paradigm, we will fail and be swallowed up by the rest of the world, or become very much like Russia prior to the 1991 revolution, if we’re not already.

    It’s so sad to see homo sapiens fail to use reason, the one edge we have over all other mammals, to resolve its major challenges in governance. I wish I were hanging from some tree looking for berries. I’d have a much better shot at my dreams that way.

  43. Agree wholeheartedly.

    IMHO, the current White House contingent doesn’t fully understand how badly the failure to do FinReg well has now compromised the larger economy.

    They need to get out more.
    Although they should leave Larry Summers at home.

  44. Dear DDJ,

    Having two business degrees and having taught business courses in universities over the past decade, I can say with some degree of authority that a good arts graduate is much better prepared to (as you put it) “enter the workforce and compete” than the average business graduate.

    There are many problems with the ediucation system, but the choice of majors by liberal arts students is not one of them.

  45. There was an expression, “Where you stand depends on where you sit.” refering to which side of the aisle, There must be something similar about what you see. People still secure in their jobs on the bridge don’t see what is happening in the bilge.

  46. I have wondered for some time if not the 9/11 “saved” the economy in 2001. The enourmous amount spent on increased security measures and the military must, in an economical perspective, have been a “stimulus” many times bigger than the ones implemented after Lehman failed? Remove the spending caused by 9/11, is it not most likely that the recession would have happened earlier? So maybe it would have tanked in 2002-03 if not for 9/11.

  47. The reason the most renowned economists of the time wrote A Program for Monetary Reform, as described within the pamphlet, was to focus on repairing what they saw as the cause of the Great Depression, which is the same cause as the the one that is coming.
    The Introduction explains its purpose –

    “It is intended to eliminate one recognized cause of great depressions, the lawless variability in our supply of circulating medium.”

    If Simon Johnson was as smart as Professors Frank. D. Graham, Irving Fisher, Sen Paul Douglas, Earl J Hamilton, Willford King and Charles Whittlesey, then he would have at his disposal the truest means available to reverse the foolishness of which he here speaks.
    It is all laid out point-for-point in the document, Simon.

    The Monetary Revolution lets the bankers get back to banking and restores monetary sovereignty to the American people, acting through their government.
    The Money System Common.

  48. Mr. Johnson:

    So if real change is needed what have you proposed that advocates real change, rather than more or less of the same parts of the deterministic, legacy system?

    I advocate segmentation of predictable, probabilistic, and uncertain regimes.

    Risk Lies in the Risk-Based Capital Approach of Basel III article in American Banker warns against conflating risk and leverage.

    Your political commentary is great. Would like to see the same re economics and capital market governance

  49. As I’m fond of saying, no one has ever lost money (or an election) by UNDER-estimating the stupidity of the American people.

  50. Having taught in MBA school from the late 1970s to early 1980s, I left feeling that our students were over-trained but under-educated. What is needed is critical thinking skills. See:

    Click to access GlobalFinanceNewsletterMay05.pdf

    I have a undergraduate liberal arats degree and an MBA. I am for whatever works to solve problems.

  51. Because it’s easier and more fun to listen to Beck, et al, and enjoy an emotional tirade. Let’s face facts: this has never been, on the whole, an intellectual society. In fact, I’ve concluded that we are an anti-intellectual, narcissisctic society that can be compared to adolescence so far as maturity.

  52. Mr. Waterbury, “There are only two possibilities if this continues: a people’s violent revolution or a Constitutional Convention to bring the public back in control of our government (public financing of campaigns, term limits, lobbying limitations, etc.). Either avenue is frightening because of the vast unknowns awaiting us in the outcome.”

    The “knowns” – war lords and drug lords in charge of Spaceship Earth for “eternity” :-) – is immensely more frightening. It’s total depravity. Do we or do we not have “free will” to chose beauty, truth, goodness?

    We had a flowering of hard-earned human civilization in the USA with a vibrant “middle class”.

