Nathan Lustig

The US Economy Needs Chemo

Category : Political Science & Economics
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There are two huge trends affecting the world economy.  First, the world is going through the biggest economic shift since the industrial revolution.  New technology is changing every industry and it’s happening fast.

Second, the enormous credit expansion that has fueled the world economy since World War II is beginning to topple over.  It’s taking ever more debt to marginally increase our GDP.  These two macro trends are causing our economic chaos.

The US economy has cancer.  Government and personal debt are massive.  They are unpayable without monetizing the debt or in plain English, printing money.  Unemployment is at record levels and the lowest amount of working age people are in the workforce in decades.  Our government isn’t functioning well.  The stock market is recovering as the Fed prints money, but main street is suffering.

The Democrats under the direction of Barack Obama believe that we can spend our way out of our problems. They believe that if we simply print more money and put it into the economy, we’ll revive the economy and everything will take care of itself.  That’s why they passed the stimulus and believe its best to keep interest rates at nearly zero.  If all else fails, start the printing presses!  The vast majority of the trillions of dollars that have been printed have going into consumption, which doesn’t help the economy long term.

That’s the road to inflation, or hyperinflation.  To me, that’s like a doctor saying, “yeah, you’ve got cancer, just take these pain pills, drink some alcohol and live the good life and things will get better.”  In reality, you might not feel the pain by continuing your behavior, but in the long run, you’re gonna die.  But hey, we postponed the pain as long as possible.

The Republicans believe that the debt is the problem.  They believe that if we cut spending, balance the budget and get out of debt, everything will be ok.  That’s suicidal.  If we just cut, cut, cut, we’ll go into depression.  Their cancer cure is to hack off the offending body part, without anesthesia, in the middle of the forest with a dull instrument.

The Democrat’s plan will burn us to death in the long run via inflation, while the Republican’s plan will freeze us to death with huge recessions, if not depression.  There is a third way, but I believe both sides are too partisan to take it.

Instead of treating our economic cancer with alcohol and painkillers (printing money), or chopping off our leg in the middle of the forrest (austerity), we need chemotherapy (targeted reforms).  We need specific medicine that will actually have a chance of working.  The US’s economic cancer is fairly advanced, so even targeted remedies may not work, but it’s at least worth a try.

Instead of actually looking for targeted solutions, or taking a bit from both sides, both parties continue to toe the “either/or party lines” of “we can spend our way out of it” or “we can cut our way out of it.”  But it’s not bipartisanship.  It’s a third way.

So what is the third way?  It’s realizing that while we do need to shrink government, its not about just cutting monetary outflows.  It’s about cutting the money that’s printed and then put into consumption.  We need to be investing in projects that will actually net a positive return.  We don’t need more consumption.  We need infrastructure, investment in new technologies and education.  We don’t need spending, pork projects and transfer payments.  We need high speed Internet everywhere.  We need better transportation. Better schools.

The cuts come in spending cuts, while we increase investment. We need a new roof on our house, not a trip to the Carribbean.  Spending on consumption won’t work.  Draconian cuts won’t work.  It has to be investment. The only way it happens is if we demand it. We have to start now. We have a 7-10 year window to really get started and give it our best shot.

I Don’t Want Bipartisanship

Category : Political Science & Economics
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My post a few weeks ago on Why I’ll vote for Obama in November was one of top five most popular posts I’ve ever written in terms of traffic.  I got tons of feedback in the comments, on Twitter, Facebook, via email and even some phone calls.  Most was positive, but some was very negative.  I realized I didn’t explain what I wanted in a politician well enough and that there were many misconceptions about bipartisanship and my solution to the problem.

Even though I don’t agree with much of what Obama has done and believe he’s been a bad president, I’m going to vote for him because he has the biggest chance to actually push for the big changes that we need and the current Republicans are a disaster. If he wins, he won’t do much more damage and might actually make change.  If not, we give the Republicans a second chance to come up with a potential game changing candidate.

Lots of people felt the same, but others disagreed vehemently, either supporting Obama’s agenda or saying that the Republicans had it right.  Many wished for more bipartisanship.  I don’t want bipartisanship as we’ve come to know it today.  The current definition is one side comes up with a proposal, the other side says they don’t like it, puts in a few recommendations and we pass a watered down bill that doesn’t actually change anything.

That’s not what we need. Bipartisainship used to work because each party had big ideas that they believed in, but individual politicians were allowed to have their own opinions on the rest of the issues.  Both parties were “big tents” where everyone generally agreed on the big issues, but smaller issues were left up to the politician’s good judgement.

