BTW I'm Voting for McCain / Palin

The Audacity of Arrogance

And Barack said, “Let there be light,” and there was light. As a Republican, losing the White House is not my greatest concern – it is the tremendous arrogance of the leader that Americans appear ready to hand the reins of our government to. At a fundraiser last week, Senator Obama said, “contrary to rumors you may have heard, I was not born in a manger…I was actually born in Krypton and sent here by my father, Jor-el, to save planet Earth.” He may have been joking, but Superman? I think not.

Arrogance is a common vice in presidential politics. As Frank James noted in The Swamp, “anyone who runs for president of the U.S. must, by definition, have an ego that vastly outstrips that of most other mortals.” However, has there ever been a presidential nominee with a wider gap between his self-estimation and the sum total of his life achievement? Obama is a three-year senator without a single important legislative achievement to his name. As editor of the Harvard Law Review, a law professor, and an Illinois legislator, his most memorable work is a biography of his favorite subject, himself.

In displays of demonstrative arrogance, Obama created his own version of the Presidential seal, accepted his nomination in front of pillars as if to position him as immortal amongst sheer commoners, and crafted a campaign slogan that oozes arrogance. “We are the ones we’ve been waiting for” actually means, “I am the one we’ve been waiting for.” In his nomination acceptance speech, Obama declared it a great turning point in history – “generations from now we will be able to look back and tell our children that this was the moment…the rise of the oceans began to slow.” Economist Irwin Stelzer noted in his London Daily column, “Moses made the waters recede, but he had help.” Obama apparently works alone.

With the election 19 days away and the economy in recession, Senator Obama is poised for what some predict will be a blowout victory over Senator John McCain. America needs a leader to guide it through one of the darkest periods in recent history. Our relations with other countries are suffering, our housing market has collapsed, companies cannot borrow new loans and struggle to pay off existing ones, and overall Americans are worried about the future. Obama has had an extraordinary campaign strategy – use high-flying, optimistic rhetoric to appeal to an electorate disillusioned with our current administration. But we need someone to DO president, not just BE president. We need a leader, but none are running.

Winston Churchill famously said, “the best argument against democracy is five minutes with the average voter.” Ask the average American voter about Obama’s stance on various issues and they will not score very well. Ask them who will bring change, Obama scores off the charts. Obama claims he will change the world. But what has he done to bring change in his political career so far? He has a lackluster Illinois State Senate record and a blank U.S. Senate record (voting “present” nearly 130 times). Obama claims to be able to work with fellow Republicans, but he has never done so before. Why should we believe he would do so now? Obama claims to understand everybody’s views and positions himself as a moderate, but he has been ranked the #1 most liberal Senator for the last three years.

Unfortunately, I, along with many Americans, am not thoroughly excited by either choice, as evidenced by the fact that a geriatric Senator with no personality who is disliked by his own party is only a few points behind the most popular Senator and biggest celebrity in American politics today. I worry that Americans will overlook Obama’s extreme hubris, extremely liberal ideas and lack of accomplishments and be stuck for the next four years with a man who will spend more time boosting his own ego than our struggling economy.

Worst Debate Ever? A Long Way From 1858

Until the Seventeenth Amendment was passed in 1913, United States Senators were elected by their states’ legislatures. In 1858, the Illinois Legislature was up for reelection with the controlling party being able to fill the open Seat. Abraham Lincoln and Stephen Douglass represented their respective parties in a sequence of debates focused mainly on slavery which have come to be widely remembered as the greatest exhibitions of public debate in American history.

Tuesday night’s Presidential debate between Senators John McCain and Barack Obama was one of the dullest and most boring debates in American history. The headline on the DrudgeReport Wednesday morning read, “The Worst Debate Ever.” We are facing one of the most pivotal times in American history – we are fighting two wars in the Middle East, the housing market is in shambles, and the stock market has plunged. Now is not the time for political posturing and lackluster debate. It is the time for someone, anyone to lead.

In Lincoln’s day, they had to rely on newspapers to distribute their message. With technology today, millions of people can watch the candidates ducking, dodging, and making excuses live on television and the internet. The entire debate was reiterating stump speeches and avoiding mistakes instead of looking the American public in the eye and properly addressing how to fix the state of our great nation.

The framers of the Constitution never intended for lifetime politicians. They intended that outstanding lawyers, doctors, businessmen, and teachers would put their personal careers aside for a few years to serve their country and then return to private life. The American government has been locked in stagnancy because everyone is so damn worried about the political consequences and winning the next election – rather than actually about achieving anything.