    The paw of beasts came down on “middle class” innovation 30 years ago from the oil biz…and now it’s this hysterical and nihilistic THING killing human beings and the environment.

    Anything other than “modernizing” the Declaration of Independence’s list of grievances and re-establishing a government created by people who have the capacity to self-govern, and do in their “private” lives,

    would be admitting that we are narcotized hedonistic masochists who are dead on arrival to anything resembling the potential of a Human life.

    Are we or are we not HUMAN BEINGS with free will to choose what is GOOD?

    Maybe it is “genetics”…recently came upon newly found “history” about Mom’s father…it’s impossible for me to bend a knee and giver power over to psychopaths and sociopaths. So I’m moving forward with preparations – first, of course, is the PREFERENCE to choose the Constitutional Convention route…but with the knowledge that the armed hooligans of the plutocrats will show up to destroy it before it even begins…so now what, right…?

    Those who LOVE money are in cahoots with those who will do anything for the money….knowing Wachovia and Wells Fargo have vicious skank drug pushers manning the phones and LAUGHING at all the people they forced into foreclosures in AZ is jet fuel for my rebel “genetics” – no question what needs to be done…there’s nothing to yaddayadda about anymore – MILLIONS of people are NOT going to step back. It’s IMPOSSIBLE to step back. Think of it this way, pedaphiles swear they can’t help themselves. So why is it different for people who can’t help themselves when it comes to taking out predators? Would you stand there and let a rabid raccoon bite you?

    Yes, not saints, even though Joan has been so designated over time, but WOMEN leaders always step in when it gets this disgusting and filthy in the “business” world to go to war – and win one for the ages to come.

  53. Math and science are real tools, but economics and business are soft, phony, idealogical nonsense. What economics and business graduates are equipped for is dissembling, manipulating, collaborating with entrenched power. To suggest that Americans are insufficiently educated for productive work is to ignore that work has been systematized, dumbed down, Taylorized, since the beginning of the Twentieth Century. Like those prevailing in the military, business systems are designed by geniuses for execution by idiots.

    The biggest problem with higher education is that it engenders unrealistic expectations for personal success, which is largely a matter of luck: right place, right time. As business organizations become larger and larger, fewer and fewer educated people are needed. The surplus creates a reserve army of the overeducated and underemployed, whose principal recourse for personal survival is quasi criminal activity euphemistically referred to as sales.

  54. “And how are we going to get the jobs back?”

    Many of the jobs that were lost during the recession will never come back, due mostly to the following three trends that have been ongoing for years but were made more noticeable by the recent financial crisis:

    1. AUTOMATION. The last time we had full employment was in the pioneer days when practically everything was made by hand and everyone worked from dawn to dusk just to survive. The more automated our society becomes, the less work there is for people to do; it’s a natural consequence of having machines and computers do our work for us. Nowadays, there simply isn’t enough non-automatable work available to keep everyone busy at a full-time job, and this trend won’t reverse until we run out of fuel to power the machines that do our work.

    2. OUTSOURCING. Along with the global economy comes the global labor pool from which large corporations can choose their workers. Americans cannot compete against the hundreds of millions of laborers in Asia who work for less than a dollar an hour. The drain of jobs from developed countries to developing countries will continue until an equilibrium is reached, at which point all the world’s corporate laborers who are lucky enough to have a job will be toiling away for the same poverty-level wages.

    3. DO-IT-YOURSELF. Think of the various tasks that were formerly part of a paying job, but now we do ourselves: fill our own fuel tanks and pay at the pump (goodbye gas jockeys & clerks), use ATMs and do banking online (goodbye bank tellers), book our own flights and print our own tickets & boarding passes (goodbye travel agents and airline check-in staff), record and bag our own purchases at self-checkouts (goodbye cashiers), and shop online (goodbye retail store staff). These types of jobs continue to disappear every day.

