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Obviously, I'm not an economic expert. None of us are. And the problem is, the economic issues facing this country are incredibly complicated. They can't be broken down into simple sound bites. Unfortunately, both campaigns are trying to frame our economic woes into simple sound bites -- "The middle class needs relief" versus "Increasing taxes on the rich will hamper investing"... but this isn't an issue of simple sound bites.

That said, at first blush, following the shit really hitting the fan earlier this week, Obama at least released a two-minute ad discussing the issues at hand (http://my.barackobama.com/page/community/post/samgrahamfelsen/gGg42R). McCain on the other hand had to backtrack on his statement that the U.S. economy was fundamentally strong, and he also said he would fire the SEC chair and form a committee to look at the problem. To someone who's biased towards McCain maybe firing the SEC chair sounds like decisive action and maybe forming a committee sounds like a reasonable way to analyze it. To me, it sounds like he has ZERO fucking idea what to do about the economy. But Obama said one thing in his ad that I feel absolutely hits the nail square on the head, and it's when he said he would "end the 'anything goes' culture on Wall Street with real regulation that protects your investments and pensions."

Is it a specific plan? No. But it's a just two-minute ad (which some conservative pundits attacked Obama for because it didn't have any sound bites and was too long... *sigh*). And in this two-minute ad, I feel Obama made a point that correctly framed the real issue. To be honest, for me, Obama does it time and time again. Whether or not you agree with his solution to the issue is certainly worthy of thoughtful discussion and debate, but unlike McCain and the Republicans (and unlike most Democrats for that matter), I applaud Obama for at least asking the right questions and seeing the issue as it really is.

I'll do my best to discuss the two candidates plans, but overall, I think it's more about each candidate's overall philosophy and attitude towards just how are economy should work that really concerns me.

Like I said, I'm not an expert, but I can say this -- I'm no dummy, and I promise you that I've looked at this issue a lot harder than the average American voter.

So, let's talk a bit about economic history and philosophy in America...

Way back when, after the revolution, President George Washington appointed Alexander Hamilton as the first Secretary of the Treasury and Thomas Jefferson as the Secretary of the Interior. Both men were geniuses, and both men had vastly different visions of what the new United States would look like. Hamilton envisioned that the real industry of this country would be in cities and centralized banks and capitalist free markets. Jefferson envisioned a country of artisan farmers who grew their own food and maybe occasionally traded a smoked ham with their neighbor (many miles away) for a few of their prized rutabagas. Money could be generated by selling apples at market or maybe via wise investments in a parcel of land, but the notion of generating money out of "thin air" via a market economy was a very foreign idea to most of the founders. For Jefferson, cities and markets and banks were in many ways not real, and for him, an American citizen would be educated and self-reliant, working hard on his farm during the day and reading Homer in the original Greek at night.

We obviously became a Hamiltonian nation. (Oh, and let us set aside for the moment the fact that Jefferson died hopelessly in debt and Hamilton died over a needless duel... I'm contrasting two visions for the country here rather than the men.) However, when it comes to economics, we often think in these basic Jeffersonian terms... Capitalism for the average American means getting a fair wage for a fair day's work. Capitalism means a free market -- if I come up with an invention, and I work hard to make it, and someone wants to pay me for my invention, then government should never interfere with that transaction. Business shouldn't be constricted or regulated -- leave it to the free market to reward genius and hard work and punish those who are not industrious. Government can only make things worst, and besides, regulating business is a bit like socialism, isn't it? And weren't we raised to believe that socialism is evil?

Alright, fair enough. Hell, to be honest, I grew up believing pretty much this exact picture of capitalism. Here's the problem -- true free market capitalism is a failed philosophy. That's right, I said it. An unobstructed free market capitalist society on a large scale is destined to fail.

Does this mean I'm advocating socialism? Well, the average Republican would probably immediately accuse me of that, but I'm not advocating socialism at all. Socialism is also another proven failed economic policy.

