So the Republicans play chicken with not only the US economy, but the global economy as well, and the President, always wanting to be seen as the "most reasonable guy in the room," once again lets smart tactics, lead to poor strategy and an even worse outcome.
What's going on? Is the President just clueless? Are the Republicans just evil?
Meanwhile, our economy sits in a 'dirty diaper,' with literally no catalysts for significant job creation, and yet, the story being conveyed by the media is focused on the false narrative of "compromise" narrowly averting disaster (a pyrrhic victory, if there ever was one).
And count on this: when the next set of bleak economic numbers come in, they will again be presented as "surprising," as opposed to predictable from a mile (and many quarters of data) away.
It's a case of Spin, Cycle and Repeat.
What's the Definition of the Situation?
In 'Why This Crisis Isn't Going Anywhere--And What To Do About It,' Umair Haque frames the problem as being just as much a case of a failure to properly diagnose what ails the patient, the US Economy, as a case of malpractice:
What's going on here? Why continued stagnation, and perhaps more interestingly, why is the status quo always "shocked" by it, every dismal quarter? Here's what it suggests, in no uncertain terms: they're struggling to discern what this crisis is yet.
As noted in my earlier piece, 'The Great Reset,' he's right. There is a disconnect. This is no ordinary cycle that just needs to bide its time until the sun magically rises again.
Rather, we are in the midst of a systemic disruption that is, at a minimum, as significant as the stifling days of Stagflation in the 70s, and on the cusp of the true horror that was The Great Depression.
The Innovator's Dilemma and the US Economy
I won't recite the Whats and Whys of my analysis -- read the piece if you'd like -- but I will say this.
As a student of disruptive innovations, I would argue that the pattern that we are seeing is a textbook example of the principles espoused in Clayton's Christensen's, The Innovator's Dilemma.'
Let me explain. In 'Dilemma,' Christensen shows how smart enterprises can make catastrophically bad decisions by using the following, seemingly sound, logic:
- Does the innovative approach have a compelling return on investment?
- Does our core constituency want this innovation?
- Does this innovation leverage our core competencies?
In the PC era, we see how Microsoft outflanked much bigger companies, IBM and DEC, specifically because the PC was disruptive to the mainframe and minimcomputer.
IBM's best and brightest using the above litmus test, could "easily" evaluate the logic of trading in historically-proven product sales that were measured in the millions of dollars per sale for speculative ones that would be measured in the thousands of dollars per sale, and conclude that there was no "there" there economically speaking.
Moreover, their best customers could tell them plainly that the last thing that they wanted was an undepowered machine that couldn't be centrally managed.
Finally, back then, all of IBM's bones, muscles and sinew were designed for selling vertically integrated, proprietary solutions, something that a more horizontally oriented PC harnessing commercial-off-the-shelf components was to be an anathema to.
The moral of the story then, as now, is that disruptive technologies often serve a different audience, start off as small opportunities, and bit-by-bit, work their way up the stack until they destroy the incumbent's position.
Upstarts often win these battles because they have no base to protect, and thus, can think and act outside the box.
Flash forward to the present. We are in an economy absolutely gasping for new jobs and, at the very least, a "fig leaf" of hope.
What are your priorities, Mr. President, Mr. and Ms. Congress? Do you disrupt big business by taking away favorable taxation? Do you tighten governance so squishy lines of business go away? Do you play chicken with the companies that make up the Fortune 2000, risking jobs and the stock market?
After all, YOU are the incumbent, and the ultimate return on investment is getting re-elected, right? Your best customer tells you repeatedly via lobby and specific interest group that he/she absolutely does not favor any new products (taxes, legislation) that promise short-term pain, even at the cost of long-term gain.
The market doesn't reward it, the electorate doesn't reward it and the media only tells stories with binary narratives.
Plus, your core competency is taking pork and making it into sausage.
Such is the Innovator's Dilemma. That, and the hard truth that one should never under-estimate the ability of people to convince themselves of anything when their livelihood depends upon it.