David Moon: Political instability a relative measure

David Moon

According to security experts at IHS Jane's Information Group, Somalia and Zimbabwe now regularly join Gaza and the West Bank as the least stable areas in the world. So, too, do Sudan, Ivory Coast, Chad and Haiti. Afghanistan is obviously on the list.

Political instability extends far beyond Egypt and Libya.

It must be pretty difficult to live in a politically unstable country, but I suppose everything is relative. In the U.S., military leaders don't declare war on their own elected officials - at least not in the past 150 years - so it's a lot better here than in Sri Lanka. But I wonder how Barack Obama would respond if a few hundred thousand people demonstrated outside the White House demanding his resignation. I don't think George W. Bush would have climbed in his pickup truck and driven back to Texas. Most Americans assume that conceding to the will of the masses is the right thing to do - at least if it's Hosni Mubarak doing the conceding.

Would we have reached the same conclusion in our own country?

Mubarak was president of Egypt for 30 years, after serving as vice president for six. For comparison, Obama has been in office a little more than two years.

There are obviously different ways to measure a government's stability. Just because we try to operate our country according to the bylaws in a fairly stable Constitution, actual governance practice has suffered its own form of instability.

Since 2001 there have been more than 4,000 changes to the U.S. tax code. Last year, which was considered a "status quo" year, the code had a total of 579 changes.

That's certainly one type of instability.

Think about the nonprofit board on which you serve, the finances at your church or the budget for your school's PTA. Imagine that you are more than half way through the year and still haven't decided on a budget.

That is instability. It is also our federal government.

I was 11 years old when Gerald Ford backed into the presidency in 1974. Following the Watergate scandal, my mother told me Ford would likely be the last Republican president ever elected in the U.S.

Ten years later a Republican carried 49 states in the 1984 election. Ronald Reagan's vision of tax reform included a 44 percent reduction in the top rate. His version of free market capitalism was dubbed "Reaganomics."

Twenty-five years later, Obama's version of financial reform is predicated on the fact that "at a certain point you've made enough money."

That is a 180-degree change in a period half as long as Fidel Castro's reign in Cuba. If our leaders reflect the values of those being led, we have unstable values in this country.

I don't know about you, but during the threat of a federal government shut down a couple of weeks ago, I was about ready to send everyone in Washington into exile with Mubarak.

David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. He may be contacted at http://www.davidmoon.com.

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Comments » 4

CHSgirl writes:

Quite frankly, I agree w/ PO--at some point, enough is enough. How much money do the millionaires and billionaires need? When is enough????!!!!!! When 400 people/families are worth as much as 150 million of us COMBINED,I believe that is a very wrong "re-distribution" of wealth. We are quickly becoming a third world country: the VERY rich and the poor. Guess it all comes down to our values and principles. And, you know what? No matter how wealthy a person is, here's a question for you: Have you ever seen a U-Haul following a hearse??? You canNOT take the with you.

laocoon writes:

David, you're conflating too many ideas here. Is there a point in there somewhere? I suggest you go back to school and start with a course in macroeconomics. For your next column, please toss the chinese menu of buzzwords and put some cogent thought into it, or just go back to your expertise in personal financial topics.

LocoPhan (Inactive) writes:

The longer that high unemployment and higher gas and food prices are the center of our news universe, the more unstable our government is. Given enough time, there are two ways we can go as a nation, either accepting the "new normal" as some suggest, or there will be a citizen's revolt.
We keep hoping that the current (or future) legislators or President will get something done, but it never seems to get better.
The longer Washington continues "business as usual", the longer it will take to crawl from the financial hole that has been dug for the nation. Or, we can give up and start learning Chinese...

reform4 writes:

David, after reading "The Quants," I've determined that the real instabilities in our economic system lie within the new breed of folks in Wall Street. Long ago, the stock market was a place for a company to raise capital, and the price of the stock was dependent on people's belief that the products/services would succeed or fail in the marketplace. No more. The price of a stock is purely a speculative measure as to whether some other sucker thinks it will go up or down, distorted by hedge fund strategies, shorts, insurance on shorts, analysts who may be secretly serving the needs of the investment side of the same institution.

Whether we get a federal budget out on time? Please, that's small potatoes compared to the threat of quants diving back into their leveraged computer models, sans any reasonable regulations.

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