Capitalist Nexus

Tonight Sarah Palin began to take over the Republican Party.  Whether the media gets it or not, Palin has amazing political skill and will be a force in the coming decade.  It will be interesting to watch her grow over the next 60 days leading to the election.

Not only has John McCain served America with honor, but the man often accused by Republicans of abandoning his party and turning his back on Republican ideals may have just provided the party its blue print for national government for the next 20 years.  By choosing Sarah Palin as his VP choice, McCain may redefine the Republican power structure in Washington for years to come.  Given her age and fitness, Palin would be a very youthful 52 if McCain serves two full terms and only 48 if he decides one term is enough.  If Palin in turn decides to run, and selects Louisiana Governor Bobby Jindal, who is only 37, as her VP the two of them could form a 16 year run to redefine how Washington works.  While much has to happen between now and then, both Palin and Jindal are developing the reputations they need to assume Presidential level leadership.  Palin will be tested on a national stage in the months ahead, after already compiling an impressive reform record in Alaska.  Jindal will also receive significant attention as his state prepares to deal Hurricane Gustav.

By moving to Palin, McCain has given the Republican party the opportunity to redefine itself and reposition itself for the future with a fresh new agenda and a new cast of leaders, while using its existing leaders to serve as a bridge to that future and make amends for the mess they allowed to take place during their watch over the Bush years when they controlled congress.  While McCain may very well have won this election with a safe and traditional choice, by selecting Palin he gives the Republican party a clear vision past his Presidency to a future with new, exciting, and experienced leaders in position to take over from day one and manage the country.  That could not happen with a traditional safe pick for his VP.

One can only imagine the reactions around the campaign circuit with the Palin announcement.

Barrack Obama – Internally he knows he made a very poor choice with Joe Biden.  In criticizing McCain for being in Washington for 29 years while nothing has been done for 30 years about our dependency on oil, he knows Biden has been a Senator for 36 years.  Biden voted for the war, but was against the surge.  Biden argued that Barrack does not have enough experience to be President.  For a candidate running on judgment, this was a poor choice, when Hillary would have virtually guaranteed him a win, and by all notions of fairness earned the number 2 spot by virtue of her 18 million supporters.  For all the change Obama attempts to represent, picking a life long part of the problem he consistently attacks makes him look small and foolish.

Hillary Clinton – She probably feels similar to how Bill Gates felt the day Google went public.  While nothing changed that day, he knew business would never be the same.  Hillary’s franchise has suffered a terrible blow.  Should Obama lose, her bid to run in 2012 has become much less unique with Palin as the incumbent VP.  Unless it is painfully obvious to everyone that she gives her heart and soul to elect Obama, Democrats will regret her dividing the party and costing them the election.

Bill Clinton – He is happy, knowing he is still the man.  He nailed his speech and showed Biden and Obama play checkers to his chess.

Joe Biden – He is thinking Barrack will ask him to fake catching some strange illness, check into a hospital, and step down so Obama gets a mulligan.

Tim Kaine, Kathleen Sebelius – They are both wishing Barrack had McCain’s stones.  Each had a more compelling story in Obama’s change narrative than Bidden but Obama’s desire to play it safe cost them a chance of a lifetime.

Mitt Romney, Mike Huckabee, Tim Pawlenty – Some things are not meant to be.  Politics, like business is a function of need and opportunity.  While each is disappointed, it is hard to hold a grudge against a man that makes a decisive and daring move to win, which is what McCain did and neither of these men should be bitter about that.

Ironically, as the Republican election started, McCain was a pariah to many parts of the Republican party.  By choosing Palin, he may very well end up being the man that gives the party a vitality that extends beyond his own lifetime.  In contrast, Obama was hope of the Democratic party future, and it may be that by following the George Bush blue print of a non-electable Vice President, which we all know Biden will never be President, and de-branding the party’s most powerful woman, he has created a power vacuum that sets the party back in its search for a new leader.

