Wednesday, June 18, 2008

Optimists and Pessimists

By Alan Caruba

One’s outlook on life depends heavily on whether you are by nature an optimist or a pessimist. That is especially true of economists of whom Harry Truman once said he wanted a one-armed one to advise him because the ones he talked to were forever saying, “On one hand and on the other”, generally from the same set of statistics!

Having plied the precarious trade of public relations counselor for much of my misspent life, I can tell you that there is no such thing as a client on which one can plan long-term. The vagaries of the economy are such that they often disappear the moment the economy begins to go south on them. In fairness, they often have no choice. Others fail to see that “showing the flag” in good times and bad is an essential part of doing business in America.

What those unschooled in business management often do not see is the wise decision to reduce outlets that no longer generate a reasonable profit margin in favor of opening others that will. The population shifts and with it the buying habits of people as they move around. Similarly new products are introduced and gain a foothold or are abandoned when they don’t.

For example, these days Eddie Bauer is closing more stores, having already shuttered 27 shops in the first quarter, but is planning to open two others by the end of the year. The Gap is closing 85 stores, in addition to others owned under the names of Old Navy and Banana Republic. The company will tilt toward its Gap brand. Another clothing chain, Ann Taylor will close 117 stores nationwide. There are any number of such chains that are restructuring in this fashion. The high-end seller of gadgetry, Sharper Image, has filed for bankruptcy protection and announced the closing of 90 of its 184 stores.

A casual glance at such news would suggest a nation whose economy is in serious trouble, but as Larry Kudlow, an economist and commentator, pointed out in May, “Corporate profits are outperforming all expectations. With three-quarters of the S&P 500 companies reporting, profits outside the banking system have increased ten percent over a year ago.” Unemployment remains at remarkably low levels nationwide.

The point being that, depending on your outlook, optimist or pessimist, there is ample news available to reinforce your evaluation of the economy, but a free-market economy is always subject to spurts of growth followed by slowdowns. This cycle is the only predictable thing despite mountains of statistical data. The U.S. economy is surprisingly, often astonishingly, able to adjust and adapt, even if some pain is involved.

Much of the pain consumers are feeling at the gas pump is the result of extraordinarily bad decisions regarding America’s energy needs going back to the days of the Carter administration and forward through the last three decades of environmentalism that continues to stymie any efforts to provide coal-fired or nuclear plants to provide electricity, and the thwarting of any ability to access our extensive oil and natural gas reserves in ANWR or off our coasts on the continental shelf.

The Congressional mandate for the use of ethanol is a classic example of what happens when politicians interfere with business decisions and they do it all the time!

Voters need to focus their attention on the platforms and promises of the two candidates for president. It’s worth noting that John McCain has begun to tilt toward favoring domestic oil exploration and production while Barack Obama seeks to impose an industry-killing windfall tax on the profits of oil companies.

The nation’s future economy literally hinges on your vote because, without affordable energy, America ceases to be globally competitive.

Optimists will vote Republican. Pessimists will vote Democrat.


Saildog said...

Well Alan, I am going to vote neither, because I am an Australian.

However if I was able to vote in this election I would look closely at the Repbublican record:

1) The US (the government, the country, the people) are jointly and severally broke. The government has spent money like a drunken sailor.

2) The republicans led the US into two illegal and unnecessary occupations that have cost thousands of lives and trillions of US$.

3) The republicans have led a full frontal assault on the great US constitution. Government intrusion and torture is now routine.

In contrast Bill Clinton left the country the strongest it has ever been. A balanced budget, no assault on basic freedoms and no illegal occupations.

Call me boring, misguided, a foreigner who knows nothing, but the basic facts seem clear enough to me.

Alan Caruba said...

There are very good reasons why I do not comment on Australian politicians, parties and policies. I know little about them and it would be presumptuous of me to make such comments.

Bill Clinton left office under a cloud of scandal. Voters rejected 40 years of Democrat Control of Congress while he was in office and it was they who balanced the budget. Etc. The luster he once had was lost during the recent primary campaign on behalf of his wife. In short, the Clinton era of politics is over.

Unknown said...

The introduction to one of my favorite radio shows says "The last beaken of truth in a troubled time" The show is the "Shaun Hanity show"

"in a troubled time" caught my attention because every time is troubled time. When has any time never been troubled?

Violent politics, bitter passions, everyone claiming the other is stepping on the constitution. Every political generation has been like that. Even the founding fathers argued bitterly over what they ment when the constitution was sighned.

So when people get excited why; whats so new and different?

Is the glass half empty or half full? "The facts" can go either way. One could argue that the world has come so far since July 4, 1776 that any previous generations would have thought it impossible; and the United States played a huge, big, gigantic, noble role in all of that. How one nation, literally a "new nation" could have, in such a short time, such enormously benificial impact on the world.

What you beleive tends to be what you acheive. To those that take lemons and determin to make lemon aid as eatly settlers, pioneers, and noble charicters as Dr. Martin Luther King Jr. did. The world will continue to prosper to new hights.

To the Sail dogs of the world that thinks life is doomed, the sky is falling, anarchy is but a few days away, we need to be saved from our selves. Then the world will eternally be just one big lemon.

Saildog said...

Accepted Alan, I am not an American. That is why I am careful not to endorse one or other of the candidates. The fact is that we are coming to the end of probably the worst presidency the US (and the world) has endured. It is Repbulican. The democrats in Congress, since 2006 especially, have hardly covered themselves in glory. In fact I would say that US politics is at an all time low.

And the US is not alone, UK (I am also Bristish) politicians are also at a very low ebb.

On top of that Australia is a backwater, and what our second rate politicians do has very little impact on anybody except us Australians.

Unfortunately the same is not true of the US. What happens there, what the president does, has quite a large impact on the rest of the world, including Australia. That is why the US is watched; and why we take an interest in your elections.

And it was true that Clinton left under a cloud. Still, it doesn't change the basic facts. Bush and the Republicans have been a disaster for the US. The contrast with truly great Republicans such as Theodore Roosevelt, Ike Eisenhower (who my grandfather, also a WW2 general, knew personally) and Ronald Reagan (who broke the back of modern communism) could not be greater.

As for Justin's comment about me, actually I am an optimist. The fact that I choose to keep my eyes open is an obvious point of difference with you!

Alan Caruba said...

Saildog, you REALLY need to create and post to your own blog. You may note that not ALL of your comments are posted here and those that are represent a courtesy on my part. However, the endless stream of your comments would test anyone's patience. Again, this is MY blog and not a forum for debate. I post MY opinion and not for purpose of learning YOURS. Do not abuse the privilege.