Republicans used to believe in small government, a strict interpretation of the Constitution and generally conservative attitudes, but the individual members could stake out other “liberal” positions on tax policy, social issues, environmental protection and many others.  Democrats used to believe in larger government and a more fluid interpretation of the Constitution, but could take all sorts of other more conservative positions on individual issues.

Now, to be a successful politician, you have to be monolithic in support of your party.  You have to be lock step with them you’ll draw the ire of the party activists.  You must agree on everything or you’re voted out.  Because of jerrymandering in the House, we get more and more “true believers.” Joe Lieberman was basically kicked out of the Democratic party because he sided with the Republicans on Israel and defense.  The independent minded Republicans have all been voted out. Both parties have become irrationally tied to their positions, co-opted by hyper partisan politics instead of making things better.

I do not want bipartisanship.  I don’t want a president who leads from the right or from the left. I want someone with an independent mind.  Someone who can for example support a simplified tax code, a new look at the drug war, cutting the defense budget, a look at the prison industrial complex, civil rights and investment, not spending.  Someone to take the best from the Republicans and the best from the Democrats ad go for it.

That’s how we get out of this mess.  We don’t need compromise, we need someone who is willing to break away from working in lockstep with a party.  Someone who recognizes a good idea when they see it and throws their support behind it.  We need a rejection of both party’s lock step agenda.  We need to reject the idea of bipartisanship in its current definition and break the lockstep grasp that both extreme wings of each political party has on our country.

Why I will Vote for Obama in November

Category : Political Science & Economics
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I am going to vote for Barack Obama this November, but not for the reasons most people will.  I didn’t last time.  I didn’t vote for McCain either.

I believe that Barack Obama has been a bad President.  He has shown little to no leadership, lack of backbone, a poor grasp of economics and has been in constant reelection mode since his inauguration.  He’s made a bit of progress, but hasn’t proposed real solutions to any of the big issues.  He’s spent huge amounts of money and continued to run up debt.  And before you say it’s the evil Republicans’ fault, Obama had a filibuster proof majority in both houses for a year and a half and still couldn’t get things done.

During Obama’s term, he passed health care reform, but only went half way.  Instead of leading, he outsourced all of the hard work to the very unpopular Harry Reid and Nancy Pelosi.  Whether you agree with Medicare for all or not, Obama could have passed it if he wanted to.  He also could have tried to push for fixing the root of the problem: that healthcare is based on use, rather than outcomes.  Instead we got Obamacare.

Guantanamo Bay is still open.  Even worse, Obama has presided over some of the largest erosions in our civil liberties in recent history, many of which are unconstitutional.  He signed a law that allows US citizens to be detained indefinitely in Guantanamo without a warrant, a trial or due process.  He’s authorized the assassination of US citizens who “support terrorism.”  He intervened in Libya and is thinking about it in Syria.

His TSA has introduced naked body scanners, pat downs of little kids and the elderly and is thinking about adding random TSA checkpoints complete with scans for cars on the highway!  The Orwellian “if you see something say something” is coming out of Obama’s government.  To not appear weak on terrorism, Obama has allowed all of this to happen under his watch.  If a Republican had been in office, the left would be HOWLING, but since Obama is a compatriot, the criticism in muted.

Obama’s justice department and SEC have let Wall Street do as they please, presiding over huge bailouts while leaving mainstreet to pick up the pieces on its own.  His administration has kicked the can down the road in just about every aspect of government, preferring to do the safe, hopefully crowd pleasing move rather than actually lead.  Afghanistan is still raging and seems to be getting worse by the day.  Our spending is out of control and our debt situation will be like Greece or Spain if interest rates ever rise.  To me, his biggest success is that he’s gotten us out of Iraq.

So all of that said, why am I going to vote for Obama in November?  Because since about 2008, the Republicans have been an unmitigated disaster.  They’ve pushed out the moderates and become the party of fear.  They’ve become anti-intellectual and incredibly social conservative.  Instead of a primary, they’re hosting an old school Christian religious revival, looking for other people to blame.  Illegal immigrants, Barack Obama, Islam, gays, college students…”others.”  This is a very very dangerous path to go down.

That Santorum, a guy who lost his home state by 18% points a few years ago, and Gingrich, who was thrown out of the House of Representatives for ethics violations, are mainstream and winning states in primaries is shocking.  Republicans are selling old policies, fear and religion.  Many have much more in common with the Islamist fundamentalists than they would ever like to believe.  They’ve started a war on contraception, gay rights and morality.  We have candidates that say with a straight face that the devil is attacking the US and that we shouldn’t have a separation of church and state.  We have states that are requiring candidates to sign anti-premarital sex pledges.

