What does Tuesday mean? Maybe a little.

With the 2010 mid-term election about a week away, the rhetoric is running at a fever pitch. Every election is important and this one is no exception. But this election is but a tree in a big forest.

I have seen it written many times that the US is 20% liberal, 40% conservative and 30% somewhere in the middle. I assume 10% are kids or surfer dudes.

The 2008 election was clearly as much or more a reaction (away from Bush) as it was an action (toward Obama). This year's result may be equal, but opposite. If 40% of the voters are truly conservative, they are unavoidably seething over what has happened in Washington the last 2 years and wield considerable power when provoked.

Liberals seem to be disappointed also, but that's only because there are still some components of our lives that remain private and untouched by government.

1994 made Bill Clinton a moderate. Against the will of his own party, he signed Welfare Reform, he sent troops in the former Yugoslavia to defend the Muslim population and, if his presidency was to have any lasting effect, he was forced to work with a Republican Congress. Nothing can make Barack Obama a moderate, but perhaps he will have no choice but to behave like one after next Tuesday.

Regarding the rhetoric on the campaign trail, the other day VP Biden said the following words in a speech:

“Every single great idea that has marked the 21st century, the 20th century and the 19th century has required government vision and government incentive."

 Now I understand that Joe Biden is crazy, but I don't think this was off the cuff. This was actually written down, approved by staff and read off a teleprompter. They mean it. Or, more precisely, they want us to believe it so they pretend that they mean it.

I suppose I could spend the next few paragraphs citing examples and offering a philosophical foundation for not only why this isn't true, but also why it simply cannot be true. However, there are some things that one really should not have to argue.

The fact that Biden was not laughed off stage, the fact that people remained in the audience, the fact that this statement could actually be uttered on a national stage does not speak well of our mindset in 2010. Sure there will be a minor course correction on Tuesday, but it won't cure the disease.

It's clear that liberals have institutionalized certain segments of our population and made them less dynamic as a result. Urban poor (mostly black), labor unions, government workers and many universities can't imagine life without government sponsorship. In the case of urban poor, a generation or two of kids have grown up with enough empirical data to confirm that one's place in life is fixed and that sustenance arrives in the form of a government check every week, independent of your actions at school or in society.

But Biden's statement starts to leak into the productive, commercial segment of the citizenry. Innovation? It's a government thing. Investment in the future? Not without Uncle Sam. Placement of available capital? We'll take care of that. Central planning of the economy has been tried uncounted times throughout history and has failed reliably. Are we really taking seriously a man who promotes the idea here in the USA?

Why do political leaders espouse such things? Because it expands their power. But why do their followers lap it up?

That is a complete and total mystery to me.

Doing What They Said

It should come as a surprise to no one that today's government is anti-business. They made that clear before the election of 2008. They were going to "clamp down" on wall street, regulate the banks, spread the wealth and not allow the "greed" that caused the crisis do any more harm.

Problem is, in the middle of a downturn, enough voters were seeing nothing but doom and gloom and actually bought into this message ... Howard Dean proclaimed that "capitalism has failed" (despite 200 years of evidence the contrary). The liberals won bigger than ever before. Now, what are the consequences of that election?

I just read an interesting interview with the CEO of Intel, Paul Otellini. Intel is the world's largest semiconductor company and remains a testament to the power of innovation combined with business savvy. Without Intel and the myriad of businesses that were either spun off, inspired, funded or made more efficient by it, the US and world economies would be much different. Dear reader, your standard of living is in no small measure higher thanks to Intel.

One year ago Intel had $11B cash in the bank. Today they have $18B. Why? Why is the ratio of cash to revenue the highest in history for the S&P 500? Because today's administration has said and done enough that is anti-business that fear of future taxes and regulations has paralyzed American businesses. They are not investing, expanding or hiring. They are sitting on their cash because they have reason to believe that the liberals will stick it to them again and again. The small companies that I help manage are doing the same thing.

Getting inside the head of liberals who think they can run the economy better than the business people is a theme of this blog. Runaway capitalism, monopolies, unfair business practices, inhumane working conditions and overpaid executives are just some of the reasons liberals use to explain their policies. We must regulate tightly and keep a close watch on business or they will start doing more harm than good.

