The Vote & Pray Choice

Make no mistake. John McCain would make a great President. Nothing is more admirable in a politician then the willingness to stand up and be counted for what he or she believes is the right thing to do. While the Republican Party’s manifesto has always been marred by its right wing social agenda and cowboy approach to geopolitics, McCain emerges as a pragmatic fiscal conservative with a track record of standing up to his own party on issues driven by lunatic fringes within, including the neocons and Bush.

Compare that to his opponent who has no resume to boast of and appears out of sorts on substantive issues when he does not have his speech writers backing him up. Rhetoric is no substitute for logic and Obama has on countless occasions betrayed a fundamental lack of understanding of some of the problems facing his country and the world. For example, his assertion that he will talk to Iran with no pre-conditions is churlish. It may result in some photo ops and an academic debate with that country’s leader on whether the holocaust actually happened but will not stop him funding of the Hizbullah and may even embolden his blatant disregard for international opinion. Such a course of action may just prove to be as dangerous as Bush’s “good cop will fix the bad guy” policy.

Again, on the economy, Obama is misguidedly left of centre. Both have spelled out their proposals in policy statements and it is clear that while Obama will cut taxes for middle class America, McCain proposes tax cuts for corporate America. So will somebody now move the quality of the debate up by a notch or two? Obama’s proposals will of course, be more popular. Unfortunately, all tax cuts are not necessarily good for the economy. It is only those targeted tax incentives which have the potential to encourage investments and generate jobs which are desirable. For instance, a tax break linked to investments made or the creation of research facilities or infrastructure results in productive use of the tax dollar. Private corporations use the tax dollars more efficiently so rather than the government taking it away and then diverting the money in an inefficient manner it is better to let companies retain their earnings and put the same tax dollars to more productive use. On the other hand, Obama’s tax breaks which will result in a US $3,000 saving for several American households will not achieve much. For instance if this gift from the Obama administration is diverted to the purchase of consumer electronics which will be made in Taiwan or China, Uncle Sam will contribute to generating more income in these countries perpetuating the economic crisis in same way that it was created. (For a more detailed analysis of the economic crisis see the next blog on Monday morning).

Given the McCain camp’s inability to articulate this to the average American voter, it is quite likely that we will see a sweeping mandate for the democrats on November 4. Ordinarily, this would rank as a disaster of sorts, leaving one to only hope that if Obama’s politics are for simple minded then at least his policies once in the saddle are pragmatic without being mired in ideological constrains of whatever hue.

So why then, have I decided that given a choice, Obama is the candidate that America should elect as President? The answer is that we are not living in ordinary times. The ongoing economic meltdown needs a big fix. The answer does not lie in small minded policy tinkering and as the most able Treasury Secretary is discovering, the normal tools of economic manipulation at his disposal are insufficient. The reason for this is that there is a very close relationship between macro economics and behavioral economics. Indeed, it is not far fetched to say that macro economics is only the symptom of collective group psychology. As scary as it may sound, it is necessary to recognize the fact that our prosperity as well as that of future generations is dependant on the principles of mob psychology rather than interest rates, inflation or the stock market index. Indeed, these indicators are only the result of what is called as “collective sentiment.” Consider the following. When the sentiment was positive people came to the party thinking it would never end. Even Gordon Brown, the present British Prime Minister stood up in Parliament and said that the era of boom and bust cycles had ended. The iconic Alan Greenspan framed his progressive interest cuts on this very belief. And even those with doctorates in economics invested heavily in the stock markets believing that economic prosperity had reached a new paradigm due to methods of increasing productivity which were unknown at the time that economic cycles were invented. These are symptomatic of mass hysteria leading to fatal lack of recognition of the bubble that was developing. So small wonder that when it burst it took everyone by surprise. It was something which they never thought would happen. Now the shock of it all has created exactly the opposite mindset. Just like the inebriated at a late night party, the world has woken up the next morning, not just with a hangover but with a feeling that the end is near. People are now predicting Armageddon. Just as previously the unbridled optimism bred reckless economics, the present pessimism is now resulting in a global siege mentality. The need of the hour is therefore for someone to restore some semblance of confidence and normality so that rationality will return to the global market place. And it has to all start where it began – the United States of America! An aging McCain with an old world mindset does not have it in him to reverse the psyche of the American people. An inspirational Obama who has created a movement out of a political opportunity with his oratorical skills, is the right man to inspire, lead and restore confidence in the same manner as Churchill led a defeated Britain out of the mess at Dunkirk to ultimate victory over Nazi Germany. History has this knack of throwing up men with the ability to turn the collective psyche of a nation, at a time when it is needed the most.

Ironically, Obama is likely to take the White House for all the wrong reasons – whether it is the blacks voting for “one ‘o us” or the intellectually feeble who believe his promise to fix health care, restore international understanding and co-operation, save the country from economic ruin and reduce their tax bill, all at the same time. Unfortunately for McCain, once elected Obama is the only guy with the potential to inject the adrenalin into the American psyche to lead his electorate to hope and start believing in themselves once again. And it is this turn of sentiment which will lead to the stabilization of the economy and not any amount of tinkering which his Treasury Secretary will do. Make no mistake. This is America. The most free and open society in the world. The place where innovation thrives and the country which has not only given the world every modern tool at its disposal, including the internet, but has also shaped society across the globe – a fact that attracts more resentment then appreciation. Such an environment can flounder only if its people lose their self confidence. And Obama’s role in history may just be to reverse that sad trend. He may still mess it up by trying to play God and finding that he does’nt have a magic wand after all. But as long as he presents his carefully cultivated calm and composed image and his speech writer does not retire, there is hope for the future.

Which is why the only thing to do for the American people is to vote for the Obama ticket and pray that he chooses the right set of advisors.