
PE Obama’s 1st Big Mistake - peter123
http://blogmaverick.com/2008/11/08/pe-obamas-1st-big-mistake/
======
mixmax
I think the post is a bit misguided. The people you talk to about matters of
economy and finance are people with a background in finance and economics. For
all their other assets entrepreneurs don't know a lot about macroeconomics,
big finance, and economic policy.

I'm sure that one layer below this there will be, or at least should be,
entrepreneurs that are consulted in order to get the most bang for the buck.

But I honestly don't see Mark Zuckerberg lecturing Robert Rubin and Warren
Buffet on how to save the economy...

~~~
vlad
Why did you imply that Mark Zuckerberg would be the candidate? A commentor in
the blog post did the same, but I did not expect this from Hacker News, when
Cuban did not imply at all it should be Zuckerberg or anyone else
inexperienced.

 _The people you talk to about matters of economy and finance are people with
a background in finance and economics._

Cuban did not say there was anything wrong with such experts, but that the
team should have someone who runs a small business for a living, that's all.

For example, I just thought of an almost identical situation.

Ron Paul's campaign advisor on the economy, and one of the two people who
predicted the economic collapse in detail two years ago, is also an active
entrepreneur. Now, Cuban did not say it has to be someone who is much of an
expert, but it doesn't mean it should be some entrepreneur with zero economy
experience.

 _I honestly don't see Mark Zuckerberg lecturing Robert Rubin and Warren
Buffet on how to save the economy..._

Cuban clearly implies he wants a good candidate, and not for example, a 23
year old web 2.0 hero.

Also, Cuban went out of his way to include franchise owners, mom and pop store
owners, and independent contractor's all over the country in his definition of
entrepreneur.

Besides distorting Cuban's points, I think it is very limiting to think that
entrepreneurs are 20 year old founders of web startups, when they could be 45
or 65-year-old economists who have also started multiple startups in their
life, whenever you hear the e-word.

~~~
mixmax
Mark Zuckerberg was just the one that sprung to mind, but I think the argument
would be pretty much the same if I had used Jeff Bezos - who was a stockbroker
before he founded Amazon, and thus should be somewhat experienced in
macroeconomy.

My point is that making economic policy, especially in the current
environment, is a difficult and specialised task. The people that have the
best shot at getting it right are the ones that have the experience,
connections and know-how of how to do it. And entrepreneurs don't - they are
in a completely different business.

This is nothing bad about Mark Zuckerberg, Jeff Bezos or any other
entrepreneur - I just think that you should get the best man for the job. I
wouldn't want Robert Rubin to be the CIO of my startup either, even though I
know he's as smart and dedicated as anyone. It's simply not his expertise.

~~~
vlad
_I wouldn't want Robert Rubin to be the CIO of my startup either, even though
I know he's as smart and dedicated as anyone._

While I have to agree that it would be hard to find such versatile people, the
argument is not logical. If a implies b, it doesn't mean that b implies a. If
it did work that way, then it would mean any CIO could never make a great
expert on finance and economy, and vice versa, and that's not qualifiable (or
realistic.)

 _I just think that you should get the best man for the job._

It is not qualifiable that Obama has found the best man (or woman) for the
job. Therefore, it is not qualifiable that entrepreneurs should not feel they
should be represented by some economist or expert in finance who has
entrepreneurial experience.

Somebody who has their money tied to their business, as Cuban said, and
depends on their business for all of their income, is the kind of entrepreneur
who should be represented. I believe Mark's point is that the economists
advising Obama make money as government employees, company executives, book
publishers, researches, faculty, or similar--I made this up, but if they're
not entrepreneurs, they must be getting paid some other way.

(In fact, to add my own thoughts, many high-ranking economists and high-
ranking finance experts could have been a part of the problem in the first
place, while at the same time, entrepreneurs spent the same years trying to
create value for their customers. They: create value in order to make money,
actually have contact with real, "regular" people, try to solve people's
existing and future problems after listening to these "regular" people, and do
so because they've chosen to bet almost all of their income and quality of
life on solving problems. This is completely different from being a professor
or book author, tv personality, and, in some way, having a hand in creating
the problem in the first place.)

 _My point is that making economic policy, especially in the current
environment, is a difficult and specialised task. The people that have the
best shot at getting it right are the ones that have the experience,
connections and know-how of how to do it. And entrepreneurs don't - they are
in a completely different business._

I think my points about how an entrepreneurial perspective could be beneficial
as well as that entrepreneurs could definitely be experts on the economy argue
your point, but I also want to note that Cuban mentions having one experienced
entrepreneur representing one person on the committee, not necessarily a
committee full of entrepreneurs (never mind all without experience in finance,
and all relatively young, and all from Silicon Valley, to boot.) So, of course
you need many experts as well as those with political connections on the
committee. But at least one expert should have entrepreneurial experience. He
even goes out of his way to point out several times that Buffett isn't an
entrepreneur in the same sense that most entrepreneurs are small mom-and-pop
shops and independent contractors.

Of course, I could be mistaken--maybe Mark Cuban did imply that he wants a
great entrepreneur advising on the economy, whether or not they have economic
experience--but I just did not read it that way, and it would be hard to argue
that a sane person would want any random entrepreneur. I've heard Cuban has an
ego, but I don't think it's that big. :)

(And again, such people exist, like the economic advisor to Ron Paul, as well
as likely hundreds of other great choices. I think that Obama and the existing
committee would not mind having an entrepreneur on board, and Cuban's post is
a great way to point out this missing piece.)

I think we (the News.YC users) saw items in the blog post that made us want to
discuss it, but of course, we saw different things. In my view, I didn't see
anything wrong in his post, therefore causing me to think that it's a good
idea for him to try to get a search for an entrepreneur started, and I wanted
to provide what I thought. Thanks!

