Mint Goes to the White House
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(dcJohn)
Last week, I was invited by the Obama administration to the White House. With me were Evan Williams of Twitter, Tony Hsieh of Zappos, the founders of Method, Blackboard CEO Michael Chasen, Jessica Jackley of Kiva.org, and many more young business leaders.
See the previous post, “Obama Administration Seeks Economic Advice From Young Entrepreneurs” for the recommendations I made to the Obama administration. Here’s some more on what was discussed on Friday.
Contrary to the opinion of those who believed I was invited only to then be coerced into letting the Obama administration win the Edison Award (we’re up against them in the “Lifestyle / Social Change” category), they had a much more constructive task in mind for us: to guide the administration on innovation, entrepreneurship and job creation.
In Washington, we met David Washington, Greg Nelson and Michael Strautmanis of Public Liason; Jason Furman Director of the National Economic Council; Macon Phillips and Katie Stanton of New Media; along with officials on the environment and domestic policy. The team stressed the main purpose of the summit: instead of just talking to big corporations, special interest lobbyists, and political pundits, they were actually interested to hear what 20 and 30-something entrepreneurs of 20 – 200 person companies had to say.
At the end of each introduction, we had the opportunity to ask questions. I took the liberty of breaking the ice with a question to the National Economic Council: “So if the US is a $14 trillion economy, and you run a $1 trillion deficit by printing money [more accurately selling T-bills and T-bonds], doesn’t that mean you’ve diluted the value of every dollar we save by 7% (1/14 = 7.1%)”.
His response was perhaps a little less than satisfying. In essence it was: “A trillion dollars isn’t that much. We have $40-50 trillion in unfunded liabilities for healthcare in social security over the coming decades, and that’s where the real problem is. So long as we can sell this debt off at 2.5% interest, it’s cheap money and maintainable. The real risk is not the inflation that you imply, but deflation. In a deflationary environment, the prices for everything drop, and consumer psychology changes. People think ‘Why buy now when I know the price will be less in 3 months, or 6 months, or a year from now?’ and that causes hoarding of capital and increased deflation.”
The last point is certainly plausible. As to the other point, deficit spending in general, and the stimulus package in particular, I must disagree. Borrowing “cheap money” for housing is part of what got us into the current recession. The Three Principles of Personal Finance apply to governments as much as individuals – and rule #1 says “spend less than you earn” (or take in via tax revenue).
I believe in a laissez faire supply-side economics – minimize or eliminate regulations, no corporate bailouts or subsidies for failing auto manufacturers – and leave people free to create, to innovate, to take risks, and reap the rewards when their work pays off, and lose their investment if it does not.
The good news is we have an administration who will listen. This trip to the White House was just the beginning of what I hope will be an open dialogue with the Obama administration. I’m not yet convinced that the government can operate on different principles than those that govern (or at least should govern) the financial behavior of individuals. My hope is that the philosophy behind Mint.com might just be able to make a difference. Want to help? Post your suggestions below.
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6 Comments so far
leave a commentThank you for the update. I was hoping that one or more of you would write something about the visit there to the White House.
I appreciate the insight into the visit. I find it hard to take any person seriously who implies that a “trillion dollars isn’t that much”
Please keep us up to date with any new communications that result.
Thanks.
Aaron,
Thank you for taking the time to put down your visit on paper. It confirms much of my own belief that the administration is more interested in advancing it’s social agenda than fighting short/long term economic challenges. As Jeff notes, any one who says $1Tn isn’t alot of money never had to earn it. I hope they listen but am not optimistic they will.
I also agree with your core philosophies and have noted your more frequent tweeting. Keep up the transparency, it’s unique and insightful.
I’m with you 100% in your philosophy, but a good Austrian could have answered their arguments! Saving is just future spending and investment in capital. Why is that bad? What happens in the long run if government discourages capital investment and encourages spending on credit? Someone needs to offer them an alternative course of action: this recession is going to happen whether you throw $1T or $10T at convincing people to spend without creating value. We COULD use the recession to transition to a more solid economy, in which dollars relate to value actually created, and people only spend what value they create, where production is actually greater than consumption. That transition requires a recession and painful loss of government control anyways. This could be the perfect fiscal opportunity!
In personal finance terms, the government is telling us that it is borrowing and spending through the roof, because it’s afraid of saving. If an individual told you that, you would set them straight. Why not the government?
Also, why does no one point out to them, as you mention, that this fiscal tactic is what got us into this situation? Expecting to solve a problem with the same behavior that created it is the very definition of madness. We need to tell the administration to watch out for the advisors who did not see this coming and who offer more of the same as a solution. We should try asking the people who predicted the problem for their advice. That would be a big *ahem* for Hayek, von Mises, and a subset of teleconomists like Peter Schiff.
I hope the White House listens to your strategies. I think you are right on. Have you ever thought of creating another entity to tackle EHRs? There are tremendous opportunities in this area, especially now that you have the ear of the Administration. With an IT background, I can envision a successful EHR product to market but lack the the resources to build it. Want to talk?
This is great. I don’t know why this wasn’t publicized more. Keep it up. Any updates since your recent visit? Great question you asked by the way. When it comes to government, there’s normally a 1 trillion dollar gorilla in the room trying to be noticed– thanks for pointing it out.
Excellent question! Unfortunately you received a classic politician answer: completey avoiding your point while raising a somehow more important problem. Congress and the White House refuse to consider the implications of their decisions.
Your post here is going to make me take a serious look at using mint.com for my budget. Excel may have outlived its usefulness.