Read the article with the new health care law in mind. With the new Dodd-Frank financial reform law in mind. With the fact that almost none of President Obama's staff has ever worked in the private sector in mind. It starts to become clear why we have 10% unemployment and some economists are saying "Get used to it".

Is it possible that liberals actually want to handicap companies so that growth slows? This would reduce suburban sprawl, pollution, consumption of resources and globalization. Is this the hidden agenda? Turn the clock back to pre-industrial, agrarian times with a smaller world population?

Or do they just simply not appreciate the power and value of capitalism? Have they not witnessed the last 200 years of American exceptionalism? Have they not seen the data tightly correlating the level of economic freedom in a given country to its quality of life? Do they still think that Karl Marx was right?

I don't know. But I do know that they're very clear about their intentions and they continue to deliver on what they promise.

Obama v. Roberts

It is often overlooked that we have 3 branches of government. The Legislative branch makes the laws, the Executive branch enforces the laws and the Judicial branch interprets the laws. These days, the Supreme Court seems to live in another place, rarely viewed as an equal player in the game.

However, there have been many historical examples of the Supreme Court striking down laws as unconstitutional, nullifying the work of the other two branches. In 1803, Marbury v. Madison gave us the first case of the Court overturning an act of Congress. Over the couple of centuries since, there has been an ebb and flow to the prominence of the court in the lives of the citizens, but there has always been a sense that these 9 jurors are the final arbiters in great matters.

The genius of the Founders can be found sprinkled everywhere in the Constitution, but no more so than in Article 3: The Judiciary. If the Founders believed in Democracy and the power of the people to determine their fates, why allow a group of nine unelected, permanent justices to strike down the work of Congress? A law that was signed by the President? Did they create a king by committee?

They created a defense mechanism. The Founders believed that individuals possess certain inalienable rights and these were not open for modification based on a brief period of popular sentiment. If, for some reason, the people elected a Congress and a President that brought about a violation of basic human rights, the Supreme Court is there to restore liberty. The fact that they are not electable or directly influenced by the people gives them an opportunity for more reflection and a view of the longer term.

It is the job of the Judiciary to rule, without emotion, whether a law is in accordance with or contrary to the Constitution. Their job is not to rule on whether or not they like a law or think it would be nice to have. As Justice Scalia once said, "I have a pretty simple job and I have nothing to negotiate." He simply weighs an issue based on the Constitution and court precedent and makes a ruling. No constituents, no lobbyists, no special interests.

The Founders also gave us a mechanism for over-ruling the Supreme Court: we can amend the Constitution, as has been done 27 times. This rationally requires an enormous amount of effort and popular support, not done on a whim based on an election cycle or two.

Which brings us to today's topic: Obama v. Roberts. The recently passed health care law is rightly being challenged in lower courts based on its constitutionality. The argument goes like this:

The Constitution gave the federal government specific, enumerated powers. In that list of powers, the only one that could possibly permit this health care law is the Commerce Clause, which establishes that the federal government has a right to regulate commerce among the states. Now, a law requiring someone (who is presumably doing nothing and is therefore not engaging in commerce across state lines) to purchase health insurance is at a minimum stretching the Constitution and at most clearly in defiance. What exactly is the federal government regulating?

On that topic, I really don't understand how anyone can, in good faith, conclude that the health care law is constitutional. If the federal government can compel someone to stop doing nothing and to purchase health insurance, then the federal government can do anything and our traditional system of government is null and void. You may love the new health care law and you may really want it to be implemented, but you have to at least acknowledge that it flies in the face of our Constitution and the intent of the Founders.

Also on that note, President Obama is probably the most intelligent person to occupy the White House in decades. He was a professor of Constitutional Law. He knows very well the points I've made and, for some reason, he doesn't care. He knows that the right way to implement his vision of health care is through a Constitutional amendment and not in a rash moment of voter frustration with the previous administration. He, however, knows that the pubic greatly disapproves of universal health care and probably concludes that the ends justify the means. This is among the reasons that I am disgusted with our current President.

So sometime soon, in some fashion, the new law will make its way in front of Chief Justice John Roberts' court and will need to stand up to 221 years of Constitutional Law. This will be the biggest decision by the Court in memory. It will either fundamentally change the nature of our Republic or it will confirm the wisdom of the Founders.

I, for one, will be paying close attention.

