Thursday, August 16, 2012

Tim's Take - Why Mitt? - Tim Makes the Case for Romney

This is the first in what will hopefully be many articles by noted economist, Tim Dimas. Before the Ryan pick, Tim weighed in on the question "Why Mitt"?  So strap yourselves in, buckaroos, and enjoy the very first "Tim's Take".

First of all, a giant tip of the hat to Joe for letting me be a guest. And for the TSH readers, please go easy on me: it’s my first time and I have to be home before 11 p.m. Midnight if you buy me dinner.

We’re a little more than 90 days away from the U.S. General Election. And while there are plenty of good people that will be voting for Gary Johnson, scores of millions will choose between Mitt Romney and Barack Obama. Most have already made up their minds: they’re perfectly content with the rampant government expansion of Federal power, or they want to curtail it. Let’s examine the economics of “Why Mitt?”

Why not Barry?

Obama went to Harvard Law School and then became a community organizer. Not my career path, but whatever. From community organizer to public office to the White House (That’s kind of disturbing to write out in that order. Ugh). Obama is certainly well suited to be a professor. But considering what little regard I have for academia, professors, and their ilk, that’s not really saying much. He’s also really good at…organizing communities? Whatever it entails, it’s not contributing to any corporation’s bottom line.

Fact: The sole reason a company exists is to earn money. Period. Not open to discussion. It is an immutable absolute. Since Obama has never worked for a corporation, or headed one, he has never contributed to its bottom line. Obama doesn’t understand how business works. Period. So why would Democrats think he could fix the largest economy in a time of worldwide global meltdown? I have no idea.

Just for giggles let’s look at the unemployment rate during Obama’s tenure:

Courtesy of Bureau of Labor Statistics:

I know what you’re thinking: “OhmyGAWD, that’s so not fair. He inherited the problems of his predecessor.” Okay. But Obama also had the “benefits” of two stimulus packages. Remember Paul Krugman saying we had to spend and spend and spend our way out of this recession? Look how much good it did. It did…no good at all. Well, that’s swell! Alright, so we’ll cut Barry some slack for the unemployment rate when he first took over. Why don’t we give him…three years? The January 2012 unemployment rate is 8.3%. The highest it ever was under Bush was 6.3%. So we caved and did two stimulus plans (bad idea), two rounds of quantitative easing (ie., bastardizing our currency – also a bad idea) and the best it did was to give us a rate – at best – 2% higher than it was at its worst under Bush. The highest unemployment reached in the last 8 years was 10%, or 1.7% below Obama’s best. In absolute terms, Obama’s best unemployment rate is .3% closer to our recent worst than to Bush’s worst. And you call that progress. We’ll come back to the “he inherited that – don’t blame him” myth later.

No business experience, spiraling unemployment, and an inability to take it on the chin and accept blame (Damn you George W. Bush!). What we are in is not a recovery. It’s a period of stagnation – a fiscal purgatory. There is no indicator to make us believe we will get any hope or change (see what I did there?) economically if we stay the course. At least Obama did give us a consolation prize: the biggest tax hike (Obamacare) and debt that this country has ever known. None of this leads to why Mitt is the right person for the job.

So why Mitt?

He has an MBA. I don’t worship degrees like liberals, or where they are from (I really hate academic types, if you couldn’t tell), but clearly Mitt has received intensive and formalized training on how to do business and how business works. He’s had to master the theory and finer points of things like Business Law, Accounting, Economics, Marketing, Operations Management, and the like. Moreover, Mitt has corporate experience as evidenced by his time at Bain Capital. Mitt took a sinking ship by way of the Salt Lake City Olympics and saved them.

While there are elements of Mitt that make me sad (Romneycare), no one can deny his business acumen or what he has accomplished as a businessman. He made his fortune before entering politics, not because of it. Why is Barack Obama rich? He never contributed to a company’s bottom line….so…? Romney put in the time at work, juggled a family, found his corporate success and cashed out. Then he ran for office. From an economics point of view, this is in direct contrast to the pretender in chief. Romney doesn’t have much flare. But he has been successful at business and done well for himself and others. I don’t know why that is a liability. Our economy is stagnant and in desperate need of someone who knows how business operates, not someone that has never worked for profit a day in his life. And certainly not the clowns that voted for Obama and somehow think that reading an article on HuffPo is a substitute for knowing the pros and cons of IRR vs. MIRR.

What the Progressives will argue

Progressives are going to attack the economic for reasons for Mitt as follows.

1. He’s super rich
2. Trickle-down economics doesn’t work
3. The Dow has done better since Obama came into office

Let’s make quick order of the criticism before we adjourn.

1. He’s super rich

a. And liberals hate wealthy people. I get it.
b. Mitt was born wealthy. He also got himself an education and grew that wealth substantially.
c. You people love JFK – he was working class?
d. You are aware JFK’s dad bought the election, yes?
e. You’re also aware the JFK used the Laffer Curve to grow the tax rolls, right? (Wait – your HuffPo article didn’t explain the Laffer Curve to you?)

2. Trickle-down economics doesn’t work

a. Which is exactly why the 1980s were so prosperous economically.
b. Accusations as ridiculous as this don’t deserve an honest rebuke.

3. The Dow has done better since Obama came into office

a. Better since what? Nuclear Armageddon? Yes. That’s true, but….
b. According to progressives, only the “1%” invest in the stock market (this is a fallacy, but just roll with it), and since they hate the 1%, I don’t know why they’re benchmarking them as the epitome of progress.
c. We can’t blame Obama for the state of the economy his predecessor gave him. And that means no credit either. So this one doesn’t hold water. To get credit for this, he’d have to take blame for unemployment. Which requires responsibility. Which no progressive has. Additionally…
d. The Dow is a marketplace, not a confidence index. Cross-reference the VIX and you’ll get a very different story…Oh wait. Elizabeth Warren didn’t explain that to you? Come on libs, KEEP UP!

God Bless America. And in the words of Davy Crockett, “you may all go to hell and I will go to Texas.”

Tim Dimas is finishing his MBA in Finance and obsessively checks the Drudge Report, WSJ, and CNBC. He enjoys Starbucks iced beverages. He has applied his knowledge of economics to develop an astounding theory on the intersection of financial/economic principles and sexuality...But that will have to wait until next time.