That is what Michelle Obama said over and over again. But it is interesting, in her speech her only heroes are those of a Chinese Cultural Revolution novel. She glorifies only those; who grew up poor, as though poverty of itself makes you noble, and those who give up or “sacrifice” to help others. Never once did she praise our free enterprise capitalist system that has created such enormous wealth that allows individuals to devote their lives to others. Without Capitalism, there is no large scale altruism. The world has seen over and over, when a strong central government squashes the individual and economic rights of individuals, everyone ultimately suffers. Michelle Obama refused to acknowledge her wonderful world of altruistic behavior only has the leverage to be effective when capitalism provides it the leverage and lubricant to be effective. Rather than celebrating America’s wealth creation history and achievement, her talk and her brother’s introduction emphasized a woman that sees America’s business traditions negatively and instead believes the non-profit world consists of loftier and more noble ideals.

Michelle Obama’s goal for her speech was to erase her now famous comment that she was only recently proud of her country for the first time in her adult life. For someone that came from such humble roots to be educated in the world’s best universities, and live in a million dollar plus home, it was ridiculous to mutter such a stupid thing. She knows there is no where in the world that would have offered such opportunities to someone of her economic origins. But amazingly her story is not unique. My parents came to America with no money and speaking very little English. My sisters and I all have graduate degrees, and we have wonderful careers. We could not have achieved our success in any other country in the world. This is a result of other countries either discriminating against outsiders, and/or generally having closed economies heavily favored towards those already in control. America is great because it allows people to achieve their dreams if their talent, effort and determination can support such dreams.

Michelle Obama probably did soften her image. As a person, she has beautiful daughters, a loving mother and brother, and an adoring husband. However, Michelle Obama as a wonderful daughter or great sister does not warrant a minute of prime time attention, her story is not any more interesting than that of millions of Americans that have “made it”. We are really only interested in Michelle Obama the politician, and in that capacity she said much more about her beliefs in America by being silent than by saying she loves it over and over.

Michelle Obama seems to love what America has given her, but she does not seem to love the America that has given her that.

Democrats seem to have been reading the Merchant of Venice lately, demanding a pound of flesh from McCain for effectively being able to characterize Obama as a Britney/Paris triplet with the now famously effective “Celebrity” ad. So as Politico reports today, Democrats will strive to portray McCain as an aloof out of touch rich politician. They must figure that since it worked so well with John Kerry it will work with John McCain. Here is the master Obama puppeteer from the Politico article:

And David Axelrod, Obama’s chief strategist, referred in an interview with Adam Nagourney of The New York Times to an imagined meeting of McCain strategists “on the portico of the McCain estate in Sedona — or maybe in one of his six other houses.”

I guess the key difference behind this strategy is that McCain spent his time in Vietnam suffering in a box, while serving his country with unquestioned honor. John Kerry, meanwhile, is well John Kerry – we learned enough about him a he testified to Congress after the war.

Maybe before Barrack Obama goes on a “tax the rich, wealth is evil rampage”, he should think about the real taxes John McCain has already paid and ask if this represents the new type of politics he wants to represent.

With typical New York Times ignorance, David Leonhardt writes:

Yet laissez-faire capitalism hasn’t delivered nearly what its proponents promised. It has created big budget deficits, the most pronounced income inequality since the 1920s and the current financial crisis.

Isn’t a deficit caused by spending more than you earn? Thus the spenders cause a deficit, not the system generating the revenue.

Does the rest of his sentence warrant a comment? I did not think so.

IBD has a wonderful editorial showing once again that the apple does not fall far from the tree. You have to love Obama part 1, saying:

“Theoretically,” he wrote, “there is nothing that can stop the government from taxing 100% of income so long as the people get benefits from the government commensurate with their income which is taxed.”

Hopefully they just stay dreams.

That was the reply from a super smart, politically aware, democratically loyal and very close friend of mine after I sent him a text saying that Obama will not win after watching the discussion he and McCain had with Pastor Rick at Saddleback, and he will likely pick Hillary as his VP to stem his bleeding in the polls. I wanted to note a few of my thoughts as I think they will become ongoing themes as these two appear together in debates this fall. The transcript of the entire event is available here.