    American corporate profitability has risen to an all-time high in the past year. The outlook is rosy for corporate managers but dismal for workers, as the rich get richer and the poor get poorer.

  55. A fourth point: Those jobs were largely vapor, most generated by the leverage created by overvalued assets. It was a classic boom psychology. You’re rich because you think you are and you spend like it. That creates jobs.

    The converse implication also holds. Once people are convinced they’re no where near as wealthy as they thought they were they stop spending. All the jobs created by the overflow of the perceived wealth are now gone.

    Real reform, the kind that checks such ridiculous over-leveraged madness by insisting on proper asset valuation has the effect of eliminating the busts, but the booms as well. Those jobs may come back once we get back to real wealth creation, but it’s hard to know when that might happen. One thing is for certain, they won’t come back as quickly as they disappeared.

  56. In support of your arguement

    Create wealth, jobs will follow

    In response to the Aiken Standard’s November 24th editorial, the “jobless rate” should be viewed in the context of the factors of economic growth—land, labor, and capital. When was there ever a governor, legislator, or editor who was not in favor of creating jobs? Yet given South Carolina’s budgetary crisis and above-average unemployment rate, South Carolina’s effort to create jobs either—

    1.Is in search of economically unproductive jobs,
    2.Lacks the necessary programs and resources to attract economically productive jobs, and/or
    3.Job creation is too limited a standard for economic well-being.

    To paraphrase Albert Einstein, expecting a different result from doing the same thing over-and-over again is the definition of insanity.

    Like the former Soviet Union, any body politic can put people to work. The challenge is to put people to work profitably. Rather than using job creation as the independent economic variable, I submit that wealth creation is a more appropriate goal. Job creation in the absence of profitability is an unsustainable and flawed construct.

    Unfortunately the lack of a robust economic vision has rendered South Carolina as an extract economy. Unless you can grow it (agriculture), enjoy it (tourism) and/or provide low-cost alternative labor to make it, South Carolina lacks the capability to participate in high multiple, value-added revenues that are necessary for wealth creation. The result is a commoditized labor force that is the last to hire and first to fire. Illustrative of this problem is the migration of talent with our college graduates. South Carolinians need commercially viable enterprises to create wealth more than and before they create jobs.

    Stephen A. Boyko

    Author of “We’re All Screwed: How Toxic Regulation Will Crush the Free Market System” and a series of SFO articles on capital market governance.

  57. In this election year, job outsourcing has become a political wedge issue for both Democrats and Republicans. Demagoguery and passion have replaced analysis and reason. Proponents of outsourcing advocate that it is to America’s advantage to avail itself to those services and products that can be sourced and acquired more cheaply overseas. Opponents of outsourcing argue that these bargain goods and services benefit only the highly skilled and highly paid Americans. Many Americans believe that outsourcing is a threat to their economic well being.

    America seems to be at cross-purposes. Notwithstanding that most southern textile manufacturers were once based in New England, southern conservative politicians who usually claim that the U.S. should compete with trade not tariffs, now argue for protectionism. This is tantamount to arguing in favor of national health care since protecting the medically uninsurable and protecting unprofitable jobs is comparable. At some level, protecting a “buggy whip” job rations a prospective entrepreneur’s opportunity to start a new venture. Likewise champions of choice, advocate that America should never enter into a trade agreement that allows corporations to leave for another country to employ cheap child labor to make their product. This “economic morality” begets commercial censorship that is an operational component of class warfare.

