Wednesday, October 21, 2009

Public Relations: the Conclusion

I must say that I really enjoyed the documentary and you can watch it for free courtesy of Google. [The related videos will lead you through the four parts] The question though is how is this seemingly anthropological look at public relations relevant today? For this I will outsource to David Einhorn writing in his investment newsletter. [It is a PDF]

As I see it, there are two basic problems in how we have designed our government. The first is that officials favor policies with short-term impact over those in our long-term interest because they need to be popular while they are in office and they want to be re- elected. In recent times, opinion tracking polls, the immediate reactions of focus groups, the 24/7 news cycle, the constant campaign, and the moment-to-moment obsession with the Dow Jones Industrial Average have magnified the political pressures to favor short-term solutions. Earlier this year, the political topic du jour was to debate whether the stimulus was working, before it had even been spent.

Paul Volcker was an unusual public official because he was willing to make unpopular
decisions in the early ’80s and was disliked at the time. History, though, judges him kindly for the era of prosperity that followed.

Presently, Ben Bernanke and Tim Geithner have become the quintessential short-term
decision makers. They explicitly “do whatever it takes” to “solve one problem at a time” and deal with the unintended consequences later. It is too soon for history to evaluate their work, because there hasn’t been time for the unintended consequences of the “do whatever it takes” decision-making to materialize.

The second weakness in our government is “concentrated benefit versus diffuse harm”
also known as the problem of special interests. Decision makers help small groups who care about narrow issues and whose “special interests” invest substantial resources to be better heard through lobbying, public relations and campaign support. The special interests benefit while the associated costs and consequences are spread broadly through the rest of the population. With individuals bearing a comparatively small extra burden, they are less motivated or able to fight in Washington.

David has in four short paragraphs perfectly surmised what it took me 4 separate blog postings. I will concede, I dug further into the psychology of the transmission mechanism of psychoanlaysis being applied to the link between product and consumers and how it has evolved over time not only in that link but how politicians now use the same mechanism to connect politics[product] to voters [consumers.]

On a regular basis I read financial news and am incensed by how it is spun. I talk at length with former business school professors and we vent together. However, when I talk to some one like a parent or a colleague in the law profession, I only receive glazed over eyes.

There are two factors at work: A) information overload B) esoteric nature of the finance industry.

I have already posted at length about information overload. My money quote that I keep chanting in a mantra is: it was Herbert Simon though who posited a long time ago " an information-rich world, the wealth of information means a dearth of something else: a scarcity of whatever it is that information consumes. What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of information sources that might consume it..." This is very similar to the idea that by reducing people to desires you can stop them from thinking about how policies are affecting them. Dancing with the Stars, 30Rock, Celebrity news all stop people from thinking about how they just donated 2,300 to Government Sachs and its colleagues to pay out, at Goldman alone, 23 Billion to its employees.

The esoteric nature of finance. So any normal Joe who did not graduate with a finance degree, MBA or an economics degree, is involved in her every day life that revolves not around finance, but what ever it is that pays the bills. Everyone can have an opinion on whether on not to raise taxes, or pursue certain domestic policies but not everyone will have an opinion on Negative Amortizing Interest Only Mortgages, or Collateralized Debt Obligations.

Thus, my hope is that my new arsenal of information on public relations and spin that I will be able to better engage my non-finance friends and family to better explain why the issues are important to everyone not just the people with vested interests in finance and financial policy.

Call it for what it is. It has more names than Satan. Call it plundering. Call it pillaging. Call it extortion, Call it fraud. Call it racketeering. Call it the financial raping of the middle class. Call it criminal. Consider the following. Middle class never consented to this financial rape. They vehemently protested it when the gov’t first proposed a $700 bailout of the financial system called TARP in Septermber 2008. Yet what did Congress and our government do? They went ahead and did it anyway. This boils down to one thing, taxation without representation. Our votes do not matter anymore.

Be outraged. Do not go softly into the night. Scream into the tempest. People voted in Obama for change, if you feel he has not effected it, then you must create your own.

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