Why is it that new governments or administrations always blame the previous one for 'economic mismanagement'?

As I see it energy and health care are the two things that are bankrupting us both individually and nationally. Seeing how badly the health care reform debate went I wonder if President Obama should have tackled energy first. After producing a sane energy policy he may have been able to build upon his success and attack energy. While we bemoan all of our jobs going overseas and all the import of goods the single largest factor in our trade balance is buying foreign energy. Moving toward energy independence would pay great dividends for our economy, security, and quality of life.

Governments like the US are at a disadvantage when it comes to long term economic management. The US has incoming and outgoing leadership all the time. In a centrally planned economy like China, it’s very easy to build on previous programs. I think China is into their eleventh or twelfth Five Year Plan right now. China can easily make an economic plan for the future and then put it to action without worrying whether its government will be out of power. US presidents get four years, and eight if they can convince the public their plan is working. The last US government to really put a long term economic program in place, and see it through, was the FDR administration. And presidents can’t stay in office as long as FDR did anymore.

The US is not a complete free market economy. The government does have a role, and most Americans expect the government to have a role, despite any Tea Party propaganda to the contrary. But unless the US is prepared to extend the terms of its presidents and Congress, it’s unlikely any government will be able to form and implement a long term plan without change or disruption.

A recurring theme in US/UK corporation waste-cutting and efficiency-increasing projects is popular view that ‘if it ain’t broke, don’t fix it.’ It manifests differently in the two cultures but the premise is muddled. Basically it comes down to 1. The company made a mint last quarter, so it ain’t broke. 2. We’re a great country and ‘rule the world’/rule/rock/etc (in this sector, maybe) - so we are incapable of doing wrong, and the present system made us great. The problem is the blind side. Unless the people who are saying 1&2 read the financial press (which is more forward looking) and see the ideas gaining traction in international conferences for their industry, they will not notice that a major new technology will shortly be adopted by competitors. In 1-2 years, those competitors will have gained enough edge to make your company vulnerable to takeover in year 3 - and they will take their profits in terms of duplicate jobs eliminated and now-surplus assets sold off. The timescale with nations is somewhat longer, but the consequences are similar - the disappearance of UK manufacturing is a simple example; the annexing of Tibet (a rice-growing resource), more complex. You are quite right about energy. The current view (at US gas pump prices) is ‘it ain’t broke and America is definitely great, even if it’s going through a bad patch’. Progress in alternative energy sources is getting proportionately more investment elsewhere, and the US may think it can bide its time and grab some when others have eliminated the non-starters. The price of delay is in increased transition time from the old to the new. ENergy costs are fundamental to competitive pricing across all industries. A 1-2y catch up can be very expensive in terms of jobs and quality of life lost. But while DC lobbyists are blasting away to keep todays profits up, both Industry and government are too distracted to notice the iceberg up ahead. The race for today’s profits is all-consuming. Until there is an accepted measure of efficiency that all US administrations have to live up to, trillions will be wasted and then the voters will get unemployed. The only winners are those who backed a president’s campaign on the basis that they’d make a fast buck afterward. Hence Bush’s ploy to re-boot star wars and a famous claim of not needing a foreign policy - until 9/11 brought him into the real world. Trying to pay off those backers with Iraq contracts didn’t work too well either. In much older times, religion tended to regulate the excesses, but it now has insufficient weight against the leverage of the system which it helped create. That system will fail because its operating parameters (low-tech, low capital) will soon be exceeded. Bin Laden has also noticed this. His solution is to take a chunk of the world back to a time when the Book fitted better, and to accelerate Western inefficiency so that more countries will become vulnerable to his approach. People may hate him, but he has a level of vision that would have been pretty impressive in biblical times. I would guess that his private vision extends much much further than a bit of Asia. He is the barbarian at the gates of Rome. Rome fell because the leaders were distracted inward, and believed totally in the supremacy of their military technology (which had been passed to the barbarians by turncoats, tweaked and used to devastating advantage). If the technology was that good, the war would not be rumbling endlessly on and black-holing fiscal and human capital. The more I compare the worlds of 2000y ago to the present, the more I perceive the only real changes to be education and healthcare. We are no more safe now (apart from medicines and ability to derive income for a comfortable lifestyle, perhaps) than Roman slaves were. For slaves, read the now paid-for service industries. We gain our leisure time in the same way the Romans did, by having other people do the chores. Nothing will change so long as the game design remains the same. The big problem, is that by the time we (=a critical mass of well-placed people) work it out, it may well be too late to prevent global warming doing a great deal of damage. The more damage, the longer the recovery time. And if the game is still in play afterwards, we’ll eventually repeat the trick. Bin Laden, however, has just noticed the flaw in his plan. A low-tech design cannot deal with a lot of rain falling out of the sky at once, and a world operating to his design will never have the resources to deal with natural disasters except through prayer. If he is wise, he will recognise that if he needs the resources of the high-tech side of the planet to help save ‘his people’ from the disease following one flood, he will need to be able to work with both East AND West in order to ward off an asteroid wiping out his entire dream. He needs to be helped to find a better solution to what he thinks is the problem. Then the money we are wasting in warfare can be put to better use. The more we are distracted, the more we build an ok world in 4y time at the expense of structural failure in the longer term. So long as people are rewarded for thinking only to a 4y horizon, nothing will change. You only get the behaviour you measure and reward. The elephant in the room, however, is being examined at the pixel level. Any suggestions as to how I can get people to stand back far enough to notice how big the elephant has become?

China is an interesting example. In general, societies which can only maintain control of an increasingly intelligent middle class by restricting info flow tend to have a short life. In the low tech era, Stalin and Lenin achieved this by killing millions to kill ‘toxic’ ideas at source (the Taliban does it on a similar scale in a smaller population). The problem with these ideas is that they oblige questions which restrictive governments find increasingly difficult to answer.

The questions also get better as the literacy rate rises. China’s birth-control experiment has created unexpected but predictable problems. These will need additional resources to reconcile. Being able to work long-term means they can tolerate the Dalai Lama for now, because having replaced the Panchen Lama with a puppet who is unqualified to discern the next DL incarnation, they think they will have a Chinese DL in due course. In 2-3 generations, they assume most will have forgotten the past. In the meantime, they have the extra paddies needed to feed their burgeoning population. They too are in an energy trap, because they are operating at the level of the English industrial revolution period - cheap labour, cheap fuel and seriously inefficient energy consumption. They too are headed for the iceberg, and they will find recovery harder than many others. The bigger we get, the more we over-focus on the detail. If we want to stay big - and future planetary strategies will be expensive - we need to change the game.

The Tea Party is just another distraction creating symptoms not solutions, unfortunately. Attractive posturing for short term profit will change nothing, even if it makes a handful of people slightly more than adequately wealthy in the short term. It has great entertainment value however, but the very fact of its arising is a bad sign. The more the administration is distracted from the bigger issues, the more likely it becomes for the biggest player to lose the game. In my Titanic metaphor, the TP would be represented by a group of steerage passengers causing a diversion whilst a couple of their number sneak up to press a few random buttons on the bridge, just to see what would happen.