Senator Obama has been running for President since he became Editor in Chief of the Harvard Law Review. He has been focused on doing and saying everything right for the past twenty years. When John McCain came back from Vietnam as a war hero, he found his wealthy bride and her father bought him his Congressional seat. Sitting at the USC Football game yesterday, many people discussed how much they dislike both candidates.

At a time when we need leadership more than ever to preserve American life as we know it, we need to ask more of our leaders not less. The time for a true debate – one which demonstrates the actual differences in how both leaders would rebuild our country and return the U.S. to greatness – is now. I won’t hold my breath as these two lifelong politicians, with ZERO real world experience ask us for our votes while making sure that they never say anything to offend anyone. One of the difficult aspects of leadership is that taking a stand on something means other people will disagree. We should expect our leaders to tell us what they believe and why instead of allowing them to dodge telling us anything at all.

Nipping at the Heals of the Great Red Dragon

The May 9, 2005 cover of Newsweek magazine boldly declared the 21st Century to be “China’s Century.” With so much focus on the massive buildup to the 2008 Beijing Olympics and the upcoming 2010 Shanghai World Expo, all eyes have been fixed on China and its recent unparalleled economic boom. The often cited 2003 Goldman Sachs report entitled, “Dreaming with BRICs: The Path to 2050,” demonstrates how Brazil, Russia, India, and China will continue their rapid expansions and overtake many of the current economic superpowers over the next few decades. With all eyes focused on the Wall Street bailout plan, people have begun to question how long the American economy will continue to reign supreme. As economists and political pundits begin to discuss and debate the demise of American economic superiority, venture capitalists and hedge fund managers have begun to take note of potential growth investments in India and China. The world’s two most populous nations now possess the world’s fastest growing economies. China successfully used the Olympics to demonstrate its technological advances, precision, and discipline to the world. This exposé successfully captured the hearts and minds of most onlookers – many of whom now could not imagine investing in any foreign nation other than China. China’s massive reservoir of cheap, unskilled labor has led to its manufacturing dominance in recent years. While we experience China’s rise today, India’s rise is still more a tale of the future. As the world’s largest democracy, India possesses demographic, democratic, and capitalistic factors which may ultimately make it a better place for investment due to their market-driven economy and well-educated, English speaking, entrepreneurial population.

In the age of the Internet, constant communication, and rapidly developing technology, globalization has been thrust upon the world – ready or not. Many middle-aged American workers have seen the downside of globalization having lost their jobs to outsourced, cheap foreign labor. What many fail to realize is that globalization is simply another word for global capitalism – with each nation producing goods and services that give them a competitive advantage. One reason the United States is the richest country in the world is because it has been open to competition from around the world. Over the past sixty years, manufacturing employment has plummeted in the United States as those industries went abroad – yet the average American incomes remain the highest in the world. As globalization has become more prevalent over the past twenty years, American incomes have risen faster than those of any other major industrial country. Globalization highlights the weaknesses in a country’s economy and demonstrates how it must adjust and adapt in order to stay competitive.

Most people think China is the country with the strongest economic future. For decades, China and India plodded along under economic ideologies that favored the visible hand of government over the invisible hand of markets. Their economic systems stifled growth and left both countries very poor. However, in 1979 China embarked on economic reforms thirteen years ahead of India, and today all of the macroeconomic factors point in China’s favor. China’s per capita income of $2,500 is more than twice that of India’s. It owns more than $1 trillion of foreign securities, produces more steel, and builds skyscrapers and highways faster than India. With all of the hype about the Chinese economy, it is not surprising that it currently attracts more than five times as much foreign investment as India. In the past twenty-five years, China has lifted over 300 million of its citizens out of poverty. Meanwhile forty percent of the world’s poor reside in India, as do the second largest number of people with HIV.

The significant differences between the Indian and Chinese political systems demonstrate how their economies have and will continue to develop. China has grown under the decree of the Communist Party. It has had very active central and local governments directing economic activity. These planned and directed investments have led to the impressive modernization of cities like Shanghai. The drivers of economic activity in China are state-owned enterprises, semi state-owned enterprises, and foreign enterprises. Showmanship and central planning are central pillars of traditional Communist ideology so it is not surprising that the Chinese would follow in the Soviet Union’s steps of impressive buildup through ineffective allocations of capital. History demonstrates that although the market driven capital allocation may be unpleasant and uncontrollable, it has done a much better job than any government has been able to do through regulation. When western businesspeople hear that India is on the rise and visit expecting it to be next China, they find it is not at all like China. India’s growth will be bottom-up, driven by entrepreneurs and small business owners , not top-down growth like that created by the government in China. India’s growth is messy, chaotic, and largely unplanned. China has failed to develop several institutional processes and structures that ensure continuity and sustainability. By contrast, democracy, rule of law, and freedom of the press are well-entrenched in the Indian political economy. The Chinese government would never empower its citizens with the ability to create purely China-based private companies due to fears of dissent and thus relies on foreign investment partners to achieve its goals. While the Indian democracy has inefficiencies, it has had sixty years of stabile government in one of the least stable regions in the world at the same time that China continually combats political instability throughout its country.

