Sunday 24 February 2008

Why a Presidential Dream Team?

Many people have been asking me what this is about. As an external observer of the US political scene, it occurs to me that what this country (and many others) needs is a “time out” from partisan politics and a brief inter-regnum of rational economics. Obviously, there’s not much of a precedent for this, but we are looking at the need to make at least four systemic changes in the next 4-6 years, hopefully before it’s too late:

1. A root-and-branch reform of the educational system to focus on learning, skills and competencies for the 21st Century. The main challenge here is not necessarily curricula, but funding. A National Education Policy needs to be funded at the national level, so that consistent, uniform funding is available. The current practice of the Federal Government providing a fraction of resources, with the States providing the rest, is unfair and incoherent in a global economy. The practice of funding education through real estate taxes is irrational.

2. A comprehensive reform of the national healthcare and social security systems. These two issues are closely linked thanks to demographic changes and changes in the workforce, yet they are being treated as separate issues. Reforming either requires balanced analysis, choice and a commitment for the next generation, without the blatant opt-outs or industry favours apparent in current policy.

3. The adoption of an ethical foreign policy, which implies a shift of resources from military spending to diplomacy, and a willingness to address root causes of religious extremism and terrorism. A sub-set of this area is the eventual reduction of combat operations from Iraq, although I believe a long-term basing presence will be necessary (and desirable).

4. The urgent reform of the national (and global) financial system, improving transparency and monitoring, while reducing unnecessary systemic risks. The role played by securitisation and derivatives markets, credit rating companies, and financial insurors and re-insurors are poorly understood and not fully costed in our equity-driven culture. We need simple, common-sense reforms to improve visibility and incorporate the true cost of many vehicles onto corporate balance sheets. (This involves working with and against extremely well-financed special interests, but no one said it would be easy, and in the long term the system as a whole will benefit)

I don’t include some other major issues, such as the war on terror or the rule of law in the US: I’m sure that if we follow the rules, these issues will resolve themselves. We have a wealth of experience in our own institutions and allies which provide the means to succeed: what we need is consistent, common-sense policy and a commitment over time. Even the issues of immigration or global warming are secondary. Immigration has lasted a long time, and will continue no matter what reform is enacted. Environmental and energy-saving technologies that alleviate global warming have a low cost horizon and can be solved by relatively small financial amounts i.e. % 15-20 billion per year. These should be supported as a matter or rational self-interest rather than as a political issue.

To implement either of these four(five) core national priorities requires an approach to politics which is unfortunately absent in Washington today:

• Rational analysis and means-tested solutions;
• A bipartisan approach;
• Sufficient funding and a long-term, consistent approach;
• Removing lobbyists and special interests from the equation;

Most of all, we must assure that the people passing laws, the people managing the new system, and the people at the front line of implementation – teachers, doctors, medical assistants, insurers, diplomats – have the means, training and will to implement reforms. We can’t separate policy-making from policy management and policy execution in either area. This means an expansion in the federal government payroll, an increase in wages, productivity- and results-linked pay (added incentives), and the resources necessary to get the job done. If we were spending $ 350 billion a year at the Federal level for education in addition to current state funding, the results would be visible.

This approach calls for representatives who are outside the normal polticial career path: law degree; some form of politics-related office; elected official in Congress or State House. Although I respect many of our politicians, they don’t have the skills set necessary for many of the challenges we face. When have you last heard of a brilliant analyst in Congress? What is worse, they are not only beholden to special interests and their party structures (which remain heavily patronage-driven), but they have steeped in the acidic swamp of partisan vitriol and betrayal since Newt Gingrich took over Congress in the 1990s.

Let’s face it: most of our political representatives today are better versed in fund-raising, campaign management, media relations/PR and managing patronage networks than they are at governing for the long-term benefit of the country. Blame them or blame the system or blame The Disney Channel: the facts are visible every serious daily newspaper you read, every day, and they are particularly visible during elections.

So, I was casting about for a “Dream Team” of policy-makers with some form of credibility, a coherent vision and a track record of success outside politics. Obviously, my pick involved lots of compromises, but here was my rationale:

Michael Bloomberg set up Bloomberg media, revolutionizing the way financial information is analysed and distributed. He’s now worth over $ 12 billion, and his fortune is growing every day. He has the track record of solid achievement in a new business field (which I can tell you from experience needs solid, consistent work), and he has an acceptable track record as Mayor of NYC. I’m not saying he’s perfect, nor that he even has an acceptable vision. But if I could hire a manager to implement long-term, bipartisan reform, this would be the man. (As always, I’m very willing to consider alternatives).