~~~
mixmax
I see your points, and what your goals are with this, but I think that you and
Cuban are getting in on the wrong level.

He wants to make sure that tech entrepreneurs are heard in the new government
- which I certainly agree is a good idea. Both for the entrepreneurs and the
economy. My grudge with the post is that he finds it perfectly reasonable that
tech entrepreneurs should be represented at the very top level of the economic
advisers to the president. My argument is that the tech entrepreneur expertise
should be represented one level further down. Both because, as I've argued
before, that the expertise that's needed is very different from doing
startups, but also because tech startups don't account for that large a
portion of the overall economy. Cuban's arguments could just as well be
applied to mom and pop stores, which are probably more underpinning of the
economy than startups, the biotech sector, the defense industry, the
automobile industry, agriculture, advertising, aerospace, big oil, clean
energy, food products etc. etc. These are all important, but none of them,
including startups, are big enough in an economical sense that they should be
represented at the top level.

Yes, an argument could be made that startups are the future of America. But
the same argument could be made of mom and pop stores, clean energy and many
others.

~~~
yters
What drives America's economy? Investment or innovation? Where has the most
influential innovation come from?

Macroeconomics is a step removed from the people who really make it work. So,
to get the best macroeconomics we need to make sure we get things right at the
micro level. I don't see this happening with people who've spent their lives
at the macro level.

EDIT

After reading the article, I also see you've set up a strawman. Cuban is not
arguing you stick a lone group of tech entrepreneurs in Obama's advisory
board. He says Obama needs to directly talk with them to see what they need,
explicitly including non tech people in this by his mention of Joe the
Plumber. Instead, Obama has insulated himself from these people with his
advisory board. I agree with Cuban that this is a bad sign.

~~~
mixmax
I just reread the article, and you're right about the strawman. Got a bit
carried away in the discussion apparently :-)

~~~
vlad
That was the whole point of my response. :) It would have been a lot simpler
had I not edited out the first line of my post, which called your original
post a strawman and linked to the definition. Since I had read the entire
article carefully, and within the context of Mark's posts that I had read in
the past, I thought Hacker News would appreciate knowning the actual views
expressed in Mark's article.

------
hugh
There are two ways to use advisors. On one hand, you can use them to help you
make decisions. On the other hand, you can use them to lend credibility to
decisions you've already made.

Interestingly, the bigger and more prominent your board of advisors, the
harder it becomes to use them for the former purpose and the easier it becomes
to use them for the latter.

~~~
mechanical_fish
Precisely. The membership list of this advisory board is a _marketing
document_ , not an exclusive list of the people who get to make the policy.
This isn't the NBA, where the people on the roster are also the ones who have
to play.

------
sridharvembu
I had the same thought as Mark Cuban. A PhD in Economics, even winning the
Nobel Prize (see my critique of Krugman) doesn't give you the real world feel
that starting and running a business does. Economics is full of unintended
consequences. Couple of examples, which every start-up person here can
appreciate: if you make it very hard to do a lay-off, that leads to businesses
becoming extremely cautious in hiring. The minimum wage directly leads to
entrepreneurs not taking a chance to hire a less skilled person and train them
on the job. These are easy enough to see when you run a business.

It would amaze you how many things that are "common sense" for an entrepreneur
are hard for someone sitting in their ivory tower.