1. The age/smooth contrast between Obama and McCain will work against Obama if McCain continues to look as relaxed and react as quickly as he did during this event. Obama is clearly at his best when he has a prepared script in front of him and speaks from tele-prompter. He has a wonderful voice with amazing inflection that he draws on to speak with authority, conviction, and inspiration. Who is not moved as he says, “We are the ones we have waited for”. That is powerful stuff. But once he moves outside of a script he transforms himself into a form of George W. Bush with his English as Second Language stop and go speech pattern. I think a good bar game during the debates will be to take shots each time Obama utter an Um or Ah. Smart bar owners will sell copious amounts of tequila and be seen as promoting the civic good by encouraging citizens to watch the debates. As the public sees more of his debate performance outside of a scripted environment, Obama’s star will continue to fade. To date conventional wisdom has evaluated McCain in comparison to Obama, as a speech giver – which he does very poorly. In general he seems pasty, uncomfortable, stiff, uninspired, and tired. But in a conversational setting McCain is able to quickly and decisively discuss points in detail and with conviction. McCain does not tend to straddle issues and thus makes it fairly easy for people to make a choice for or against his aggregate stances – making it easier for him argue that he and he alone can institute the changes required to restructure and make Washington more effective if he is elected, which is ultimately what this election is about.

2. Obama does not offer a compelling reason to be President of the United States of America. After listening to him for an hour, there was nothing compelling in his history that called out and said, “Yes, this man is the chosen one to return America to greatness”, as Nancy Pelosi may have said or ” This man can bring Washington together”, as Obama followers claim. But what has he accomplished, or what groups has he bridged? Sadly, the answer is for the most part not much or none. He lists among his personal narrative, his keen judgment not to invade Iraq, and the sacrifices he made by not pursuing high paying jobs after college and law school to work with unemployed steel workers, and to pursue government positions to advance the greater good. While questionably admirable, those are arguable not the experiences required to run the world’s largest economy and mankind’s most powerful military force. Since being elected to the US Senate, he has arguably abdicated his responsibility as a freshman senator, as he has basically been running for President full time since entering the Senate, with little to show for his efforts there. His record has essentially been one of a hard leaning liberal with few bipartisan accomplishments and fewer instances of taking risky positions against his party to effect bi-partisan solutions, which would indicate a willingness to work with Republicans on key issues. In contrast, McCain’s currency is experience, especially foreign policy, having served years in congress in various intelligence capacities and traveled extensively to Iraq, Afghanistan, and Georgia in official capacities. In addition, McCain has consistently gone against his party’s wishes to work with Democrats on controversial legislation earning him a reputation among the media as a “Maverick” and among many Republicans as a “Judash“. In an era where change is the buzz word, McCain has a track record of effectively working inside and outside his party to make change happen, while up to now Obama has only delivered speeches that tend to talk in ideal tones that are short on details. In the end, facts are friends and while Obama is not too young to be President, he is simply too inexperienced and offers no compelling reason to claim to the office.

3. The substance contrast between Obama and McCain, without trying to insult Obama, is simply that between a man and a boy. On issue after issue, Obama struggled to reach a coherent answer. When asked to name which Supreme Court Justices he would not have appointed, Obama sought refuge in the old liberal clinches about Thomas not being smart or experienced enough (though a Wall Street Journal editorial today clearly shows why such a statement was foolish), rather than squarely discussing that he voted against Roberts and Alito. When asked about when life begins, he answers that such a question is “above my pay grade”, odd for someone who will set the agenda on such issues. When asked about his most difficult personal decision, Obama spoke to his decision to oppose the war in Iraq, an issue for which he had no real accountability, as he was a state senator and thus his thoughts were of minor consequence. Thus on one of the most important questions of the night, Obama basically avoided the question, which is typical of how he has handled himself on tough issues over the past year. McCain by contrast was very direct on his answers. Asked when life starts he answered at conception. Asked what judges he would not appoint to the Supreme Court, he effectively said the four liberal ones, as they are legislating from the bench. Asked about his toughest personal decision, he answered about his experience as a POW, where he was offered an early release due to a family connection but instead he chose to honor the POW code of first in first out, which kept him as a prisoner for another three years at great physical and mental harm. The contrast in which these men answer questions clearly and directly together on stage in a debate will shock most people expecting Obama to be a smooth, cool, intellectual operator.

