October Surprise

It is political season in the United States.  Politics and economics are incestuously intertwined and the very root of our civilization.  Elections in the US are based primarily on economics, there are occasional deviations, but We the People will look out for our own welfare when deciding who to vote for or what to vote for.  As such, often times in October incumbents will try to reinforce that they are good for the economy, and challengers will dispute the incumbents ability to lead the economy.  2012 is a classic year.

As we look back, the last 5 years have been rather tough economically in the US.  Gas prices have more than doubled.  Health care costs are up.  Unemployment is up, real unemployment not the unemployment that is being reported by major media.  GDP growth is lethargic.  Food Stamp or SNAP participation is up.  There are more people on disability.  Women's income is down.  Lower earning individuals have been stressed.  Mortgages are being foreclosed.  Do I need to continue?

So what will be the October surprise?  I believe I saw an inkling today, gas prices are forecast to drop by 50 cents a gallon over the next few months.  And this may work.  As I touched on in previous posts, gas prices may be the most important economic statistic when it comes to voters.  All voters are affected by energy prices in general, and gas prices in particular.  Gas prices are advertised on many street corners throughout the land.  And high prices hurt the most economically vulnerable first.

Why do these economically vulnerable get hurt worse?  Primarily because they are least able to afford rising costs of anything.  They generally drive older, less efficient cars, and often times when energy prices rise, sales fall bringing lay offs.  High energy prices drag our economy, like it or not we are an energy based economy, and the energy that we use most is petroleum and other fossil fuels.  This is what makes President Obama's refusal to encourage more oil production on our own territory perplexing.  I know that President Obama is a progressive or liberal, or what ever the label is today.  Progressives see oil as the cause of global warming and environmental destruction.  Oil is what drives our economy at this point in history, and the price of oil can determine the outcome of our elections.

Bill Clinton may have said it better than any other President, or candidate I remember, "its the economy, stupid".  And since the price of oil is so integrally part of the economy, it could be modified to say its the price of oil, stupid.  President Obama has said it is previous administrations that have caused our troubles, however, after four years of his leadership, why hasn't it gotten better?  Is not the overall economy the most important thing a President works on?  Has that not been the case since the inception of our Republic?  Think about all the issues of the past, they all have an economic basis.  Slavery and the civil war.  The whiskey rebellion.  And even before we were a country, the Stamp Act, Boston Tea Party, and our Revolution where all economically based.

Those doing well, generally do not want change.  We had loyalists during the Revolution.  Today we have what Mitt Romney called the 47%.  There is a difference, but the safety nets installed since the 60's have made people more dependent on government.  So to economically offer them more stuff; free contraception, health care, more food stamps, cell phones, or other largess, means you in effect buy their vote.  They are voting by their personal economic standing.  They are the ones most affected by energy price increases, and they are the ones that feel betrayed right now by the current administration.  That being said, the opposition scares them.  The opposition wants them to take more responsibility for their economic lives. 

Today we are more economically caste than in previous generations.  Henry Ford did not have a lot of money, until he used the assembly line.  Frank Woolworth went bust twice before he opened what we know as the Woolworth Dime Store.  August Busch almost went out of business during the prohibition.  Today, to open a modest business is very costly, many people cannot afford it.  So they are forced to "work for the man", which they feel doesn't care for them.  The current American Caste system is keeping people from thriving as in past years.

And that caste system is a political problem.  Government is a user of economic resources, not a producer.  The bigger our government gets, the less resources are available to fuel our economy.  When the government attacks the price of energy, by raising CAFE standards, it actually hurts the economy by making cars more expensive.  More expensive cars equates to less sales, and less employment, and doesn't really accomplish what the desire is, lower energy prices.  To bow to a Saudi Prince offends our sense of nationalism.  There is a simpler answer.  Control our own energy resources.  Start now by drilling, or mining.  Work toward other technologies like solar or wind, but they must be home grown.  Balance the two so as not to affect the economy, balance the budget.

Allow those who do the heavy lifting to benefit.  Do not try to pick winners.  There are still people out in their garages, working after work to find a way to harvest other energy sources.  And one day, if we do it right, petroleum and fossil fuels will be like the buggy whip of the 1800's.  But until the internal combustion engine was manufactured cheaper than the up keep on a horse and wagon, the buggy whip was a good investment.  Government didn't lead that transformation, and as much as they like to think they can lead the next, they can't, it is not what they do best.