Tag: Political Science & Economics

A Look Back at 2009 and A Look Ahead to 2010

Category : Personal Thoughts
Posted on January 4, 2010 by Nathan Lustig

I know it’s a little late for a year end review, but I thought I finally have time to finish this post. I wanted to take a look at some of my favorite things from 2009 and take a look ahead to some interesting thing for 2010.

2009 was a fun year. I graduated with a degree in Political Science from the University of Wisconsin, made great progress on Entrustet, made some good friends and traveled to Europe with one of my best friends to visit another. I was in another great friend’s wedding, got my consulting company off the ground, saw some amazing sporting events and got more involved in Madison. I even stuck with my blog.

My Best Posts (in no order)

The Business School Way of Life

Is the Dollar America’s Achilles Heel?

America Doesn’t Plan for the Future

The Entrepreneurial Push

Every Startup Needs a Mentor Team

My Decade in Review

My Favorite Books (read, not written in 2009)

I’m looking forward to going to South Africa for the World Cup this summer, attending South By Southwest and continuing to work on Entrustet. I think 2010 will be another fun and interesting year for me. I hope your 2010 is too!

Predictions for 2010s

I know it’s just about impossible to look forward a few months, much less a year or even a decade, but here’s some guesses as to where we are headed.

2010

Gold will continue its rise in response to more US government debt creation
Developing countries continue to grow more quickly than developed countries.
Unemployment will become the biggest political problem next year, but entrepreneurs will be somewhat sheltered

Longer Term

The Reserve Status of US dollar will be called into question. Look for China and the rest of the world to continue to diversify away from US government debt. I don’t know when this will happen, but I can’t see any other solution to the US’s massive debt and unfunded liabilities.
At some point, bubbles in China, US debt and others may pop. This could lead to lower stock values and a resumption of the bear market.
China will move from manufacturer to the world toward one of the leading innovators. China will continue to assert itself on the political and economic stages. Look for their dominance in rare earth metals.
Entrepreneurs around the world will be successful, as large companies do not want to invest in new technologies and talent is cheap.

Will Millennials Put an End to “Gotcha Journalism” or Perpetuate It?

Category : Political Science & Economics, Technology
Posted on January 2, 2010 by Nathan Lustig

I think one of the most interesting stories of the 2010s will be whether my generation puts an end to “gotcha journalism” or makes the problem even worse than it is today.

The classic definition of gotcha journalism usually refers to an interview style where the interviewer tries to trap the interviewee into saying something that would be damaging to themselves or their cause. It has been around since the early 80s and became firmly rooted into our political and popular culture since then.

With the rise of the Internet, journalists, bloggers and citizens have taken gotcha journalism to new levels. The barrier to entry is much lower: instead of having to secure an interview with someone in order to trap the interviewee, the new breed of gotcha journalism uses the Internet to sift through all of the statements that a person has made in their entire life to try to paint them in a bad light.

Now, bloggers go through politicians’ every public statement for any misspeak or inaccuracy and then try to crucify them. It started with John Kerry being labeled a “flip-flopper,” moved to George Bush‘s butchering of the English language and more recently, led President Obama’s Green Energy Czar to quit because of statements he made almost ten years ago. When President Obama misspoke on the campaign trail, saying that he had visited all 57 states, right wing bloggers tried to make it seem like Obama was stupid. When Sarah Palin burst onto the national scene, left wing bloggers and some in the media sifted through her previous public statements to search for any inaccuracy.

It seems like 75% of the news stories I read about each day have to do with some politician getting raked over the coals for some statement he just made that is different from a statement he made a long time ago. Many times, the person leveling the charge is a fellow politician, along with the media and the blogosphere.

My generation is the first generation to be online from an early age. We first interacted with email, then instant messaging, then social networks and now blogs. We created (and are still creating) vast amounts of data about ourselves, much of which is stored online. We have archived AIM conversations from when we were in 6th grade, digital pictures from high school and college that are online and we all have our dumb Facebook wall posts that we made throughout our college years.