No, the real answer for me is something a lot more subtle and complex. Problem is, subtle and complex doesn't do in today's society. But I'm going to try...

True free market capitalism is a failed philosophy because people are just too fucking greedy. There's nothing wrong with greed. Like Mike Douglas said in Wall Street, "Greed is good." Ice cream is also good. But if you have too much ice cream, you're going to get sick, and if you get too greedy, you're going to make the economy sick. And greed can lead to all sorts of wicked shit -- like Lewis Black said, were the guys at Enron embezzling billions to start their own space program?

Real life example: My dad had his own small business, a liquid waste pumping company called Denver Sanitary Company. Between 1974 and 1983, he turned it into a company who's best net year for income was about $50,000, and in nine years the company started making over $1 million a year. If the company was publicly traded, it would be a gold 5-star stock for 9 years straight with almost exponential growth. However, from 1984 on, the company continued to earn on average around $1.1 to $1.3 million a year. If the company were publicly traded, its stock would plummet. Why? No growth. Wall Street demands about 10% growth per year, but you know what? Denver only has so many grease traps and Apple can only sell so many fuckin' iPods. You reach a saturation point. Besides -- my dad made good money from his business and put me through a really good school. Denver Sanitary became a sort of Jeffersonian vision of economics -- it was our family farm and it provided us with a comfortable lifestyle. And for me, honestly, that's good enough.

But that's not how our free market Hamiltonian system works. You grow, or you die. Just making money, even a lot of money, on a steady consistent basis doesn't cut it.

And such a system starts making people try to make money at almost any cost. If an immigrant worker falls into the sausage machine, fuck it. Cleaning up the machine and losing that much product is an unacceptable loss.

Thankfully Upton Sinclair writes The Jungle, the public is (rightly) outraged, and a regulation is passed. Government steps in and says, "Ok, your greed is blinding you to what's really fucking important. People eating people-sausage is not acceptable, so quit being so fucking greedy." Government, in a case like this, protects us.

Alright, I admit, people-sausage is an obvious example, but the principal is the same. When greed can make us blind, regulation is needed. So let's talk more about the here and now...

I recently got turned onto an economist named Hyman Minsky, who wrote a book, Stabilizing an Unstable Economy in 1986. I'm currently on the hold list to check out this book at the library, but I've read some summary views and the intro to the book online, and even though Mr. Minsky died in 1996, the dude seems to be a profit for what is currently happening. For a really good summary of what Minsky wrote, check out http://www.newyorker.com/talk/comment/2008/02/04/080204taco_talk_cassidy.

Here's a short version of what Minsky has to say, and how it applies to us 20 years after he wrote his book. There are five stages of the Minsky model: 1) displacement, 2) boom, 3) euphoria, 4) profit taking, and 5) panic.

1) Displacement. A displacement is when investors cream themselves over something, like a big invention such as the Internet. According to the New Yorker, our recent displacement happened in 2003 when Greenspan cut short-term interest rates to 1%. Mortgage rates hit rock bottom, and all of the sudden there's a huge speculative real-estate boom, where we have way over-valued homes ($900,000 for a 1,200 sq. foot condo in Scottsdale, AZ? Really?). But for the moment, everyone is making money.

2) Boom. So people are buying homes and making money hand over fist by selling them for 30% or 40% or more than what they paid. Everyone can get rich, right? This leads to...

3) Euphoria. Well, lots of people are making lots of money on real estate. If I'm an commercial bank, I want to know not only how I can get my piece of the pie, but I want to to make my own goddamn pies and sell them for a ton of money. I want all the pie. And the ice cream. Fuck everyone else, how do I get mine? So what do I do, I make it so any fucktard out there can buy a house? "What, you have eleven maxed out credit cards and defaulted on three car loans each for a $50,000 Hummer and you've never made more than $8.14 an hour? Sir, you've come to the right place, of course you can afford that $380,000 home in Highlands Ranch. You've earned it."