Unless something crazy happens, Romney will face off again Obama for the Presidency.  He is more moderate than the other Republican candidates, but he’s decided to practice the anti intellectual, pro Christian, politics of fear that the rest of the candidates are using to try to win the Republican nomination.  I don’t think Romney has much to offer as a President.  I admire the work he did with the Salt Lake City Olympics, but I don’t think he will actually make the big changes we need to save the US.  He’s not a transformational leader.

He’ll make some changes, while trying to get reelected in four more years.  We don’t need that.  We need a leader, someone comfortable saying that we need big changes and actually implementing them.  Someone who’s willing to go after vested interests on both sides and tackle our long term problems.

Romney won’t do it.  He’s going to try to get reelected.  And I have no idea what he really stands for.  I had hope for Obama, but instead he focused on getting reelected and staying popular.  Maybe as a lame duck he will find his convictions?

Probably not.  Obama will likely stay on the same path.  But there’s a 10% chance he says “fuck it, I’m going to do it my way” and actually lead.  We need motivation, inspiration, an “ask not what your country can do for you” moment.  Someone who will not be beholden to vested interests to take on the military industrial-Wall street complex, plus social security, health care and our national debt.

I’m fiscally conservative and socially liberal.  I don’t agree with Obama economically on the vast majority of issues.  But I’m going to vote for him because Romney and the Republicans are going down a road that I find despicable and don’t think they are the transformational leaders we need. I’d rather take the small chance that Obama can be  a game changer, because I don’t think he can really do much worse of a job.  We’re already beyond the point of no return for spending/reform, so any extra spending Obama does wont really hurt much, it’ll just make our day of reckoning a bit sooner.  His lame duck status might actually help him lead because he won’t have to worry about reelection.  Romney will.

In short, if Obama wins, he might do what he said he would in his first campaign.  If he doesn’t he can’t hurt much more than he has.  And it clears the way for potentially transformative Republican candidates to run in four years.  People like Mitch Daniels and Chris Christie or other potentially game changing figures.  If Romney wins, we’ll be stuck with him as the Republican candidate for the next 8 years.  We need a huge change and Obama is our best choice.  For now.

What do you think?

#FixYoungAmerica

Category : Entrepreneurship, Political Science & Economics
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Since the Great Recession started, young people have weathered a disproportionate amount of the shocks that have resonated through the economy.  Four years later, youth employment is at a 60 year low and student loan debt, which you can’t even get rid of via bankruptcy, is almost $1T.  That’s trillion.  With 12 zeros.  Even recent college grads with decent degrees are having trouble finding jobs.  Our government is broken, refusing to deal with real problems head on, preferring to engage in partisan bickering and gotcha politics.

We are going through the biggest changes since the industrial revolution.  Technology is changing fast, replacing jobs with computer programs and robots that always show up for work and never get sick.  In the late 1990s and early 2000s, we lost our manufacturing jobs.  In 2008-2010, we lost many middle management white collar jobs.  These jobs aren’t coming back.  Our new industries only employ a fraction of the people our old giant companies did.  Instead of looking for solutions, our institutions are failing us.

It begs the question: how safe is your job?  Do you have a skill?  Are you willing to work harder than other people?  Do you take criticism and work under pressure?  Are you better at something that just about everyone else?  To succeed in our new economy you either have to create something on your own, have skills that help those who are creating succeed or be willing to work incredibly hard.  You need to be willing to learn every day.  You have to compete with the rest of the world!

From government to Wall Street, our instutions are failing us. They’re busy talking about how bad it is or recycling old ideas that aren’t going to work anymore.   The loudest voices are not proposing real solutions.  They are stuck in the past.  So how do we help fix the problem?

Enter #FixYoungAmerica and The Young Entrepreneur Council.  “From the Arab Spring to the Tea Party, from Occupy Wall Street to the SOPA and PIPA protests, we’ve seen the power of what like-minded individuals can achieve.  #FixYoungAmerica is about starting a much-needed conversation in America and implementing a REAL plan of action,” writes Gerber.  A combination of entrepreneurship, education, government policy and hard work will make things better.  #FixYoungAmerica is designed to start the conversation and force it into the halls of government by getting our ideas into the hands of every member of Congress.  It’s a movement that needs to happen.

I’ve been a big supporter and member of Scott Gerber and Ryan Paugh’s YEC movement from the beginning.  I’ve seen the good work that YEC has accomplished so far and know this campaign can really make a difference.  But #FixYoungAmerica needs your help.  Check out the #FixYoungAmerica website and add your voice to the conversation.  We need it.