Many of us have blogs on wordpress or blogger and many more have microblogging accounts on services like Twitter where we make observations and pithy comments about our daily lives. I know I’ve changed alot since I was in 6th grade and I assume I will change almost as much between now and the end of the 2010s. During the next decade, as people in my generation get older and become leaders in business, politics and culture, will we still be subjected to gotcha journalism like our public figures are today?

One argument is that since everyone has all of this content online, we will become desensitized to people’s dumb or incorrect statements from when they were young. Everyone has pictures of themselves on Facebook that they wished never made it online. Everyone is going to have a poorly thought out wall post that could be taken out of context, or a pithy remark on Twitter that does not stand the test of time. Anyone who blogs about anything interesting will be majorly wrong about something. Will millennials become bored by the new gotcha journalism because everyone has something online that could make them look bad?

On the other hand, millennials may just make gotcha journalism even worse than it is today. Since everyone has created gigabytes of online content, bloggers and the media will have an easier time digging up dirt on anyone who enters the public eye. Imagine being able to see the new candidate for Governor at a boozy college party or getting a transcript of his AIM conversations with his best friend or girlfriend from high school. The media, bloggers and most of all, the citizens will eat this stuff up. Ratings will go up and everyone will be happy, execpt for the public feature.

I hope that my generation helps start the shift away from gotcha journalism. I can’t imagine being shocked by the vast majority of the dirt that someone would dig up about a public figure online. I hope that millennials are willing to allow people to change their opinion and not be called a flip-flopper. I hope we will cut public figures some slack when their college photos get published to the major blogs and their old blog posts come back to haunt them. I’m not optimistic, but I am hopeful. If not, we will have some really boring politicians, business leaders and public figures!

Do you think millenials will help stop gotcha journalism or do you think the problem will get worse?

The Slow Death of the Reserve Currency

Category : Political Science & Economics
Posted on October 7, 2009 by Nathan Lustig

It stared with leaders like Hugo Chavez, Mahmood Ahamdinejad and Saddam Hussein who wear their anti-Americanism as a badge of honor. Next, it was the developing countries who generally liked the US but felt they were not getting a fair shake. Next was Russia and India. Then came China, America’s largest trading partner and largest foreign holder of US dollar denominated securities. Yesterday, it was the oil producing countries in the Middle East. Even Germany has quietly started to complain. What issue has managed to unite most of the world? The US Dollar’s viability as the world’s reserve currency.

Back in April, I questioned whether the US Dollar is America’s Achilles Heel. Each day, I am more and more convinced that it is. Back when leaders like Chavez were the only ones questioning dollar hegemony, most of the rest of the would could safely ignore his statements as the ramblings of a dictator blinded by anti-Americanism. Most people did. When developing countries complained about the devaluation of the dollar, people could brush the complaints off as jealousy. When Russia started rumbling about moving away from the US dollar, some people started to take notice, but were not concerned, as they viewed Russian statements as posturing to reassert itself on the global stage.

Finally, when China’s central bank head made statements that he was not happy with the huge increase of the money supply, people began to take notice, but were still not convinced that there was a problem. Next, China signed currency swaps with countries like Argentina, Brazil, Thailand and others that allowed businesses to do deals in Yuan, rather than relying on the US dollar. This was a clear shot across the bow at US dollar hegemony. China has also stopped buying longer term US securities, prefering short term notes that they can roll over more quickly, while stockpiling raw materials, rare earth metals and precious metals.

Yesterday, the world had to take notice when the Middle East oil states held secret meetings with China, Russia, Brazil, France, Japan and others to discuss selling oil against a basket of currencies and gold, rather than US dollars. The US was left on the sidelines. Pretty much everyone is denying that these meetings took place, but where there is smoke, there is fire. It is the logical progression for the rest of the world.