Now the investment banks want theirs, and these are the greediest of the greedy. So what do they do? They start securing these piece of shit mortgages. That's right, they buy the debt from the commercial banks. If the commercial bank thinks they can make some money off of these mortgages, I can show them how I can make a shitton of money off of these mortgages.

4) Profit Taking. Now we're really getting into the shit. Neck deep. Because now the investment banks start making shit up in an effort to make more money. Now when I say "make shit up" I'm not talking about outright lying (although plenty of that happened). I'm talking about making up new "financial products." (For a great summary of this, listen to this recent interview on Fresh Air: http://www.npr.org/templates/rundowns/rundown.php?prgId=13&prgDate=9-17-2008.) Basically the investment banks starting going to other investment banks and sources of money and saying, "Hey, how about you give me a couple of million bucks." And the money source says, "Ok, you have to put up at least some collateral." And the investment bank says, "No problem, I've got these mortgages worth about a million." And the money source says, "Ok, that's basically like a promissory note worth a million, and that's basically like a million bucks, and that's good enough for us. Here's your $2 million. Have a nice day."

And then one day the money source says, "Hey, you haven't been paying you're loans back lately, so we need that million bucks collateral you put up for the loan now." And the investment bank says, "Uh... yeah... wouldn't you know it, those damn hicks defaulted on their loan, so we don't have a millon bucks." And this leads to...

5) Panic. Bear Sterns collapses. Lehman Brothers. AIG. All these greedy motherfuckers who had all this fucking fake money on their books because it was all based on overpriced homes whose real value is plummeting and all these shitty stupid mortgages given out to fucktards. And now, we are doing what Minsky calls the "last resort." We're letting the government bail these stupid greedy motherfuckers out.


Alright, so if you've come with me this far you're probably thinking something like, "These greedy assholes deserve what they get," or maybe, "Why do my tax dollars have to go to bailing these festering boils on the ass of humanity out?" Fair thoughts. But it's WAY more complicated than that. Remember the recent Fannie/Freddie Mac bailout. I heard an interview on NPR with a group of non-American international economists. They said that if the U.S. Government didn't bail out Fannie/Freddie, the entire world economy would STOP. That's right, stop. Stop dead. Why? Fannie/Freddie is tied in with trillions of dollars of secured debt. If all that goes bad, the world's banking institutions are impacted, and they have to stop lending to anyone. No credit, no loans = no economy.

So now ask yourself. What's better? All these 11th hour government bailouts, which are essential to avoid worldwide economic collapse, or some tighter regulations to slap these silly motherfuckers around and say, "No, quit being so stupid and greedy" to prevent this crisis in the first place.

Anyone who says regulations are bad period is completely fooling themselves. If you want to discuss the nature or specifics of regulation, fine. There's plenty of room for debate. But the Bush administration has basically deregulated the whole damn thing, and McCain has done nothing but indicated that he's fine with that. Frankly, I'm 100% in Obama's corner for further economic regulation, even at the risk of overkill (which I don't think he'll do). I feel Obama's plan, far more than McCain's, will bring the balance needed for a successful capitalist market. At a bare minimum, I think Obama's view of the issues is a far more accurate one than McCain's, and to be honest, I think understanding the real cause of an issue is more important than anything.

Also your friend said that this was all tried in the 70s and it failed. I'm curious exactly what he's talking about. I think we're seeing the failure of nearly 30 years of Reganomics taking full effect. Full-on deregulation really started with Regan in the '80s, was more fully deregulated by Bush II in the 2000s, and now we're paying the price.


In terms of taxes, let's compare the two candidates on taxes. First off, anyone who says Obama will raise your taxes is lying, unless you make over $200k a year. Obama plans on giving you about $1,000 a year in relief. Is it the best plan? Can he pay for it? Well, let's just look at some raw figures...