What's Right is Right

Recently Michael Steele, the Republican National Committee Chair, said that the war in Afghanistan was of "Obama's choosing" and "probably a lost cause". He derided the President for not studying history, because if he had, he would know that you don't engage in a land war in Afghanistan ... everyone who has tried has lost.

If Michael Steele does not resign, he should be fired. And if the Republicans let this stand, then they no longer occupy the high ground on principled foreign policy. This is outrageous.

After spending 8 years (rightly) denouncing Democrats for speaking this way about Iraq and Afghanistan, they cannot tolerate such behavior from their own party. Move swiftly and make an example out of Michael Steele.

Republicans should be rallying behind President Obama and the mission in Afghanistan. He is managing the war as he sees fit ... in other words, doing his job. Make suggestions on strategy or tactics. Recommend fewer or additional or different troops. Offer ideas on how we might do better. At least publicly, show a unified front.

But the last thing a government or party leader should do is call the war lost or say that we should not be fighting it. This is what Obama, Clinton, Biden, Pelosi, Reid, Durbin, Schumer, Frank, Murtha and Dean did endlessly and to the detriment of the war efforts (many after voting for the wars in the first place). The result was an encouraged enemy, lower morale among the troops and allies who saw America wobbling. In other words, the Democrats knowingly did harm in exchange for remaining popular among their ever shifting base.

If a government or party leader wants to condemn a war effort and try to end it, do so privately behind the scenes or resign your position ... then live on a cable news network.

Republicans claim that they're more principled than Democrats on foreign policy, that they are true patriots.

Prove it.

Quickly.

Nice Work, If You Can Get It

Barney Frank is the hero and, along with Chris Dodd, has his name on the title of the recent Financial Reform bill making its way through Congress. He has been getting high praise from liberals for his victory over greed and wall street interests.

That's like rebuilding the World Trade Center and calling it the Mohammad Atta Towers.

He took big money in campaign contributions from Fannie Mae and Freddie Mac. In the summer of 2008 he said the following:

I think this is a case where Fannie and Freddie are fundamentally sound, that they are not in danger of going under. They’re not the best investments these days from the long-term standpoint going back. I think they are in good shape going forward.

Since 2003 he has been the ranking Democrat on the House Financial Services Committee and became its chair in 2008. In response to the Bush Administration's concern that Fannie and Freddie were in trouble, he said:

"These two entities...are not facing any kind of financial crisis.... The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."

And roundly blocked any attempt by the Bush administration to reduce Fannie and Freddie's contributions to the housing bubble (Bush wanted what the executive branch normally has, oversight and enforcement of the law, instead of Congress both establishing and overseeing these entities).

OK, maybe Barney's not a bad guy (he is) and maybe he didn't have a conflict of interests (he did) and maybe he was unaware that Fannie and Freddie were artificially inflating the housing market (he wasn't). Maybe he just made a few mistakes.

OK - we all make mistakes. But where I come from, you get fired for this sort of thing and your reputation tends to suffer. You're not lauded with praise for closing the barn door after the cash cow is gone.

Obviously I don't come from Washington DC.

Or Boston.

The Golden Goose

Most everyone owns a cell phone, but few people know what happens inside ... that there are millions of transistors working hard to handle your phone calls, web browsing, text messages, pictures, songs and every other app. People take it for granted that it "just works" and they really have no reason to peek behind the curtain. This is as it should be.

There is a part of our economy that most people don't understand: venture capital. We see companies like Google, Intel, Ebay, Apple, Amazon, Dell, Amgen and Cisco (just to name a very few) and generally have no idea what made them possible. The mechanisms for bringing together ideas, people and capital into the right situation are a complete mystery to all but very few.

But Venture Capitalists might be the most important players in our lives, enabling (or having enabled) almost all the recent technological advancement we see around us. And, up until recently, the US had a near monopoly on VCs and their investment vehicles. Nonetheless, we still are the epicenter, with approximately 75% of worldwide venture based capital existing in the US. But, that number is shrinking.

VC backed firms accounted for almost 90% of US job growth in 2008. That year, these firms contributed $2.9 trillion dollars to our economy*. And these are not generally low paying jobs.

Unfortunately, unlike the cell phone, people's ignorance of this critical process can be dangerous, especially when politicians are unfamiliar with the golden goose of VC investing.