4. A question asking each candidate for the wisest three people he knows and that he will rely on heavily during his administration led to a rambling, non-informative, non-binding reply from Obama versus a direct and relevant reply from McCain. Obama would basically go to solve the world hot spots bending his ear to his wife, his grandmother, and Senators:Ted Kennedy, Richard Luger, and Tom Coburn. As with most things Obama, he tends to run like the Platte River, a mile wide and an inch deep. No one believes, Kennedy, Luger or Coburn will serve a meaningful role in an Obama administration, making such a reply patronizing to those that take the time to follow what he actually says. Further, he cannot even limit his answer to three people as the simple question requests, displaying the arrogance he is becoming famous for lately. Is it that hard to just follow the rules? Contrast Obama’s choices to McCain’s. He named, General Patreas, John Lewis, and Meg Whitman. General Petraeus is the world’s foremost military expert, Lewis represents all that is right in the struggle for civil rights, and Whitman captures the innovation and spirit of that capitalist spirit that has given America its world leading lifestyle. Further, it is easy to see both Petraeus and Whitman serving in a McCain Administration, indicating his answer represents more than just a short-term story to placate the immediate audience, as he did offering pro-life Senator Coburn. Again this question illustrates how these men differ in substance versus style, a point made vividly clear when they are in close proximity to one another.

As a bonus discussion point, I will just touch on another topic that tends to consistently bother me, namely the comparison between Obama and Regan.

5. Some argue that Ronald Reagan was short of specifics in his speeches, and short on experience in his life, but then was able to transform the country, and Obama will be able to do something similar through the force of his personality. Ronald Reagan was very clear that given the chance he would like to make government as small as possible with as little intrusion into everyone’s life as possible, with a very strong national defense to defeat Communism around the world. His message was very simple and very consistent with long held American ideals of individual self reliance, independence, hard work, freedom, and pride in our country. He returned a sense of pride to being an American after the disaster known as Jimmy Carter. Before he ran for President, Ronald Reagan debated Bobby Kennedy, and effectively knocked him back on his heels and sent a message that he was a political force to be dealt with. For years he delivered a series of radio addresses that carried a basic, consistent theme of individual freedom, limited government, and free markets. Reagan also served very successful terms as Governor California. Contrast this to Barrack Obama, who generally refuses to make any of his core ideas or ideals clearly known. Unlike Reagan, who clearly articulated a case for less government for all to weigh, Obama will not admit that his solutions require a much larger government, or that his ideals require everyone to sacrifice personal freedoms, or that personal property clearly has to be limited, or his view of the world sees a medical system as innovative as the post office. Reagan’s values preached being as successful as you can be, Obama’s emphasizes taking from those with more than you; Reagan’s values preached being self reliant, Obama’s emphasizes turning your care over to the government; Reagan wanted a government that encouraged all of us to reach for the best within us to produce more, Obama’s approach is punish those that have success and discourage others from seeking it. Obama believes from ones ability to ones need, that ones efforts belongs to the government to tax as needed. The politics of Obama is nothing more than to slice up the electorate into pieces and promise each part something from the other. That is very scary to me. Reagan the politician worked, because even if you are a ditch digger in America you know your kids can attend a community college, transfer to a state college, attend medical school, and then make hundreds of thousands of dollars a year. Opportunity in America is open to anyone that is willing to work hard and apply oneself. Under variously proposed Obama plans, that doctor would have a 65% tax rate – is it worth the effort to become a doctor? Reagan understood such a tax policy made no sense, and went against America’s history and ideals, and he wanted your kids and every other American to keep their money. Obama the politician wants your kids money, and as this becomes better understood, it is unlikely that most Americans will agree to give it to him.

Ultimately as the nation turns its full attention to these candidates, it will be evident that Obama is not ready for the job.

