June 17, 2010

(Updates 6-21,22) Obama Makes First Obvious Mistake

Suppose I arrive at a news set ready to begin my first day of work as the new anchor, and as I sit down in the anchor chair for the coming broadcast, alert for a certain tradition, the departing anchor, who is retiring and leaving for his last time, tosses a glass of water to me from six or eight feet away.

But suppose, unlike the traditional toss of a small cup half full of water, this time it's a humongous fragile glass of water, brimming full.

If I mostly catch the glass in the air, spilling part of it, but also manage to keep much of the water in the glass, I've done well.

That I spilled some of the water isn't really a mistake.

Thus the Obama administration efforts against the still-undecided economic collapse that began to pick up speed in 2008 is frankly impressive. In the melee, taxpayer funds were effectively transferred to Goldman Sachs by paying out AIG derivative bets 100 cents on the dollar. This is spilling a lot more water than is usual, and voters really have noticed. That particular part of the spill needs more cleanup.

But the glass was fuller than usual -- a full-blown great depression was getting started. (see these posts, especially April 2010, June 2009 and April 2009)

We could say it wasn't a perfect catch, but... overall, it wasn't bad. The overall staving off of a depression has been an accomplishment (though the eventual outcome is yet to been seen), and the stock market, which should never be gauged on only a weekly or even monthly swing, shows generally that we aren't in the full depths of a depression, to date.

It's been refreshing to have an administration in place that is mostly competent. I'm not saying there aren't any major mistakes. Just that until now, the mistakes were not of the obvious, glaring kind that most people could have avoided.

In Afghanistan for example, I've believed for quite a while that Obama is making a broad mistake of treating Al Qaeda like a nation state that can be fought primarily with physical force (although I respect the effort to narrow the war and avoid civilian deaths), but I'll grant this question isn't simple or obvious.

The six-month moratorium on deepwater oil and gas drilling in the Gulf of Mexico imposed by President Obama is another matter.
The six-month moratorium on deepwater oil and gas drilling in the Gulf of Mexico imposed by President Obama is taking a toll on the economy of Louisiana that could far exceed the damage to other industries caused by the BP oil spill. The purpose of the moratorium is to assure that no other accident occurs, but many experts believe it is too long.
...The fishing industry produces about $3 billion a year for Louisiana. Tourism, which has also been affected, is an $8 billion industry. But the Oil and Gas Industry produces $70 billion for the state of Louisiana each year and Chris John says many people who work in fishing part of the year rely on well-paid jobs in offshore energy the rest of the year.

Shutting down all deepwater drilling for "six months" is a mistake that can be mended, but we need to hear something on this soon, since drilling platforms may leave. (Here's a sensible announcement Obama should make --"I have directed the commission studying the Deepwater Horizon accident to issue interim recommendations by the end of June, so that deepwater drillers can resume operations in July or August.")

This error, like the 100 cents on the dollar payout to Goldman et al, shows a weakness in the administration's team of advisors.

Intellectual brainpower, logical ability, first-rate intelligence, these are invaluable and necessary, but not enough.

A well-balanced team needs real-world business experience -- knowing what it's like to run a business and solve problems in a down-to-earth way -- and not just in one advisor, but rather in significant proportion within the whole administration, like one of the feet of a tripod.

If you've run a business for more than a year or two, you understand instinctively that you don't shut down an entire branch of operations on the basis of one incompetent actor (BP) for longer than a few weeks. Instead, you find out the basic mistakes -- which has now been accomplished -- and then you implement rules for that activity to prevent those mistakes, such as full responsibility by those conducting that activity and new rules, both.

And you get it done. Quickly. Because time's a-wastin'.

And then you get people back to work.

Update 6-21:

Seriously bad news, and let's hope it will get changed by new thinking!
WASHINGTON — The bipartisan commission named by President Obama in May to study the Deepwater Horizon oil spill and the future of American offshore drilling will hold its first formal meeting in mid-July at the earliest, most likely delaying the delivery of its final report into next year, a co-chairman of the panel said in an interview.
The co-chairman, William K. Reilly, who served as administrator of the
Environmental Protection Agency under the first President Bush, also said it was unlikely that the panel would recommend the lifting of the six-month moratorium on deepwater drilling before it completes its report....
...Mr. Obama named the two co-chairmen, Mr. Reilly and former Senator Bob Graham, a Democrat from Florida, on May 22. But the White House did not designate the other five members until June 14. They are Frances G. Beinecke, president of the
Natural Resources Defense Council; Donald Boesch, president of the University of Maryland Center for Environmental Science; Terry D. Garcia, an executive vice president at the National Geographic Society; Cherry A. Murray, dean of the Harvard University School of Engineering and Applied Sciences; and Frances Ulmer, chancellor of the University of Alaska Anchorage.

This again demonstrates what I mentioned above: academic and intellectual strength, but a harmful absence of real-world, down-to-earth experience. In other words, how to work and survive in the real world where your salary isn't from an institution, but is instead from a productive enterprise that must deal with real problems and satisfy customers every day.

Without delay.

This is a lack of balance. Obama to date is showing a lack of balance here, and it isn't a small thing. A serious economic drag (subtracting additional billions of dollars from the Gulf coast economy through secondary effects (subcontractors, restaurants, you name it)) at this vulnerable time could be damaging to the U.S. economy more broadly.

Update 6-22:

This is encouraging:
A federal judge in New Orleans on Tuesday blocked a six-month moratorium on deep-water drilling projects that the Obama administration had imposed in response to the vast oil spill in the Gulf of Mexico.
While it's disappointing to watch a first-rate president make such a fundamental mistake, he has, and now the best we can hope for is for the rule of law to assert itself.

No comments:

Post a Comment