    Structural outsourcing occurs when innovation causes existing production to become obsolete resulting from a shift in skill sets. Improving comparative advantages and core competencies begin by redesigning products and re-training people. The old corporate culture must be replaced. Otherwise the “iron law of oligarchy” will centralize power, ossify operational components, and stagnate the thought processes in an attempt to retain control. See GAAMA Model. Comments on Release No. 34-49695, File No. S7-22-04 (June 9, 2004) http://sec.gov/rules/policy/s72204/saboyko060904.pdf

    Click to access OP-1189_1_1.pdf

    Specifically, offshore markets result from standards that are “too high” interacting with “too few” best-practice operating rules for a given level of economic activity. Offshore markets result from an amalgamation of circumstances not solely cost. If a single criterion such as cheap labor were the sole determinant for using an offshore labor market, Haiti would be the outsourcing capital of the world. Outsourcing occurs because the cost of domestic compliance is greater than the benefits derived from the “Law of Comparative Advantage.” Every financial income tax and/or regulatory operational tax imposed on the normative market that is excessive relative to the level of commercial incentive serves as a subsidy to economic externalities such as offshore markets.

    Comments extracted from my article entitled “The Governance of Outsourcing” (March 17, 2004) http://inthenationalinterest.com/Articles/Vol3Issue11/Vol3Issue11Boyko.html

  58. The above is in support of N. Cimon’s comment. Application error. Sorry.

  59. Dr. Johnson,

    Your article seems to imply that the administration has a coherent economic policy.

    Th Obama administration clearly does not have any coherent economic policy. That is why Axelrod stammered. Actually, when you think about it, Axelrod actually clearly articulated the Obama administration economic policy, which is…well…kinda liker que sera sera.

  60. I’m all for liberal arts education, as I think it encourages breadth as well as depth of thought, but there are many ways of learning critical thinking skills. Has anyone else in this discussion remembered that most people in this country don’t go to college? If we want a thinking electorate as well as work force, the education we really need to be concerned about is earlier.

  61. Or did it stimulate and cover for what was essentially inflation out of sight and mind of the Fed?

  62. “Do we or do we not have “free will” to chose beauty, truth, goodness?”

    Beautiful question Annie! Kind of Shakespearean…

  63. the jobs will disappear as quickly in the places that they disappeared to when they disappeared from the USA

    labor creates wealth, not vice versa

    if a person creates a job that’s never been created before and that produces wealth that was never produced before (assuming the wealth is also some thing that is life-sustaining), they own that job and who has the right to take that job?

    you take a job, you take a house – you destroy infrastructure – you destroyed what made the production of wealth through labor possible in the first place…

    so what kind of metaphysical wealth to create jobs is possible without intellectual and physical labor and without social and physical infrastructure?!

  64. Tom – Are you asking for a prime time policy debate between RNC’s Michael Steele and Admin’s David Axelrod to determine which is the least lame of the 3-legged horses?

    With a few exceptions, societal complexity has moved beyond the public servants’ capability leaving self-interest. Debate is reduced to political “gotchas” not “gotits (understanding)”


  65. Debate? No, not at all. What would be the point? The press would report who was sweating more, speculating about who had what for breakfast, and then we would have commentary from some fasion guru about which power suit conveyed their personalities and coloring best.

    And yes, of course, there would be nothing of substance addressed.

    Now, if it were advertised as a “smack-down”, and held in a cage, we might get a reasonable number of Americans to watch. Then they could at least come away with some fashion advice.

  66. Your points are well made.

    But how do you engage well intentioned folk to take the time to abandon the blame-game of gotchas?

    Is reak financial change needed? Does Dodd-Frank address real change or is it mostly a reshuffling of the status quo? etc.

  67. As a South Carolina resident, I must heartily agree. This place is intellectually set up to fail (and has been since indigo ceased being a valuable commodity.)

    Of course, there’s the military-base industry that secretly drives “The New South.” It’s thriving. Recruits, guns & ammo everywhere!

  68. That is because SC politicos are intellectually duplicitous. See response to “What is a conservative?” But then again so are some who celebrate diversity on Baseline as they seek financial reform.

    In furtherance of Ms. Hutto’s letter of June 15, 2010 on “What is a Conservative,” from the perspective of political orientation, it is a subject immerged in the business of “governance” deserving of further analysis. Good governance balances stakeholder responsibilities—incentives for being good citizens with stakeholder rights—societal commands.