Bret Farve is talented enough to play as a starter in the NFL for almost any team he would join. Ironically, he may not be the starter for the team where he built his legend, The Green Bay Packers. The crux of the issue is that Farve retired earlier this year after a prolonged debate as to whether or not to play another year. He reached his decision, after some prodding by Packer management, in March. This led the Packers to begin planning their future post Farve, and not unreasonably, have prepared for another man to become their starting quarterback for the upcoming season. During the past month, Farve has sent signals to the Packers and the media that he would like to play again, and either join the Packers or another team looking for a veteran quarterback.

So, now the Packer dilemma. Whether to allow Farve to return as the starter and go back on their word to thier expected future franchise quarterback, or to allow him to play for another team and possibly him have beat the Packers at some point during the season. In an ideal world, Farve would be able to continue his career and amuse fans and fellow players alike with his grit and amazing throws. Alas, in an ideal world Farve and his fellow players would play for the love of the game, while fans could watch for free. But the NFL is full of moral hazard problems which have resulted in very complex contracts to enforce optimal behavior on the part of players and owners.

Farve’s 2001 contract illustrates how both players and management try to protect their interests and illustrate that the NFL is big business, fan emotion aside. Into 2001, Farve signed a 10 year contract worth approximately $100 million. According to the Milwaukee Journal Sentinel, anywhere from $20 to $30 million of that contract was guaranteed whether Farve performed up to the team’s expectations or not. By accepting such security, Farve effectively sold his options to choose where to play football over the next 10 years. Alternatively, Green Bay took the risk of Farve under performing or getting hurt during the term of his contract in exchange for the guaranteed money they paid. Additionally Green Bay also accepted the risk that Farve may decide to retire early, creating a succession problem for them at the quarterback position.best

Because sports has such emotional appeal, what in most circumstances is an absurd concept suddenly becomes open to debate. For example, lets say you contract with the best language teacher in town to prepare you for an exam required to get your dream job. You arrange for 20 lessons, of which 10 must be pre-paid. Unfortunately, after lesson 5 your instructor decides to retire and refunds you the 5 lessons you pre-paid. How would you feel? Would you try to find a replacement? If you found a new instructor you were very comfortable with, would you hire the original instructor if she decided to “unretire”? What if you still had a contract with the original instructor and had to hire him regardless of whether or not you hired a replacement? Now lets say that in addition to your new instructor, you also have the original instructor, but he asks that you let him out of his contract so he can train your main rival for this job? What would you do? No one wants to be in this situation, but if you were forced to pay the original instructor, my guess is you would certainly want to prevent him from training your rival.

The Green Bay situation plays out in a similar to this, except the team has guaranteed and already paid Farve tens of millions of dollars, and has made significant financial and operational commitments to adjust to Farve’s retirement. Given that Green Bay seems comfortable with its prospects without Farve for 2008 is not the same thing as saying it is comfortable seeing Farve play for a rival. It is unreasonable to think the team will allow Farve to walk away and go to a division rival and possibly ruin Green Bay’s chances for a Super Bowl win. In order to maintain that privilege, Green Bay must pay Farve approximately $10 million, which is the option they purchased with the 2001 contract. In exchange for is contract, Farve’s choice is to stay retired, accept a lesser role in Green Bay, or work out a situation with the team where he is traded to another, mutually acceptable team. Regardless of legal issues in tis contract, Farve is trying to effect his desired solution via a public relations campaign to force Green Bay’s hand. So far the team seems to be holding out for a solution that maximizes its value, regardless of the public relations nightmare it is enduring at the moment.

So what is a realistic solution to this problem? In general any solution should be tilted in Green Bay’s favor, as they have the strongest legal position, and if they have planned correctly will over come short term PR problems. At the same time, to respect the history of the game, they should be willing to make some accommodations to allow one of the greatest to play quarterback to continue entertaining. It seems to me that any solution should have as a component Farve returning or forgoing some of his guaranteed money, and an agreement that Farve will not be traded to a division rival or a losing team. While this may not result in an optimal solution for either party, it should prove workable. Farve can return to play where he is wanted with a shot to return to the playoffs, and Green bay can recoup part of its busted investment and not have to face Farve twice in the regular season. Both sides tried to minimize their risk with Farve’s current contract, and as a result neither is able to secure their current optimal outcome, but that is the fundamental nature of risk.

The Chicago Sports Guy has some Farve thoughts here.