economics

Not The Change We Need

Dave Davis Commentary, Policy, Uncategorized , , , ,

Don’t count on things getting better. When we’ve gone through a rough patch, we wish the next election would result in greater competence, but that’s hope over experience. The last election saw a voter revolt against the worst inflation in 40 years, wide-open borders, and the Afghan fiasco, which encouraged bad actors to start two ugly wars. The relatively solid economy and the absence of major fighting during Donald Trump’s first term fostered nostalgia.

Trump promised peace, safety, and prosperity in 2024. A little over one year in, we still have rising prices, albeit at a somewhat lower rate, violence on the streets in cities like Minneapolis, and an ever-widening war in the Middle East. Maybe we didn’t want wide open borders, letting in bad people, but we want the good contributing to our nation, treated humanely, not terrified and abruptly deported.

Given where we are, how is that election working out? More importantly, will the future election bring improvement? Plagued by high prices, poorly conceived international actions that have led to more bloodshed and increased costs, civil unrest, lawfare, executive orders that ignore Congress, and corruption, a change in leadership surely will lead to a different direction.

But will it? Everything we’re complaining about today has its roots in the prior Democratic administration: high prices, almost double-digit inflation. Afghanistan, Ukraine, and Gaza weren’t examples of international stability. The Black Lives Matter riots weren’t peaceful. Forgiving billions in student loans by executive order, the courts were Trump’s second home during the 2024 campaign, and if you wanted Biden’s attention, his son had a painting for you.

Yes, you can argue that the current Trump administration is worse in all these areas, but that is just because Trump exceeded them, not because he initiated them. Just as Trump followed and expanded on the Democrats’ path, there is no reason to believe the Democrats won’t build on and exceed the present administration in these areas. A continuing game of ” Can you top this?”

Instead of a fresh approach to our myriad of problems, the Democratic leaders with the loudest voices promise more of the same. From California to New York City, Newsome to Mandani, and all Blue spots in between, we hear the same old, same old. The rich are getting richer at the expense of the rest of us, and not “paying their fair share.” Corporations, you name the place, are price-gouging, and inequality is growing by leaps and bounds.

Given these diagnoses of our problems, the solutions have a familiar ring to them. Increase taxes on those nasty billionaires and millionaires’ ill-gotten gains. In California, increasing income taxes on the “rich” isn’t enough; we have to tax their accumulated wealth. Investigate companies whose prices have moved up significantly. Stronger price controls on things like rent in New York City. Hike up the minimum wage to give everyone a raise. Close the growing gap between the haves and have-nots by increasing transfer payments.

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The Pursuit Of Happiness

Dave Davis Commentary, Policy, The Long Journey to "More", Uncategorized , , , ,

While waiting for the long-overdue Supreme Court Tariff ruling, I’ve had time to reflect on why so many Americans have either a dim view or little knowledge of our capitalist economic system. How can a simple, common-sense system be misunderstood by so many?

I’ve been reading Zhang Weiying’s “The Logic of the Market: An Insider’s View of Chinese Economic Reform” to better understand how the Chinese economy compares to our own. Most economists talk in jargon, but the Author explains capitalism in terms of happiness rather than marginal returns and GDP.

In capitalism, people engage in consensual exchange. Consumers and suppliers freely exchange a wide range of goods. As each gets what they asked for, both are happy. You go to the supermarket, you get what you want, and the store gets paid. Both of you win.

However, if goods or cash change hands with only one party happy and the other sad, it’s robbery. Think about that. Someone points a gun at you, demanding your stuff. The thief is happy, but you’re really sad. The point of human interaction is shared satisfaction, rather than gloom.

The gauging of happiness and sadness in society to determine whether an action is successful or just a thief. can be applied to both governance and economics. Most commercial transactions in free-market economies result in happiness for all the participants. You go to Costco, get a hot dog, and fill your cart with goods you value. At checkout, both you and Costco are happy.

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Allow People To Interact

Dave Davis Commentary, Policy, The Long Journey to "More", Uncategorized , , , ,

All the noise about the Elon Musk-led Department of Government Efficiency (DOGE) lopping off unneeded chunks of the Federal Government and the horrified response by the big government-favoring progressive left got me thinking about what the purpose of Government is in the modern world and how we can match it to those goals.