China’s economy has instituted itself as the world’s great manufacturing power. As China debated how to grow its economy, it followed in the footsteps of Japan and South Korea which both launched their economic transformations by using abundant, low-wage labor to establish huge manufacturing businesses. China’s growth is primarily due to state-owned and foreign businesses located along its eastern coast. While the Chinese are phenomenal entrepreneurs abroad, entrepreneurship goes mostly undeveloped at home. The Chinese understand physical assets and commodities. They do not give as much value to knowledge and intellectual capital – economic sectors which India dominates today. China does little to nurture innovation and is driven by the ability to cheaply replicate foreign research and development. Forty-five percent of China’s workforce remains in the countryside and has not seen the effects of China’s great growth. While China continues to be the poster child of economic growth, its population continues to age faster than that of any other nation which will make it difficult to sustain such growth. Due to its rule which forbade families from having more than one child, more people retire each year than enter the work force which is leading to a shrinking workforce and will make it difficult for China to continue its booming manufacturing growth. On the other hand, India has a very different work force primed for an economic boom of its own.

India knew it would not be able to compete head-to-head with Chinese manufacturing and instead decided that its global competitive advantage lay in the services business. India’s choice of a service economy had good timing – the Internet and rising global income increased both the supply and demand for services. Companies worldwide are exploiting new technology by moving services work abroad to low-wage economies and as the technology boom continues, India continues to reap the benefits. As China’s workforce declines, India’s is exploding – 25% of the world’s under-25 population lives in India. More importantly, due to its British influence, India possesses huge numbers of English-speaking workers who are very familiar with Western culture. India is driven by private-enterprise. The American economy has been the envy of the world for many years. In addition to bridging a potential language barrier, India has learned the lessons of the American Dream by the huge numbers of Indian-Americans who have returned to India with money, investment ideas, global standards, and most importantly – a sense that one could achieve anything. In fact today, India has the second-most entrepreneurs per capita, meaning the largest number of entrepreneurs in the world. China is working as hard as it can, but India has the definitive advantage in language and cultural compatibility. As much as China does not appreciate intellectual capital, India glorifies it. India has vibrant information technology, pharmaceutical, and engineering-based knowledge industries.

In all fairness, both India and China will both continue to rapidly grow over the next several decades despite their many flaws. Both countries will be successful and neither will be the leader in all industries. The essence of private equity is being able to take an idea, product, or service and use outside capital to enable the company to grow in ways it never before thought possible. The job of a successful investor is to find the gaps in developing industries which are under-funded and primed for growth. The healthcare industry in India is a prime example of where private equity investment could fill a void in society while simultaneously being a very lucrative investment. India has the healthcare infrastructure to benefit from Western medical technology and services that have never before filled its hospitals. The most successful ideas recognize a void or an opportunity before anyone else does. Service businesses are very attractive to private equity firms because they are often sustainable and high margin. Manufacturing businesses are more of a gamble because they rely on cheap labor which will continually be moved to the location which supplies the highest volume of labor at the cheapest wage. Right now, that country is China, but as their economy grows and their citizens desire a higher standard of living, it is very likely that Chinese manufacturing may be outsourced to other emerging economies like Vietnam and others. Today however, China’s workforce is the largest and cheapest in the world and so in the short run, they will prove to be a strong investment. Currently, references to private equity investment in these nations refer to the goods and services these countries can produce and export to the world. The true promise that India and China provide to investors is the rapid development of their internal markets and growth of their middle classes which will soon seek the same standard of living as everyone else in the world. Investments should be instead focused not on how much the country can export but how much can be consumed by the 2.5 billion people that live there. The great economic expansion has been the pride and joy of the Chinese government, but at some point their controlled growth policies will limit a seemingly limitless economy. China will need to be less involved in capital markets and take less authority over companies situated there in order for their country to extemd its phenomenal growth. India on the other hand must improve its secondary education, infrastructure, and water shortages. It has several Silicon Valleys already booming within its borders, but it also has several Nigerias. India also must get its poverty and HIV under control. If it is able to improve some of these negatives, the Indian population has the skills, understanding of Western culture, and entrepreneurial spirit to be a very successful 21st century economy. The debate over whether globalization will make China or India a better place to invest needs to not focus on which country is better, but instead be focused on how the individual strengths and weaknesses of each nation would impact specific investments.