POTUS #StateoftheUnion '12

The annual State of the Union address. A major political event, economic increment and trending topic.

@RogueEconomista

Every year Americans await the President's take on the economy and where we're headed in the new year. Campaign years are especially important because voters can signal whether or not they are happy with the administration at the ballot box in November.

Previously, we've discussed the difference between positive and normative economic statements. This is never so tantamount as to when you are deciding which candidate, which party even, to vote for. Politicians have to pander to voters' preferences to get or stay in office. Their political promises, however, often lack the economic prudence to maintain our strong global standing with high production or low unemployment. Below, some highlights from President Obama's 2012 address that could have gotten lost in translation:

• The Iraq War is over and thus commenced the President's speech. By ending the way America lowered her military expenditures and extended the lifespans of troops no longer challenged by Bin Laden's al-Qaeda. President Obama philosophically challenges us to imagine a world where we achieve economic growth without the aggressive use of national (preemptive) defense. It's a tough picture to paint: Americans have been at war constantly for the last 9 years and our economy has not emerged unscathed. This should be a major selling point for what follows...

• "Everyone gets their fair share...everyone plays by the same set of rules..." President Obama calls this idea an American value, not one of only Republicans or Democrats. The idea of instituting equity or fairness into economics is a slippery slope: our experiences, lifestyles and beliefs shape our idea of what is right or wrong, fair or shady. This is a political promise, not an economic one. The markets don't promise fairness, only efficiency. There will be losers. And who determines what is fair? If there is in fact a "who" then we're not in Capitalist Kansas anymore. Welcome to the new State-Sponsored Capitalism. 

Where's the nose??

• Domestic manufacturing is definitely a major bulletpoint of this year's speech. Surprisingly (to me) the President blatantly promoted protectionist strategies to promote domestic business at the expense of importing or producing goods and services cheaper elsewhere. I believe this to be problematic because by promoting America and putting down the rest of the world we are effectively cutting off our own nose to spite our lovely face. International trade helps us to grow beyond the resources we have. If we couldn't trade financial capital or democracy for oil then we'd have to change our way of life immediately. Also, producing goods and services at the lowest cost is a hallmark of competition and provides incentive for businesses to expand and evolve. This is more President political pandering: Obama is obligated to throw his support behind American manufacturing and production because he needs to be reelected this fall. In the long-run trade barriers such as "buying American" or subsidizing American producers hurts competition.  Suppose we protect our industries as the President suggest and prices are better elsewhere in the world? then cash flows will leave our country for more favorable markets; it's a self-fulfilling prophecy. Trade restriction are a highly controversial area especially during a time when domestic jobs are so scarce! But economically, what's better for America's future?

• Aaah yes, and taxes. If anything the Buffet Rule is major political prose. The likelihood that we reform our complicated tax system anytime soon is slim to none. The likelihood that we reform taxes so they are more efficient, less obnoxious and well..fair? You do the math.

*sigh* And no word this year on moving closer towards faster, efficient public transportation like we see in technologically-advanced Europe and Asia. With rising gas prices and American protectionism we can  likely conclude that these constraints will constrict the economy and have an adverse effect on the job situation. People without income cannot pay high gasoline prices at the pump. They need high speed/long-distance trains, new buses, routes and stops, and metropolitan-wide light-rail systems to get them to where the jobs are. Oh, and more jobs will become available as we improve upon our nation's aged transit system to compete with other markets across the globe.

Love to hear your thoughts on this year State of the Union address!

Dr. King's Dream Today

"Beyond Vietnam" is a speech by Dr. Martin Luther King, Jr., that you probably have not heard of if you are an 80's baby like myself. It was the speech he received the most vitriol for. Delivered exactly one year to the day before his assassination in Memphis, TN, King vilified America for her negligence of the poor in lieu of an unpopular war. What economic value can we use today from King's vision in 1967? Is his message in this unpopular speech relevant?

Most notably from that speech, King quoted an important statistic: "We spend $500,000 to kill each enemy soldier while we spend only $53 for each person classifed as poor; and much of that $53 goes to people who are not poor. So I was increasingly compelled to see the war as an enemy of the poor..."

Per Google, the costs of killing an enemy combatant in the Iraq or Afghan wars range from $50 million to $150 million depending on when you compiled the data. However, our soldiers of all colors can sit in the same classroom and live on the same block in peace. But the income inequality is the issue that remains an issue.

I believe that Dr. King would support the #Occupy movements worldwide. In "Beyond Vietnam," King speaks against the war to break down the wall between not only black and white, Jew and Gentile, but also between capitalist and communist and every variation in between. Market structure is a non-factor in King's utopia. Capitalism may very well be an engine of income inequality; but inequality anywhere is injustice everywhere. So with the growing income inequality we have experienced here, the conclusion is that the American capitalist structure must be reformed.

