Export Opportunism

President Barack Obama finished his first State of the Union address last week with the same vigor and rousing rhetoric that helped win him the presidency 15 months ago. But politics were on bright display and there seemed to be little 2010 doubt that, despite Obama's calls for congressmen to set politics and ambition aside to do what their electorate sent them to Washington to do, political impasse would be the name of the game in a year of midterm elections.

The speech has been President Obama's most useful tool in tackling a political crisis. When it came to selling the health care bill or troop surge in Afghanistan, the slumping president has looked to his rhetorical skills to remind everyone how inspiring he is and why a large majority of Americans liked him in the first place.

In practical policy, however, Obama has numerous challenges he ambitiously set forth in his speech last week, the most peculiar of which is his goal to double exports from the United States in five years. It is a seemingly innocuous pledge in a sea of promises that define state of the union addresses, however, it is much more puzzling considering that doubling exports is a keystone of his strategy to repair the American economy.

The United States has run a trade deficit every year since 1975, and contentious squabbles over the reasons why have dominated American international economic policy debates ever since. In the 1980s, it was Japan who bore the brunt of American criticism for weakening the yen and boosting exports at the expense of Michigan auto workers and other Rust Belt industrial firms. In the 1990s, the post-NAFTA "sucking sound" from Mexico was the scapegoat for another swath of American manufacturing job cuts and a drop in the number of things we consume that are produce at home.

The 2010 rhetoric signals that the United States will either enhance protectionist measures against foreign imports, or, more interestingly, take on the Chinese and pressure the world's fastest growing economy to halt its alleged currency devaluation, allowing the dollar to depreciate, boosting exports and reducing the trade deficit.

Either strategy would go contrary to the international economic policies that are in the country's best interest in the short term. The former would only jeopardize any hard-earned progress on recent trade negotiations, and the latter would further alienate the single most important country to America's economic future, in terms not only of trade but of finding a willing lender to finance America's massive debt-driven recovery. Or, it could just be a matter of semantics: the U.S. might well double exports in five years' time, but it might also double its imports, only worsening its untenable current account deficit.

Each of these potential reasons signals very little economic policy creativity; though it will be no small achievement if the United States can actually double its exports in five years.

Heated Debate

As expected, the meetings in Copenhagen have amounted to mostly talk and little action. While Europe has taken some steps to pledge financing to developing countries for taking a low-carbon growth strategy - far more than the United States has been willing to front - the prospects for agreement are no more firm than before the meetings began last week.

But perhaps what is lacking is a proper frame for the issue. Public acceptance of the existence of climate change is a moot point; the very existence of a world meeting on reducing carbon dioxide and other greenhouse-gas emissions signals it. But defining the issue as specifically one of temperature change, rather than as a broader dilemma of environmental conservation and biodiversity, is what is keeping the eco movement from achieving its full potential.

The 350 campaign and others have succeeded in putting carbon dioxide emissions in the public consciousness. Even the average person can understand CO2 emissions create a greenhouse effect, rising temperatures and effects ranging from subtle changes in seasons to outright climate catastrophes. The simplification of climate change has enabled a mass movement.

But this gives leaders an easy escape. Emission of greenhouse gases such as CO2 or CH4 (methane) can be tied directly to industrial or agricultural production, energy consumption or cows breaking wind. Therefore, this makes trade and protectionism the arena for debate; and the recent round of WTO talks has shown that this is where leaders from both developed and developing countries can drag their feet and blame the other side. But if environmentalists can successfully implant in the public's mind that it is not only climate change (temperature changes), but also environmental degradation, mass-extinction of species, turning our oceans and parks into oil wells and mines, and utter waste (does your mobile phone charger really need to come with 3 pounds of packaging?), they can successfully re-frame the issue into one of broader importance.

I'll conclude with one example. As a student of international affairs, I have many classmates who profess a devotion to saving the environment. Copenhagen must come up with positive results, they say. Yet, I can't even begin to count how many times I visit a sandwich shop frequented by many such students and see how wasteful our society can be.

When a customer buys a sandwich, the woman at the register puts it in a plastic bag. Not long after eating the meal, many of these students discard the perfectly pristine plastic bag - destined for a landfill after being useful for literally 7 minutes (the time it takes to walk the sandwich over to a place to sit, take it out of the bag, and eat it). Multiply that by the hundreds of students who visit this one sandwich shop in New York City.

The amount of waste is astounding, and it seems to me, at least, that few link waste and climate change as one issue about protecting the environment and reducing our consumption. Saving the environment is not just about maintaining a temperature.

The Lame Congress

When looking at President Barack Obama's tanglings with the Democratic leadership on Capitol Hill, one can start to see some virtue in Obama's predecessor's desire to consolidate executive branch power, even when he had a Congressional majority for much of his 8 years in office.

Congress just gets in the way.

The so-called "genius" of American democracy is the so-called well-functioning legislative branch. Unlike many traditional Parliamentary systems such as that of the Brits, however, the United States has a powerful lower house AND upper house. In time of political and economic struggle, this body of legislators has proven itself increasingly beholden to special interests.

Two of the most significant legislative breakthroughs in the current generation - health care reform and a commitment to greenhouse gas emissions reductions - are on the horizon. The Copenhagen meetings are moving ahead this week and health reform is in the United States Senate will a more-than-50-percent chance of passage.

