Tuesday, December 3, 2013

The Agenda: To Shield the Inept from Accountability

Is it just me or do you also get the feeling that President Obama has a deep dislike for businesses. Maybe I am a bit late but it just occurred to me why this may be the case. In business, failure is met with dismissal; and who likes to get fired? Certainly not the President of the most powerful nation in the world.
screen shot image of the Reuters headline of their article "Obama urges Americans not be discouraged by rocky healthcare rollout"
Obamacare Website Failures
What's the alternative? Well, most of us just try harder next time.
But there are those who probably wish that accountability seized to exist.
Wish granted.
...Today, if you royally fail, you get to be on TV. Again, the President tries to recover from his team's failure. In multiple television appearances, Obama has directly addressed the nation on the subject of the many problems associated with the implementation of his health bill. In my opinion, the continuous mishaps continue to demonstrate his lack of leadership.
Now that I am sure many feel that my comment is (1) unfair because the Obamacare website is surely (2) much more complex than I could ever imagine.
To the unfair part, I say that "I am not so sure I would agree". In any case, it is all about performance and not about fairness.
With regards to the website's complexity, I say "sure". Which is precisely why government should not had attempted it. You know, government should focus on what it does best like meaningless speeches for the uninformed and spending the money of those who pay taxes. But a complex website... I just don't think it was a good idea.
Case in point. If you want to sign up for Obamacara, whether you like the idea of it or not, you would be better served through a business site rather than the government's.
color illustration of the C. Vanderbilt from Wikipedia
The mighty C. Vanderbilt
"But", I hear, "businesses do not care about insuring for the under-insured"; a statement with which I disagree.
Business is all about finding an opportunity to do something better than others. In the past, when transportation was slow and expensive, those like Cornelius Vanderbilt created solutions by deploying new steam boats and railroads. Society has long benefited from their work; whether originally driven by greed or not.
Today, as the President publicly fumbles, there are those like Clint Jones, CEO of GoHealthInsurance.com, who continue to demonstrate that the free-market is ready to pick up the ball and run with it... literally. If you want to sign up for health insurance coverage under the Affordable Care Act, your experience will be fluid through this private website. On the other hand, signing up through the government's site runs the risk that you will not get coverage when you expect it due to one of many back-end problems.
By the way, Clint's website was created with the company's money. No taxes had to be confiscated for this superior interface; something interesting considering that tax-free is an idea which has proven to be foreign to our President.
image composed of two screen shots from Reuters article "Obama urges American's not be discouraged by rocky healthcare rollout" and CNBC onlive video interview of GoHealthInsurance CEO Clint Jones "Bypass Heathcare.gov to enroll in Obamacare".
Government Ineptitude vs. Business Drive
Also important, now that we are highlighting the power of free acting companies, is that businesses are agnostic about the merits of the product. GoHealthInsurance does not care if Obamacare is good or bad; it just knows that there is an opportunity. In the end, the public will decide the merits of Obamacare. If American citizens determine that Obamacare is not what they want, then GoHealthInsurance will fail as a business and no one will shed a tear. But if demand turns out to be strong, then they will do really well.
Why am I so sure they will do well even when the government is clearly their main competitor? Because launching a database is the easy part. Updating it is always the impossible task. Seeing the almighty American government fail in front of a global audience during launch time is just the start. As soon as congress changes even the smallest aspect of the law, the real complexity will begin.
I can't help but feel that Obama, who clearly thinks that he can just "will" progress for it to happen, has demonstrated an aversion to accountability. No wonder he continues to fight those that practice daily accountability: businesses. He has driven corporate long term capital investment to the lowest levels in memory. Companies are just not confident to expose their money to projects that will take more than 20 years to pay off. Perhaps the best solution would be for him to just get out of the way. He should stop protecting ineptitude. Instead, he should let businesses, the real accountable players, do their thing and score a few touchdowns. We surely need them.
color pencil sketch of a highschool touchdown
Mr. President: we need a few touchdowns

Additional Comment:

On LinkedIn, A consumer electronics expert raised two very valuable points, which I would like to address here..
  • First, he stressed the fact that my article seems right-biased as he feels that republicans were much more disruptive to the economy. To this I offer that the article is biased for sure. But it aims to argue for less government rather than either side of the isle. Everybody knows that both parties have had pro-growth presidents as well as anti-growth ones. Unfortunately, this time it was Obama's opportunity to act against two hundred years of great American experience. Because bureaucrats fail to have any skin in my game, it is difficult for me to get too excited about any of them regardless of their party affiliation.
  • This gentleman's second point was that the stock market is at all-time highs. While I understand the fact that viewing things through the prism of stock market valuation  places doubt on any assertion that the economy is not well, it is important to make sure that the facts are better understood. It is correct that the stock market measures corporate profits. The part that's missing is that prices are on a per-share basis. This means that with less shares, earnings go up on a relative bases and stock prices follow. This without any improvement within the company. This is what we now have. Companies have been borrowing against future earnings to buy back substantial amounts of shares from the market. The net result is that low cost of capital for big companies indirectly increased stock prices. Higher S&P prices must therefore not necessarily result from a better economy. Let's also remember that stocks are an asset class just as housing. Like with housing in 2007, higher prices do not imply any degree of improved economic health. 
    Chart from the Federal Reserve Bank of Saint Louis showing the correlation between the unsustainable US monetary base and stock market prices
    St Louis Fed's Report on the Monetary Base and Stock Prices
Bernanke's monetary easing and the glut in global savings are behind the effect rather than white house brilliance. High levels of available capital, in a high risk environment, where American blue chips are viewed as offering lower relative risk, and depressed cash flows from competing low-risk asset classes like bonds, all easily result in a Dow boom. But reduce availability of capital, change the risk balance or increase interest rates, and the S&P's valuation crumbles. A recent quick test by the Open Markets Committee demonstrated this point with plenty of force. 
But that is the economic side. How about the political one? If anything, higher stock prices have benefited those with the liquidity to speculate on them and not the rest of the country; a fact that I am sure upsets Obama. He has seen the fat cats get fatter under his watch. I doubt he intended it to happen. Otherwise he would be talking it up at every TV opportunity he gets. It would become his best tool against anything thrown his way. Bit it isn't. A higher S&P is clearly painful to him.
Getting back to the main goal of the article, no one can deny that a simple website has turned into a nightmare for Obama. Meanwhile, a previously unrecognized company came out of nowhere to get it done right, on their own and without excuses or taxes. The article is about the great nature of American businesses when compared to clumsy government. 
For four years now, I have seen small businesses struggle to gain access to any of the supposedly plentiful low-cost capital and strain as regulations continue to make operations much more complex. 
Small banks continue to disappear at a dramatic rate. In the health industry, the same thing is happening with small institutions. But in industries with lesser access to capital things are much worse. For many, the alternatives are bleak. 
Today, Obamacare has created such business pressures that if you are a CFO with a deep understanding of it you can get a job anywhere and at whatever price you want. A cursory exploration of any of the online job boards will demonstrate this. About 30% of the openings are for them. This is unusually high demand under any circumstances. To compound the problems, our small businesses can't afford to hire any of these stars. Without the money, what are they to do? 
Through the article, all I ask is for small businesses to get a break.

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