They cannot attack the US militarily and win, so they have to attack the US’s biggest asset and its biggest weakness: the reserve status of the dollar. It is America’s soft underbelly. I don’t believe that these countries are moving away from the dollar because they do not like the US or want to see the US fail. They are moving away from the dollar because they are scared. They are scared that the US will continue to print huge amounts of money to inflate away its massive $90T+ unfunded liabilities (yes, T=trillion) and national debt, making their dollar denominated securities go down in value. I have seen people say that America’s unfunded liabilities between the debt, medicare and social security is over $120T, or about 10 years of GDP. You can see their fear in skyrocketing gold, which hit a record high of $1,045 per ounce today. The oil producing nations are tired of pumping their tangible, natural resources in exchange for dollars that are not backed by anything. They are simply looking out for themselves.

Taken together, these country’s actions are a frontal assault. They are saying “enough is enough.” They do not want to accept our paper, which is backed by nothing, in exchange for their manufactured goods or natural resources. Unless the US takes decisive action to stop the erosion of the dollar, I fear that the US will lose its biggest competitive advantage: the reserve status of the dollar. If this happens, our standard of living is fated to go down.

Nobody Voted for President Pelosi

Category : Political Science & Economics
Posted on August 12, 2009 by Nathan Lustig

That is a subheading from the August 1st Economist article called Crunch Time: A difficult Summer for the White House and it sums up how I feel about the Obama Administration so far. I did not vote for him (or McCain), but I had hoped that he would live up to his “post-partisan” rhetoric during his campaign and rise above the political fray. I thought there was a chance that he would be able to stop the “gotcha political culture” and really focus on big problems. So far, the Democrats’ plans have not lived up to their billing. The Economist explains it well:

Worse, the plans have usually ended up running away from tough decisions. With the stimulus bill the flaws were forgivable: there was an urgent need to give the economy a boost. But the House of Representatives has produced a cap-and-trade bill that is protectionist, riddled with exemptions and which gives away the permits that are supposed to force carbon-emitters to change their ways. There is a growing danger that this bill will not be passed through the Senate and reconciled with the House version in time for the Copenhagen summit on climate change in December.

With health care, Mr Obama’s preference for vague statements of principle rather than detailed specification has led to a House proposal that loads taxes onto the rich, sets up a state-run insurance scheme that many fear will put private-sector providers out of business and fails to contain, let alone reverse, the escalating costs of treatment while adding an expensive requirement that everyone have health insurance, with large subsidies where needed. Barely any Republicans could support this proposal as it stands. Frantic efforts to save the reform effort are under way in the Senate, but it is distinctly odd to note that the president’s signature policy is now being devised for him by a gang of six senators. Financial regulation is also stuck.

President Obama has allowed the Democrats in Congress, especially the House, to run the country, outsourcing the details, and arguably the Presidency, to Nancy Pelosi and Harry Reid. This is not what most centrists and even some Democrats voted for. Right now, Obama is risking his Presidency by allowing the rest of his party to trot him out to support poorly thought out, unpopular legislation.

On health care, Obama has allowed the Democrats in Congress to take the easy way out (and protect their supporters): soaking the rich, refusing to touch tort reform (trial lawyers) and ruling out taxing health benefits (unions). He has made deals with Big Pharma and the insurance companies that do not address the rising costs of health care. These plans only try to bring the uninsured into the current system. While a noble goal, it could well bankrupt the country. Instead of truly trying to rise above partisan politics and making touch decisions to both cover all Americans and stem the rising costs of health care, Obama has outsourced his responsibilities and is risking his presidency. Until yesterday, Obama was silent when Democrats bashed real concerns about the competing plans voiced by Americans, causing his approval ratings to sink.

The Republicans are no better and possibly worse. Instead of trying to reach across the aisle or propose any solutions of their own, they are simply saying “no.” Its almost like the end of Rome when out of touch, rich, elites did everything they could to stay in power at the expense of the rest of the population. Both sides seem out of touch and angry whenever there is disagreement. Obama would be well served to tell Pelosi and Reid who’s boss and come forward with a detail oriented, innovative plan that cuts across constituencies and addresses both cutting costs and covering everyone.

What do you think? Do you agree that Obama has outsourced the tough decision to Congress? Should he confront Pelosi/Reid?