King explicitly addresses the "giant triplets of racism, militarism and economic exploitation..." and says that true compassion will force us to examine our values, or our normative statements. Should we spend our money on national defense or moral uplift? Today, on January 16, 2012 , we ask ourselves this question. The war in Iraq is over as the war in Afghanistan rages on. In contrast, income security, i.e., welfare spending is roughly 12% of the national budget, or $5,777.64 per poor person.

"There will be no meaningful solution until some attempt is made to know these [poor] people, and hear their broken cries."

- Dr. Martin Luther King, Jr., April 4, 1967



prosperity,

@RogueEconomista

BP Must Pay

This week an Op-Ed piece ran in the NY Times which audaciously claimed that BP is the poster child for economic justice in industrial accidents. In response to the accident of 2010, a $20 billion fund to compensate victims of the BP Deepwater Horizon Oil Spill was established and Kenneth Feinberg was appointed by the President to oversee compensation to the masses of households and businesses adversely affected. The NYT author takes pains to note that BP has "performed quite admirably" in the aftermath.

Oil & Water don't mix; BP Deepwater Horizon rig explosion response team

The Players
Last year, The Delasol Group established a working relationship with Fiduciary Management Group (FMG) to facilitate monetary distribution for Loss of Subsistence Use of Natural Resources; verbiage meaning that due to the oil pollution, there are people who can no longer eat food from the water, use the water in any functional capacity or go back to work if their vocation dealt with the water. This is a claim that affects households and small businesspeople in the region.

And that $20 billion to rebuild the Gulf Coast economy? As of Monday the following statistics (1) are predictably true:


The Numbers

• 29.45% of the Fund has been paid out since inception in August 2010.
• 61% of all compensation has gone to businesses.
• There's a 64% chance an individual will receive $5,000 or less (grossly understating the value of loss).
• Claiming Loss of Subsistence Use of Natural Resources comprises two-hundredths of one percent or .02% of all claims paid.

The Rub

Specifically, The Delasol Group and FMG are working alongside tribal leaders of the Biloxi-Chitimacha Confederation of Muskogees in Southern Louisiana. This is a population that falls short of the education and political clout to make easy work of the onerous documentation. The Delasol Group is a business which serves the disenfranchised. This is a population of skilled shrimpers, homemakers, oystermen, deck hands, administrative assistants boat operators and many others who deserve more than a cursory article; more than a federal oversight; more than an obliterated culture. Visit FMG's secondary website dedicated entirely to the cause to learn more about the firm's efforts and the BCCM website to read about the tribes' history, goals and concerns moving into the future.

The Mission

Should the Gulf Coast Claims Facility amend their erroneous processes to file and receive compensation for Subsistence Use claims of Natural Resources damaged by the BP Oil Spill, FMG will invest and allocate reward monies for current and future generations of the tribes. The Delasol Group will draft, publish and present and make permanently available economic literacy curricula sensitive to the tribe's socioeconomic needs to nurture and develop their assets.

In addition to muddied shores and tarred inlets, these citizens face off against both their own government and Big Business in a mutual quest of life, liberty and the pursuit of happiness in an all too familiar standoff. To achieve tribal-level justice the American Indians are pitted against businesses and victims in competition for a bigger piece of GCCF pie. No litigation necessary; it's not their day in court these people strive for. They, like so many other disenfranchised Americans seek a day when their land, language and lifestyle are respected as any other.

I'd like to see the NY Times write a piece on the income inequality rampant among those who have received  GCCF payment and those who have not. Or an Op-Ed on the deleterious conditions marring a credible and accountable GCCF claim approval process. No, a follow-up on how the people in this video clip have improved economically with help from BP since this was filmed last March should do the trick.

BP has made amends for nothing until it has made amends for everything. The GCCF is as yet unsuccessful if it neglects even the least of victims. In the spirit of activist and theologian Dr. Martin Luther King, Jr., "Injustice anywhere is a threat to justice everywhere (2)."



(1) Report obtained from the Gulf Coast Claims Facility website
(2) From King's Letter from Birmingham Jail, 16APR1963



@RogueEconomista

Optimistic Economics!

This year, our 4th year in operation The Delasol Group focuses on improving efficiency in our mission to distribute personal, practical economic information to the People. We've been quietly building a foundation providing resumes and cover letters to job seekers, drafting new economic literacy workshops and partnering with other visionaries to get appropriate information to specific demographics. Efforts to market our mission and our brand have expanded beyond The Econtrepreneur - the official blog - and is now accompanied by a Facebook page and Twitter account profiling Delasol in the community and informal discussion on issues of economic significance. A primary means of marketing has been in the form of commercials, all of which are featured on The Delasol Group's YouTube page. 2012 A.D. has arrived plentiful with new opportunities and even wilder dreams for this small economic education and consulting firm with big ideas. Personal, practical economics. For everyone!

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cheers,

suneye rae
founder / economist