analyticsbox | Apr 06, 2022
…If Politicians Understood Economics
Truth be told, most politicians do understand economics - some more, some less, and a few, not so much. This brings me to a major point so well described by prominent economist, Thomas Sowell.
“THE FIRST LESSON IN ECONOMICS IS SCARCITY, THERE ISN’T ENOUGH OF ANYTHING TO SATISFY ALL THOSE WHO WANT IT;THE FIRST LESSON OF POLITICS IS TO DISREGARD THE FIRST LESSON OF ECONOMICS.”
Well said! Politicians understand economics but ignore the basic ideas in favor of appeasing voters. As Alexis de Toqueville once quipped:
“THE AMERICAN REPUBLIC WILL ENDURE UNTIL POLITICIANS DISCOVER THAT THEY CAN BRIBE THE PUBLIC WITH THEIR OWN MONEY.”
And that is what has become the norm in politics today, good economic policy has long been forsaken for buying votes, even though the intended results never match up to the promises. Good policy would yield so much better results, but the pressures to enact stuff that sounds good, but isn’t, is overwhelming good common sense.
I am flabbergasted by the recent nonsensical budget proposals by the current Administration.
For starters, the US Government says in its annual report of September 30, 2021, that the government is on an UNSUSTAINABLE FISCAL PATH. That is echoed by every government agency that deals with economics and finance. This budget doubles down on fiscal irresponsibility, while claiming to be fiscally responsible - reducing the future deficits by a Trillion dollars.
What? Their projections over the next decade are for over trillion dollar deficits every year! And the interest bearing debt grows from 30 Trillion to 44 Trillion. Are you kidding me, fiscally responsible??? Meanwhile, the unfunded obligations continue to grow, with Social Security and Medicare both going broke - Medicare in 4 years, Social Security in 11 years. You think it is time to deal with that nightmare?
The Formula for Economic Progress is simple, as discussed in No Spin #16. Growing government spending to $6 Trillion is the exact opposite of what we need to do. It will be paid for by significant increases in taxes and runaway borrowing, both taking resources from the productive sector and giving to the government to pay for many unnecessary or non-productive programs. (Even whole departments could be done away with).
Some of the tax increases are unworkable or counterproductive. Others disincentivizes activities we should be incentivizing.
It takes away incentives for oil and gas production, which we desperately need until we have suitable replacements. It continues to incentivize ‘green energy’ which is not economically feasible yet.
The Billionaire Tax (wealth tax) has been tried in many countries, never works and after a trial period has been repealed almost everywhere it was tried. But it is right there.
Raising Corporate Taxes might be a minor improvement in revenue while the real cost is borne by employees and consumers, and more importantly, it disincentivizes investment, attracting new corporations, and growing our corporate base.
We are headed over the ‘Fiscal Cliff’ already, and this just makes it worse. And it does nothing to improve our economic growth, just the opposite. When will we ever learn? It's just not that hard.
This is why it is so important for the ‘voting public’ to understand economics and what works for the good of the country. Express your views to your representatives, and if they don’t get it, then vote for someone who does.
LEARN ECONOMICS, THEN VOTE SMART