    Societal commands are comprised of principles and rules. Principles are prospective societal policies that define social effectiveness in terms of doing the right things. The principles upon which conservatism is built are:
    1. Rule of law,
    2. Property rights, and
    3. Market solutions.
    Rules, on the other hand, are codified best-practices that define operational efficiency in terms of doing things right. The following is how rules interact with conservative principles for societal governance.

    The rule of law is a legal maxim according to which no one is above the law. Conservatives often rail against “situation ethics” of legal consequentialists. They see “if-it-feels-good-do-it” moral outlook as unprincipled and inconsistent. Yet many conservative become consequentialists when arguing “choice.” The three most common tests to determine whether a new-born exists are tax deduction, social security number, and insurability—non exist until the child is out of the mother’s womb.

    Property rights establish the relation between the property and other persons, assuring the owner the right to dispose of the property as the owner sees fit. But how many Aikenites mistakenly appropriated the property rights of bar and restaurant owners by prohibiting smoking in their hospitality establishments? Public control of private resources is known as National Socialism. It was tried in Germany in the 1930s with unsatisfactory results.

    “Term limits” was a popular rallying cry of many conservative campaign speeches. Fundamentally, term limits are political controls which stand in opposition to market solutions where ideas to invent better mouse traps trump bureaucratic fiat. Controls whether, rent or alcohol or wage-and-price etc., result in either supply shortages (quantitative or qualitative) or black markets. Once a critical level of societal demand has been achieved for a particular good or service, regulation does not stop such activity as much as it directs where such commerce takes place and how much it cost to transact.

    Being a conservative is conceptually rigorous. However, either political conservatives define themselves or their political opponents will.

    Stephen A. Boyko

    Author of “We’re All Screwed: How Toxic Regulation Will Crush the Free Market System” and a series of articles on capital market governance

  69. Correction to “rule of law” paragraph

    The three most common tests to determine whether a new-born exists are tax deduction, social security number, and insurability—none, according to the rule of law, exist until the child is out of the mother’s womb.

    sorry for cut-and-paste error

  70. Correction to rule of law paragraph

    The three most common tests to determine whether a new-born exists are tax deduction, social security number, and insurability—none, according to the rule of law exist until the child is out of the mother’s womb.

  71. You know, it’s really true…. I did NOT vote for Axlerod, and now he is running the country, the same way Rove and Cheney ran Bush. What a freaking mess. I was lead to believe these guys had nerves of steel and the grit and determination to turn this oligopoly on it’s head. No,…. they are just a silly bunch of cowboy character actors. Axlerod…. what a joke. It would be funny if he wasn’t actually KILLING us.

  72. Oh Simon, must we go thru this again. They don’t want to convey a clear message because then the common folk will band together and demand change and they don’t want that. They want to continue the status quo. Or continue this move to complete power held by corporations.

  73. As a longtime Chicago-area resident and observer of David Axelrod, I think the problem is that Axelrod is a superb political consultant and campaign organizer whose knowledge of economics is extremely limited. And his duties certainly won’t allow him the luxury of being able to learn on the job.

  74. Oh boy! This is the theme that keeps coming back in just about every issue, political and intellectual: our educational system and its need for balance.

    Time to go back and reread CP Snow’s lecture on the Two Cultures and Leavis’ raging response. Worth a reread or at least an account of what it did to the intellectual world over 50 years ago. http://www.telegraph.co.uk/technology/5273453/Fifty-years-on-CP-Snows-Two-Cultures-are-united-in-desperation.html

    Of course now we measure our worth in earnings. Faces turn just as blank at the mention of Shakespeare as at the mention of the Second Law of Thermodynamics but brighten when the matter of market value is raised.

    And hey, if something comes up in the form of a multiple-choice question, we can ace it!

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