The Republican loss and what it means

Having participated directly and indirectly on the Bush/Cheney Campaign, the Giuliani run for the Presidency and that of Mitch Romney, yet having met and been inspired by such Democratic icons as Senator Patrick Moynihan and Henry “Scoop” Jackson, I can make an objective academic case for what happened and why Democrats do such a better job. First and foremost America will continue to be the beacon for freedom, western values and entrepreneurship. So don’t heed that “all is lost” as so many feel and believe.

The recent Republican loss and previous losses can be described by two factors: a failed message on entrepreneurship and something I dub “Micro-Connectivisim.” It is that simple, you don’t need millions spent on post election analysis; I asked both Republicans and Democrats alike for their opinions on the loss and this is the sum total of this small but relevant focus group study.

Winston Churchill had a trusted circle of officers who were required to tell him negative, objective news of the war, for Churchill understood the difficulty of his officers’ fear being the Greek messenger. It is my understanding from those I talked to as well as articles already written on why Romney lost that it seems that the campaign leaders believed up until results on Pennsylvania and Virginia that they had a chance of winning!

Unfortunately, the Dow was already down 3% in the first three days after the election and thousands of employees are being laid off due to the results and economy from such companies as Bristol Myers, Boeing, RIM, US Cellular etc. It is fair to say that if the debt issue isn’t tackled and capital gains taxes rise, we will see unemployment of greater than 9% next year and underemployment at greater than 15%.

Why is there a connection between taxes, employment and entrepreneurship? There are several economic cycles depicting growth and overall direction such as the Kitchen 3-5 year cycle and Juglar 7-11 year cycles. But most famous is the Kondratiff 45-60 year cycle. The famed Elliot Wave Theory is somewhat based off such cycles. The reality is human ingenuity is happening at an ever quickening pace, thereby shortening major technological developments from decades apart to years apart, creating both macro and micro consumption. Increasing taxation lengthens the ebb in these cycles creating higher unemployment by stifling entrepreneurism.

Let’s see how, under President George W. Bush from 2002-2007, due to low tax rates, minority owned business grew by 46% overall. African American owned business grew by 61% to 1.9 million; Latino owned business grew 41%; women owned business grew to 7.8 million, creating $1.2 trillion in receipts. More interesting to note is that from 1982 to 2002 when President Reagan instituted lower capital gain tax half of the Forbes 400 in 2002 started with less than $20k-$25K in the previous 20 years and became the richest people in the United States. So this top 1% that the media and White House are always talking about were not too long ago closer to the bottom 50%. The aforementioned is due to the power of lower taxes and natural human ingenuity that wants to take risks when there is a positive opportunity cost and greater benefit to themselves and their families. You may ask why Romney didn’t share this to help harness support from different demographics. I don’t know.

Ok, what is Micro-Connectivisim? It is the ability to connect to every stakeholder. Through minute ten dollar donations, many young college-aged democrats, minorities and women in general felt part of a movement; everyone wants to feel that they belong. As the Japanese say about marketing, “you can aim to satisfy your customer or aim to delight them!” The Democrats have learned to delight consumers, even for ten dollars. President Obama and David Axelrod understood the importance of the emotional connection with voters and basically took this basic human element of psychology and won every battleground state including Florida and Ohio.

Utilizing “crowd funding,” people of all walks of life could donate and be part of a team. The Republican Party needs to install out of the box thinkers and implementers, while breaking down the barriers to those that want to help even if they can’t donate the $25,000 or $100,000. Unfortunately all too often only money matters; yet there are people without such dollars who can contribute just as importantly. In short, it is time for Republicans to reflect. For without the Latino, African American, and single white women vote, the Republicans cannot win national elections going forward.

It is all about the message in the bottle and to remember how President Lincoln embraced the advice from a young girl named Grace Bedell and the rest is history!

About the Author
Dr. Peter Kash holds a Doctorate in Education and an MBA. He is a Venture Capitalist for 30 years and has taught at the Wharton School of Business and Nihon University in Japan, and lectured worldwide including as a Visiting Professor of Entrepreneurship at Hebrew University in 2015. He has authored three books worldwide and his two bestselling books are available in Hebrew and English. All proceeds from the books in Hebrew go to the charity NATAL.