FT : James Carville On Obama, Derivatives, & Soundbites

Friday, March 27, 2009

If nature abhors a vacuum, politics abhors complexity.  There has been much discussion and some angst in the press lately about President Barack Obama’s supposed communication breakdown during the financial crisis.  The breathless reports convey the impression that he has lost his communication skills altogether. One headline admonished: “Obama struggles as communicator.”  Watching the staple Sunday-morning television shows, you would have thought that the assembled pontificators had a sense of nostalgia for the days of the campaign, when they admitted to feeling “shivers” up their legs when they listened to him, or soaked up the crowds of 50,000 swaying happily to his moving speeches about change we can believe in.  Last week, for example, the Politico wrote: “To Obama’s dismay, he is learning that successful presidential communications is only in part — often a fairly small part — about personal eloquence.  It requires harnessing his words to a consistent strategy of public education.”  Well, yes.  But has Mr Obama really lost some of his skill as a communicator?  I think not.  He is every bit the master communicator he was in his heyday of early 2008.  The essential problem is not how good a communicator he is but the complexity of what he has to communicate.  We can argue, ad nauseam, about which forum Mr Obama should use to level with the American people.  Should it be on 60 Minutes or Jay Leno?  Should he do fireside chats at the White House or predictions for the college sports season on ESPN?  But that does not change what he has to communicate.  Recent US presidents have had an easier time honing their message to soundbites and images.  President Ronald Reagan spoke about beefing up defence spending, conveniently flanked by soldiers in uniform.  When President Bill Clinton was pushing for passage of the Deficit Reduction Act in 1993, deficit reduction, inflation and interest rates were something people understood.  It was tangible and could be felt by consumers.  President George W. Bush effectively used the September 11 attacks to frame the push for war as a moral choice between the evil of the terrorists and the inherent goodness of the American people.  Mr Obama had a relatively easy time communicating the value of the recent economic stimulus package.  After all, we know what bridges look like.  We use them every day.  And we know that repairing infrastructure creates jobs.   The same can be said with the trickier concept of unemployment compensation insurance/benefits.  We all know someone who has lost a job and needs the extra aid.  We can argue about whether the ends justify the means (i.e. deficit spending) but the public can grasp the need for such a mechanism.  The same cannot be said, however, about the banking crisis that has handcuffed the US and world economies.  It is impossible to break the explanation of the crisis into a sound bite or image.

The result is that it seems to the average American that the government is simply throwing excessive sums at banks and insurance companies.  Now they read that the government is buying “toxic assets”.  I do not know about you but I would rather not buy toxic anything.  As someone who has prided himself on being able to reduce complex problems to simple messages, I am totally stumped by derivatives.  After hours of research, they seem to be something rich, greedy bankers thought up to make more money selling them to other rich, greedy bankers.  They did not understand what they were selling.  Buyers did not understand what they were buying and insurers did not understand what they were insuring.  Now the taxpayer is stuck with these things that no one can explain.  It is notable that the single most eloquent quote of the crisis by a flummoxed Mr Bush came in the first bail-out debate when he said: “If money isn’t loosened up, this sucker could go down.”  The problem is compounded by the fact that the only people who can explain them are the bankers who created them.  It is like relying on a criminal to tell us how he committed a crime – and paying him to do it.  To be fair, I thought Mr Obama did a good job on Jay Leno explaining the AIG situation until he used the word “leverage” (translation for laymen: financial shovel that people use to dig themselves into a deeper hole), a term that escapes 97 per cent of the public.  It is not that Mr Obama is not communicating as well; it is that what he is communicating is too complex to reduce to simple words, especially when in the last 40 years, the length of a TV soundbite has dropped by 40 seconds.  That being said, try this experiment.  Contact an engineer and ask him what a bridge is.  Or contact a doctor and ask what surgery is.  Then walk into your local bank and ask your friendly banker what a derivative is.  Good luck, Mr President.

Reference : http://www.ft.com/cms/s/0/7f21ae14-198a-11de-9d34-0000779fd2ac.html

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