Arnold Schwarzenneger is something of a counterpoint to Bloomberg. More popular, with higher name recognition, he would be invaluable to getting the team elected. His record in California is really mixed, but he seems more pragmatic to other Republicans. He brings name recognition and electoral votes in a big state.

Paul Krugman is an academic at Princeton, my alma mater. I distrust academics in policy-making positions. Unfortunately, I can’t think of another economist trusted by enough people to be effective in office. I’d vote for Rubin, but he’s getting old, and I think we need a Treasury Secretary who doesn’t come from Wall Street. Krugman understands the nuts-and-bolts of economic policy in practice, and on paper at least is concerned for “the common man.”

John McCain has the military record and breadth of experience to deal with some of the urgent issues the Pentagon faces today: a bloated procurement system, inadequate resources for counter-insurgency conflicts, the need to support vets, the National Guard, etc. I agree that he’s a bit of a loose cannon, but I think that he should round off his distinguished record contributing to the lasting reform of the Armed Services rather than being President (given his lack of economics knowledge and his need to play to the Republican party base) or languishing in the Senate for another term.

Bill Richardson: An extremely solid candidate, but perhaps not as inspirational as possible. Still, he has an excellent background, policy management experience, is low-key, speaks Spanish and has good contacts in Europe and Latin America.

Homeland Security: Richard Clark comes out well after 9/11. On the other hand, David Petraeus has the front-line experience and has actually led counter-insurgency under extremely difficult conditions. Of the two, I lean towards Petraeus, although a person of Clark’s experience should not be left out in the cold. (CIA Director?)

Bill Gates has a stellar track record, even if people today discount the relevance of Microsoft. I don’t buy that so easily: Microsoft may have problems, but it’s the workhorse of desktop computing, and was a brilliant innovation in its day. Gates is a knowledge worker, and in the 21st Century we’re looking at educatorns as knowledge workers. There is so much that can be done with e-learning, which opens up learning beyond the physical confines of the school. He has also dabbled in educational reform (charter schools) through his Foundation. On the other hand, it’s a pity we can’t give teachers stock options!

Al Gore needs to put his ideas to the test and become Secretary of Energy. Given the role of energy (including transportation) in greenhouse gas production, he will have the mandate and the bully pulpit to push through energy savings, renewables and fuel efficiency standards (among other things). He can get much more done here than as head of the EPA, which is toothless. A future administration should upgrade the EPA to a Department, but in terms of the three main issues in energy, I still think Al Gore is better suited to this position.

Colin Powell deserves a chance to salvage his reputation and contribute his skills to a major issue facing the country. On the other hand, I increasing think this should be an agency, not a Department. Anyway, he brings credibility and real understanding to the job, and the position needs a heavy hitter to get the budget allocations needed, particularly after the ramp-up in problem after Iraq.

John Edwards was a brilliant trial lawyer, and the Dept. of Labour needs to work through the courts. I prefer him in the courtroom than in the Presidency. He’s better suited to a Department than to Oval Office. In time, he may become better balanced and get the experience needed, but I think he’s 12-16 years away from that point.

Barack Obama: same comments apply as per John Edwards. We need an Attorney General to re-inspire Americans (and the world) in the rule of law. We need someone to deal with really difficult moral cases. And we need to de-politicise the justice system. Can Barack do it? I don’t know. But I think he’d be an excellent candidate for President after 8-12 years of national experience. It demands much more than his experience in the state legislature and the Senate, and would make him much better for it.

Are these selections ideal? Hardly. And the problem is, I can’t think of other candidates capable of the changes needed. But I know they’re out there.

One major problem I see is the lack of really inspirational Republican candidates. (Bloomberg is hardly a Republican; Schwarzenegger is…well…Schwarzenegger). The Republican Party gave us Abraham Lincoln, Teddy Roosevelt and Ike, among others: inspirational candidates (maybe for the wrong reasons). There doesn’t seem to be anyone of the same caliber coming up through the system these days. Mike Huckabee? Mitt Romney? Admirable though their achievements may be, they are neither balanced enough nor have the background necessary to understand the real issues of this generation. They are campaigners, not leaders.

So, this is an explanation of the “Dream Team.” Chances of being implemented? Virtually nil. Intellectual satisfaction derived from the thought process? Very high.

The big question not addressed by this piece is how to separate special interest lobbying from the policy-making and delivery process. I’m only a corporate rocket scientist, not a magician. On this subject, I’m totally out of ideas, but I know there are some good ones out there.

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