My take on the question will shock and horrify others, but hear me out. The purpose of modern Government is to provide the structure for free and open markets to thrive. These markets are another way of saying people can freely and safely interact.

Markets are the best way to allocate resources to better the human condition. Nothing, including the various forms of socialism, mercantilism, feudalism, or tribalism, has lifted humanity more than free and open markets. If you don’t accept this, I urge you to read “Super Abundance.” As the structures necessary for markets to thrive expanded, humanity’s living standards have dramatically improved, even as its numbers have grown.

The reasons for market superiority aren’t hard to find. Billions of people using the latest information will arrive at better decisions and make them quicker than the relatively few elites in Government. In the information age, this advantage only grows.

Markets are the most democratic form of choice. People vote for their preferences. These are hard choices because their money is involved rather than theoretical. We are all human, so markets make mistakes momentarily but self-correct as new information enters the continuous exchange. We invest funds to receive a proper return. If the profit potential leaves, so do we.

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Time Waits For No One

Dave Davis Commentary, Policy, Uncategorized , , , , , ,

While we await the election, the world moves forward. Wars keep spreading. The administration continues its mission to prevent this, but we have the opposite. Ukraine seized Russian territory. In the Middle East, Lebanon is aflame, and Iran is taking blows.. Now, North Koreans have entered Russia, apparently to bolster the Ukrainian front. The conflict containment policy has failed.

Kamala Harris says she wouldn’t change anything. Are we looking at the same wars? While we wait for direction from whomever wins the Presidency, our friends have suffered. At every step of the way, the U.S. put obstacles in the way of the Ukraine, and Israel to deal their foes attitude changing blows. Aggression is best met by a solid and painful response. If it isn’t, the attacker has no reason to desist. When we forget this simple fact, we promote more bad behavior. Lawbreakers paying little price or no price leads to more crime.

Now we have Turkey bombing the Kurds. Remember them? They are the ones who filled the combat role in our victory over Issis. A terrorist attack on military base caused the Turkish action, even though there is no proof it was the Kurds.

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Working Towards Decline

Dave Davis Commentary, Policy, Uncategorized , , , ,

Two happenings this week show how far we’ve traveled from reality. The vice-presidential debate and the East Coast Longshoreman Strike may have little in common, but both evidence an archaic way of thinking. The idea that we can stand in the way of progress in a way that saves everyone’s present job has never worked out in practice. Pursuing such a program with an expanding wage scale is madness.

From Diocletion’s Roman Empire to China’s Qing Dynasty, stopping time by government fiat only resulted in decline. Yet both vice presidential candidates claim they can preserve and bring back manufacturing jobs. J.D. Vance hews to Trump’s tariffs to protect otherwise unprofitable businesses. At the same time, Tim Walz would continue massive subsidies and tariffs to do the same.

The East Coast longshoreman demanded a considerable wage increase and banned further automation. With its potentially severe economic consequences, this strike is a stark reminder of the dangers of resisting technological progress. The Luddites in the U.K. in the early 19th century, who violently opposed technological change and rioted over the introduction of new machinery in the wool industry, would seem to be a strange model to follow. There appears to be a settlement with a significant wage increase, but we don’t know about automation. It’ll be interesting to see the final draft.

Both presidential tickets employ industrial policy methods of protection and subsidies, disregarding the fundamental economic concepts of “Comparative Advantage” and “Opportunity Cost.” Some countries possess advantages that enable them to produce goods more economically. Understanding these concepts is not just important; it’s empowering. It’s the key to making informed economic decisions and fostering growth.

Understanding and applying the principles of comparative advantage is crucial for economic growth; it’s a beacon of hope. Canada could grow dates in greenhouses, but countries with a favorable climate can send them to Canada at a much lower price. On the other hand, wooded Canada has lumber unavailable in date-producing desert nations. Dates for the lumber trade leave everyone with more. Adhering to these principles has allowed billions of people to live better than ever, and continuing to do so can lead to even more prosperity.

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