On both accounts, however, President Obama is dramatically weakened by a gridlocked, polarized Congress. Right-wing Republicans, fearful of losing their party base in midterms next year, are holding ground on their "conservative" values of small government ($700 billion bank bailouts) and personal responsibility ($700 billion bank bailouts). Meanwhile, Democrats are doing more to hurt their own chances with a weak leadership at the helm (Pelosi and Reid).

The result is depressing. The Democrats have dropped the public option - the primary innovation in health reform - from the negotiations, and Obama will arrive in Copenhagen empty-handed and with only an argument that his Congress won't change the status quo no matter how much the United States is to blame for climate change.

President Obama has barely been in an office for about 11 months. While his potential for achievement is great, his Congress will likely have more to say about that.

A Bretton Woods Moment?

Sorry for my long absence from the elastic thinker. The demands of grad school have greatly weakened my brain's elasticity, and has rendered my gray matter into an examified/essayified amorphous pulp resembling baby food.

However, I recently contributed a post to The Morningside Post, a student-run newspaper/online blog at Columbia-SIPA, to re-whet your appetite!

http://themorningsidepost.com/2009/11/a-bretton-woods-moment/

The LDP Saga

The Financial Times yesterday finally published a graphic previewing the Aug. 30 Japanese general election, in which the mainstay Liberal Democratic Party (LDP) will likely lose power in most convincing fashion since 1955. I did the bulk of the research for the graphic and am happy it came out OK!

You can view it here: http://www.ft.com/cms/s/0/ce4c5268-8745-11de-9280-00144feabdc0.html

Call centers to plowshares

In the last couple of weeks, new developments have shown that drought has severely impacted India's agricultural sector. But this has failed to grab major headlines until recently, when the situation became especially dire.

The situation should call attention to the still-pressing needs of India's farmers, who are less able to benefit from the economic expansion that has made India an emerging hub for call centers, software development and other "business processes." India largely remains an agricultural country - agriculture, forestry and fishing account for 17 percent of GDP - and should therefore promote the development in rural areas as much as it should focus on its "knowledge" sector, which generates more wealth and investment but also employs far fewer people.

Why bankers rule

In the past couple of days, much anger has arisen regarding bonuses paid to bankers on Wall Street or in the City of London among populist good-for-nothing welfare-state leeches like poor people and the uber-liberal-Sarah-Palin-hating "mainstream media" who, in between their worship of Barack Obama's statuette, find it so easy to bash anyone or anything that has a connection to financial services!

In an unusual effort to quell these outrageous attempts by all those pesky median-income or minimum-wage earners out there who can't get enough of taking a free ride off the hard work of rich people (all of whom got rich only by the virtues of hard work), the elastic thinker has decided to produce a list of 8 reasons why there is no problem paying out massive bonuses to bankers during an economic crisis that has produced unemployment of 9.5% (and rising):

1. Contrary to public opinion, bankers are actually the smartest people in the world. Unlike the money you earn, theirs requires $60,000/year MBAs, which means they're really, really smart. They actually earn their money, 'cause they figure out how to make money using other people's money.

2. Bankers work harder than you do. What? You want a bonus during a recession? Mortgage tough to pay? Well, bud, you shouldn't have bought that house. If you were smart enough to read that 10-K filing or actually turn on that Bloomberg terminal you have at home, you would've seen all this coming. What's that you say? You don't have a Bloomberg terminal? You snooze, you lose.

Again, that's why they get paid more than you, because they are actually smarter! Don't you know economics? Skill and its scarcity in the labor market are rewarded largely through compensation. That's why you make less, because you just couldn't make the cut.

3. Had Goldman Sachs and all the other God-affiliated institutions didn't pay bonuses, they couldn't attract such amazing talent! If they didn't pay bonuses, some other bank would find a few million to throw at them. That would risk a massive brain drain.

4. Bankers are prophets and decipherers of mysterious information that normal people simply are too incompetent to understand. I mean, come on, this is why one day the markets jump and the dollar gets stronger, and the next day the opposite happens based on new information. Let's leave figuring all that out to the bankers. They know best.

5. If it weren't for bankers, we would not have the movie "Wall Street," the actress Darryl Hannah, or the name Gordon Gecko in our vocabularies.

6. Bankers have more culture than you. They drive better cars, eat better food, wear better clothes, use BlackBerrys and go to better gyms than you. Not only that, they don't have to sit with the commoners at sporting events. They can get their caesar salad, Chardonnay and chicken fingers with dijon mustard dipping sauce in an air-conditioned box while you stand in line for 15 minutes to get your aluminum-foil-wrapped hot dog. Remember, perks like this are necessary to keep bankers happy. They are very busy people and need to relax every now and then to blow off some steam. Strip clubs help, too.

7. Bankers represent what the American economy's future is all about. Who needs to make useless widgets when you make knowledge?? It's the knowledge economy, baby!

8. Bankers are the backbone of America, generally speaking. When national challenges arise, they are the first to go to war ('we rate Halliburton a strong BUY'), show their patriotism (speculating on foreign currencies), and campaign for a cause ($240 million in lobby spending in election year '08!)!