Friday, 22 February 2008

Obama and politics of hope

Senator Obama’s campaign to be the nominee of the Democratic Party for the US Presidential elections in November this year has been criticised of lacking in substance.

Senator Clinton has claimed that being president is not about producing good speeches but about delivering good policies.

Obama repsonded to the message by being very explicit about his policies in his last speech, delivered in Houston, Texas (after winning the Wisconsin primary) and during his debate with Hillary Clinton yesterday.

The question: is the message of hope that Obama tries to transmit positive or negative?

In my post Recession, money, thinking and confidence, I concluded:

“A healthy economy is one in which the aggregate confidence of people matches their aggregate skills. More confidence than skills is as bad as less confidence than skills.”

If there is more confidence than skills, bankers lend money, consumers spend money, but since there is a shortage of skills, productivity does not match the spending; this leads to inflation. If there is less confidence than skills, bankers lend less money, consumers spend less; thus resulting in lower demand and consequently unemployment would rise and skilled human resources are not fully employed (i.e., recession).

This analysis calls for realistic optimism rather than blind hope. However, hope and confidence that is not matched by current level of skills could still be a good strategy if it is used with intelligence. In other words, if hope motivates people to improve their skills, the aggregate skills of the population will eventually match the level of hope.

People that have hope and are confident about their future, spend time improving their skills. For example, an 18-year old who is confident about his/her future may decide to take out a bank loan to go to university rather than settling for an unqualified job. (Of course, the bank manager must also be confident that the university graduate will repay the loan). Tertiary education will improve the skills of this young person and the more people doing the same the more it would increase the aggregate skills of the society and its productivity.

A case in which hope would be damaging for the country is when a person has blind hope about his/her future situation, starts borrowing money to spend and does not do anything to improve his/her skills.
To conclude, if hope is used to mobilise resources to a good cause, it is positive. On the other hand, if hope is used to indulge, it is negative. Given that Obama also asks people for commitment, his politics of hope are positive for the US.

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