According to the Tax Policy Center (an independent economic analysis group), "With interest costs, Obama would add $3.3 trillion to the national debt, while McCain would increase the debt by $4.3 trillion." (http://taxvox.taxpolicycenter.org/blog/_archives/2008/6/17/3749301.html)

Now I only have a minor in math from an Ivy League school (which McCain seems to think is a bad thing -- when talking about Palin he said, and I quote, "[Americans don't want] somebody who has — who is, frankly, necessarily gone to Harvard or an Ivy League school." Umm... I do. Not because it's Ivy League, I just think my President should be educated and smart, call me crazy.), and while I'd love to live in a world where we add $0 to the national debt or (god forbid) actually have a surplus, if I have to choose between adding $3.3 trillion or $4.3 trillion, I'll add $3.3 trillion.

McCain's top economic advisor has stated that the next president, no matter who it is, will have to raise taxes (http://www.time-blog.com/swampland/2008/09/the_mccain_tax_increasescontin.html). Obama is at least putting forward an idea of how to pay for his middle-class tax cuts "closing corporate loopholes and raising the top marginal tax rates to Clinton-era levels." (See Alex's comments on the Enron loophole.) McCain is just sticking with the notion of sticking with the Bush tax cuts, which VASTLY favored the most wealthy in this country. Will Obama be able to pay for his middle-class tax cuts with his plan? Well, I hope so. But at least it's a plan. At least it follows a basic spending logic, viz. "If I reduce the amount of money coming in here, I must make up for it by increasing the amount of money coming in there."

Speaking of McCain sticking with the Bush tax cuts... ask yourself this -- does it benefit me and the country has a whole that while the bottom 99% of American income earners have had no growth or even some losses in their incomes, the richest 1% are 2-1/2 to three times richer? And the richest 0.1% are even richer than that. And this same 0.1% got a 15% tax cut? I wish I had better more specific stats on this, but if you want a damning report, check out Free Lunch by David Kay Johnston.


Ok, I've rambled on enough. Bottom line is, when it comes to the economy (and a million other things), I support Obama. I support Obama because I think his world view on the economy is the right world view on the economy. I think McCain hasn't framed a single issue about this election correctly. He and (espeically) Pallin's values and world view are 180 degrees the opposite of my world view and the direction I think the economy and the country should go in. I think the campaign they are running is the most appalling, nasty, vicious, untruthful affair I have ever seen in my lifetime. They flat out lie in their ads (confirmed by independent fact checking groups and media), and we live in a country where we need the women on The View to call him out on it, and when they do, he says, "Those ads don't lie." Fucking Karl Rove said the McCain campaign has gone too far: http://www.huffingtonpost.com/2008/09/14/karl-rove-mccains-ads-hav_n_126280.html.

And on top of that, McCain is old and might die. And that means that Palin becomes President. And that, my friends, is a catastrophe. I'd rather have George W. Bush burn the Constitution and declare martial law and rule as emperor for another 8 years than Palin be President for a single year. Her world view is the antithesis of every rational belief I hold dear.

I say simply and truthfully, and honestly with calm resignation more than malice, if McCain is elected, my fellow countrymen will have told me that they wish for a new (read: same old) direction for America, and it is one that I can no longer be a part of. My plans to move to another country will begin in earnest. I could stay and fight, but really, how do I fight? You're one my closest friends in the world and you might have stopped reading this an hour ago, and that's fine. I do go on. But really, elections are no longer won on rational enlightened thought (see my P.S. below), and that's the way I deal with things, and I don't have the energy to deal with them on a different level. Maybe I'm the sane man in the asylum, maybe I'm the crazy one. I don't know. But honestly, I'd rather spend the second half of my life living somewhere where I feel my community shares my values than fight the rest of my life fruitlessly in a community that doesn't.

P.S. For a fantastic analysis of why people vote the way they do, check out this article by George Lakoff: http://www.huffingtonpost.com/george-lakoff/dont-think-of-a-maverick_b_125850.html. I'm currently reading his book, The Political Mind.