George W. Bush was the first MBA president, but I saw little evidence of it. He held back quality immigrants that are the lifeblood of young tech firms. He allowed Sarbanes-Oxley to greatly reduce the likelihood of a start-up going public (exit strategies are key to attracting capital). He allowed tariffs, entitlements and a rising debt to reduce the amount of capital available to entrepreneurs.

Sadly, Barack Obama is arguably worse. I think Bush at least understood the basics of wealth creation, but Obama has never even participated in the private sector. Never had to make a payroll. Never had to raise capital. Never had to focus on a market. Never had to navigate the enormous red tape and government bureaucracy and go to the expense of hiring lawyers and CPAs to help. It's safe to say that in any room of business people, Obama is the least qualified.

And it shows. Noticeably absent from the stimulus package was any significant private sector infusion. Actually, the private sector would have preferred not to have a stimulus package and to simply either reduce taxes or just keep the enormous debt from getting any larger. I've already outlined in an earlier blog how I feel the Health Care legislation is unfriendly to small and growing businesses. And the rhetoric coming from the White House is hardly friendly to any capitalist, let alone the venture variety.

I'm certain that many liberals have good intentions, but they have no idea how their tinkering threatens the engine of growth that gives them the resources with which to do their tinkering. I know very few liberals who have actually seen the birth of wealth first hand, which is probably why they see it as a zero sum game, with benevolence derived from redistributing it.

Watching liberals try to manage the economy is like watching a surgeon open up a cell phone to improve reception. The physician is smart, educated, well intentioned and dedicated, but the most likely outcome is a broken phone. Don't mess with the Goose.


* Source: National Venture Capital Association

That Credibility Thing

Iran is a threat to the middle east, Israel, the world economy and to its own (mostly) innocent people. The Iran government has been rushing to build a nuclear weapon for the last few years and is finally within sight of their prize. In response, the Obama administration is "getting tough". On the list of possibilities are more sanctions and, as a last resort, military engagement.

If your reaction to this is "yea, right", then this article will make sense to you.

As was discussed in an earlier blog, the left gave away any chance to be taken seriously on this topic during the Iraq war. They gave up and headed for the safe ground of opposing anything Bush did or said. The Iraq war was costlier (in terms of lives, money and good will) than anyone predicted, so the left could look smart in opposition (and their constituents did them the favor of not noticing that most of them had voted for the war in the first place). And oppose, they did. At every turn and opportunity, without hesitation.

(As an aside, isn't it nice not to have Iraq to worry about? If things continue on this trajectory, within a generation Iraq could be a shining example of peace and prosperity in a troubled region. It could take the path of Japan after WWII and again contribute to the greater good.)

But the true cost of the left's immature and short sighted behavior is just becoming evident. When an opponent negotiator does not believe you will use your last resort, they will not believe or accept any of the ultimatums that come before it. Sure, Obama can probably get some tougher sanctions through the UN, but what do Iran's leaders care? They run a totalitarian regime with very little threat of a revolution. Under sanctions, the people will suffer, but not the leaders.

Also, remember that we have no "smoking gun" or hard evidence that Iran is building a nuclear weapon; it's all speculation. Would the Democrats ever allow CIA intelligence and bluster from the enemy to be a sufficient cause for a preemptive strike? No chance, not after the words that came out of their mouth after Iraq became difficult. Wouldn't they look foolish(er)?

Ideally, the left would have remained committed to winning the Iraq war and the west could have then turned its gaze to Iran - with the desired effect. Now, Obama lacks the fear factor and, whether he would actually use the military preemptively or not, the Iranian leadership believes their path to nuclear statehood is unobstructed.

I have heard a couple of commentators question the west's right to deny Iran a nuclear weapon: "Who are we to decide who gets nuclear weapons and who doesn't?" This statement boggles the mind. Iran's leadership supports terrorism in Lebanon, Iraq and Gaza. They deny basic human rights to their people. It's like saying convicted criminals deserve weapons just as much as the police.

A free, democratic Iran with a track record of being a good citizen of the world? Sure, they can have a nuclear arsenal without me writing a blog article about them. Today's Iran? Are you kidding?

Obama and the left have painted themselves into a corner. The irony is that their lack of credibility makes military conflict much more likely. If the threats don't work, it's all that's left.