This is not just a problem in economics. After I got out of Princeton with a
PhD in Electrical Engineering, it amazed me just how orthogonal to the real
world much of my adviser's academic work proved to be - I happened to land a
job that _directly_ dealt with one of his core areas of research, though I
wasn't involved in that area during my PhD myself. My realization led me to
write a paper that pointed out that his work was dealing in mathematical
models that were not very relevant to the real world, which predictably led to
our intellectual parting of ways.

I felt experience working as an engineer should be mandatory for anyone
aspiring to be an engineering professor, yet you will find that most
engineering faculty have never worked outside of academia.

~~~
mmm3999
Not arguing your underlying point, but the examples you chose are poor--all
economists are well aware of the effects of a minimum wage, and of barriers to
hiring/firing. It's people with no background in economics who don't
understand those things.

~~~
sridharvembu
I would agree if you said "most economists" instead of "all". On the minimum
wage, a couple of Princeton economists wrote a scholarly paper pointing out
how that didn't suppress hiring (sorry, don't have a handy reference) or
increase unemployment. On barriers to hiring/firing, I grant that most
economists would agree they are bad.

On the other hand, Krugman himself has been a strong advocate of nationalized
health care. Milton Friedman argued how the health care problem is really one
of licensing regulations designed to maximize pay for doctors. Imagine an
American Software Association that decides how many licenses to grant every
year, and you need those credentials to be a hacker. Yes, Friedman addressed
the "quack" argument too.

------
aswanson
I don't think he, or any politician at that level, for that matter, can help
it. The only people they rub elbows with are the established, credentialed,
and connected. If he knew the right startup/entrepreneur people he would be a
VC or angel, not a politician.

------
jobeirne
Uh, can anyone tell me how "your current group has no one with 100pct of their
networth on the line" is a reasonable complaint?

We're talking _economics_ here. Smart people familiar with basic economics
don't risk 100% of their net worth.

------
joubert
Maverick schmaverick. However, to give you the benefit of the doubt, name 3
startuppers that you would propose. BTW, do you seriously think Warren Buffets
advice on macroeconomics would be worth less than someone who has started the
corner deli?

------
nsimpson
Does anyone else see this as a thinly veiled partisan rant along the lines of,
"Democrats are Ivory Tower elitists who hate Joe the Plumber and will destroy
free enterprise in the USA"?

In what sense does this article have any practical value for entrepreneurs, or
even the Obama administration? Seems like Schmidt, Page and Brin have been
offering plenty of informal advice along with lots of other successful
entrepreneurs.

------
nazgulnarsil
I think from the primary polls a good 10% of the country would like to see Ron
Paul as an adviser. He has consistently showed that he has a firm grasp of
conservative economics and an intellectually honest president would want both
sides represented.

------
patrickg-zill
Is there a pool on when Cuban will start expressing buyer's remorse on his
Chris Matthews-style leg tingling for Obama?

I'll take "last week of February 2009" if it's available.

------
davidw
I am quite happy that Obama won, but I have started flagging pretty much all
of the articles with 'Obama' in the title. I don't want to talk about politics
here.

------
sown
Finance != Economics.

------
Allocator2008
Wow. So this post is seriously suggesting we make Joe the Plumber Treasury
Secretary? Man I'm in the wrong business. Maybe if I had gone into plunging
toilets instead of testing software I could be an economic guru too.

------
wd40
Amazing post - perfectly posited imo. The most powerful lines for me:

"Entrepreneurs that start and run small businesses will be the propellant in
this economy. PE Obama needs to have the counsel of those who will take the
real risk inherent in creating companies and jobs. Those who put their money
and lives on the line with their business...Your current group has no one with
100pct of their networth on the line. I promise you that the possibility of
losing it all will provide a completely different perspective than any of the
“knowledge” the esteemed, learned members of his current advisory team offer."

~~~
JoelSutherland
The danger of advice from somebody with everything on the line is a lack of
objectivity.

Personally, I don't think we need to make any sweeping changes to encourage
entrepreneurship directly. The United States is already a great place to start
a business. The key making sure that is true 20 years from now by continuing
to invest wisely in education, research, energy...etc.

~~~
Prrometheus
>The key making sure that is true 20 years from now by continuing to invest
wisely in education, research, energy...etc.

And by keeping taxes and regulations light and minimal.

I would like to point out that our government's investments in education and
energy haven't gone very well, though its investment in general research
probably does more good than harm.

~~~
sown
_And by keeping taxes and regulations light and minimal._

But no more than that.

 _I would like to point out that our government's investments in education and
energy haven't gone very well, though its investment in general research
probably does more good than harm._

It's also worth while to point out that many other industrialized nations have
also made investments in energy and education and had better results. So, we
shouldn't abandon the idea (as you seem to be implying) but rather take a good
look at how we do things.

