facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast blog external search

Obama to the Rescue!

Take a breather, America – the sagging economy is being fixed by the great tactical economist Barack Hussein Obama.  Yes, it’s true, the lame duck President of the United States has figured out that the economy has stagnated over the past 7 years, and that Congress is not able or willing to fix it.

As to those two points, he is absolutely right!  Here’s the Plan:

  • Obama will sign an Executive Order directing every government agency to identify bottlenecks to competition
  • Then, the agencies must identify ways to increase competition in the economy
  • After all, Obama claims, “Competition is good for consumers”
  • He claims to recognize that the free market works best when there is competition
  • Welcome to the good fight. Mr. Chief Executive

How will it happen?  First, we target that icon of all American businesses – the set-top cable and dish box market.  Thank God, we are about to be saved from this non-competitive, but critically important, aspect of our financial lives -- entertainment.  After all, he claims, the average cable box rents for $231/year, up 185% since 1994, while the cost of computers, televisions and mobile phones has dropped by 90%, apparently in that same time period.

Clearly, the American consumer has a problem.  Before we fix it, we should discover the root of the problem.  After all, doesn’t good problem solving require accurate definition of the problem?  Somehow, the interview in which Obama granted us insight into our great national economic problem did not address this issue, so I will.

For all of you “seasoned citizens” out there, do you remember when the nation’s cable TV industry was in its infancy?  I remember clearly analyzing the situation by asking my wife, “Why would anyone pay for television?”  After all, commercials back then were relatively few and relatively short.  OK, I got that part wrong.

But I also watched the process carefully, and other problems were evident.  These involved politics and politicians.  I was watching the Milwaukee market, as we lived close by, it was an early adopter of the cable, and therefore a good example of the burgeoning industry.  One thing became perfectly clear watching the bidding for the contract.  This was going to be an authorized monopoly.  One city-wide company would get the entire area, creating a dearth of competition for the service.  And, a second things was also obvious – this would be a “pay-to-play” process.  Find me a retired 1970’s Alderman or Council member from Milwaukee, and I’ll find you a wealthy retiree.  I should have perhaps gone into retirement planning at that stage, but I digress.

There is some justification for the authorized monopoly, as the laying of cable is expensive, and the installers should have a period during which they are solely able to recover their costs through revenues.  Patents work that way, and the patent system has survived for years.

But that was 40 years ago, and to this day the cable companies control most areas of geography, with only satellite and dish competition.  And, the services we all get are intolerably expensive.  Don’t even get me started on customer service.  In fact, the cable industry helped to launch Clark Howard’s career, when he adopted the term “customer no service.”  Cellular phone companies confirmed the “customer no-service” industry trend.

Fast forward to today, and help is on the way.  Ironically, probably by increasing government regulation of the rental cost of the set-top boxes.  At least, that’s my guess.  Can you see in your minds the constant improvement in the hardware boxes that would be created through more regulation?  Me neither.

Problem solved, right?  What was that problem again; the national economy?

That’s right, and the set-top box is only part of the great national economic problem.  The President’s whiz kids, the Council of Economic Advisors (CEA), recently released a report that documented reduced competition in the economy.  They noted a reduced level of business startups, with a higher concentration of industry-specific measures of concentration (read: fewer providers).  Such insight!  I wonder what that little gem cost the taxpayers?

The CEA noted also that labor mobility had slowed down, and that some firms were making “outsized returns.”  What is the norm for returns, and did they mean Apple or ExxonMobil when they referred to “outsized”?  The President didn’t say, but I think I know.  After all, they note that the 50 largest companies saw their share of “the pie” grow.  Every lame economist understands that the pie is fixed, right?  Every dollar made by someone is a dollar taken from someone else, right?  Yea, that’s the ticket!

In a stated example of government serving the people, Obama pointed out that the FAA and the DOT sought to provide airlines with greater access to takeoff and landing sites at capacity-constrained “slot-controlled” airports.  Here’s a direct quote that I love, “The FCC….in its recent spectrum auction design, established a market-based spectrum reserve designed to ensure against excessive concentration in holdings of low-band spectrum.”  Huh?  That, folks, is government problem solving at its bureaucratic pinnacle.

Obama and the CEA argue that consumers and workers would benefit from additional policy actions by the government, focusing on consumer issues.  After all, they recently gave us Elizabeth Warren’s fabled Consumer Financial Protection Board (CFPB), so government works, right? Wrong-O!  The CFPB reports to the Federal Reserve (FED), not to the government established by, for and of the People.

Obama correctly states that Congress is stuck for ideological reasons, and that workers haven’t benefitted as much as they used to from the great reforms of this Administration.  No argument there.  Maybe, if an American company had been hired to build the Healthcare.gov website, some American workers would have benefitted.  Instead, Canada got a great economic boost.

Call me cynical if you will, but listening to Obama impersonate a free market capitalist is a joke.  I could improve the lot of the American worker far easier with a veto pen that with any number of government studies, Protection Boards, and “market-based spectrum reserves.”

So, Mr. President, as they say in “flyover country,” “Show me.”