politics

Falling In Line

Dave Davis Commentary, Policy, Uncategorized , , , ,

The most dismaying part of today’s public policy dysfunction is the willingness of people who know or should know what they’re saying, which isn’t true, to shape views to align with their group’s views rather than look at the actual data. Just this past week, two well-known sources of information said things unsupported by any facts. If you believed them, it could cause harm.

On his Fox business show, Larry Kudlow and the panel laughed at a Wall Street Journal article showing professionals selling while the public buys. With the market rallying, their clear implication was that the public is smarter than the professionals and buying now is a better bet than selling.

This assessment flies in the face of experience. One of the universal signs of a market top is widespread bullishness, especially among smaller investors. Small investors don’t have the information that the pros have access to. Who else is left to buy to increase prices when the public is all in? Basing your market outlook on the supposed stupidity of professionals and the bullish actions of the public hasn’t worked out well in the past.

I don’t know what will happen. If the tariffs stay high, it’s hard to see a solid future. However, if Trump makes a few inconsequential deals, like the one with the U.K., and then calls most of the tariffs off, it would surely improve the outlook. At this point, no one knows what Trump will do. I don’t think Trump knows.

Having served in both the Reagan and Trump administrations, Kudlow has a unique position. He knows the adverse effects of high tariffs well, so it’s baffling that he’s taken a bullish position with high tariffs still in effect. Implying that the pros do less well at market turns than the public to justify his pro-Trump position is out of place.

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Homeless

Dave Davis Commentary, Policy, The Future Party, Uncategorized , , , ,

Seven Years ago, I started the series on the “Future Party.” The two-party system had increasingly become captive to its most extreme elements, and the situation becomes more divisive daily. During this time, we’ve experienced a mishandled pandemic, the most significant inflation in four decades, conflicts threatening a new Cold War, if not a hot one, and an upheaval in the world’s trading system.

Both parties contributed to these situations while ignoring the sword of Damocles hanging over the nation, our out-of-control debt problem. At the same time, we’re dividing in ways we haven’t seen before. We receive information from different sources, resulting in an inability to discuss the day’s issues. Each side presents its own “facts.” Where people on the left or the right enjoyed Johnny Carson or Jay Leno, those watching Stephen Colbert would never watch Gutfeld!, and visa versa.

The division has even spread to those we choose to associate with. Some won’t even consider dating anyone with different views. Whatever happened to understanding the other person’s position sufficiently to come to a compromise?

What has caused the widening gulf between Americans? One answer is too much Democracy. By that, I mean too many elections. As I pointed out in the Future Party series, national presidential elections get our attention and participation. Off-year elections and primaries have much lower turnouts. They appeal to partisans and those most directly affected. Government employees will turn out because local elections hit their wallets, but others can’t always devote the time.

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Emily Post Values

Dave Davis Commentary, Policy, Uncategorized , , , ,

I’m far from alone in being frozen in place rather than making everyday decisions in a timely fashion. It’s hard to make choices and commitments when the situation can change in a minute on a whim. The president explained what each nation would suffer from U.S. tariffs, complete with a visual aid, only to turn around and delay much of the implementation. Then came exemptions. Worse, the whipsaws often came while markets were open, so there was no time to evaluate.

It takes investment capital to create productive jobs; how can I or anyone else commit funds and effort under today’s circumstances? Franklin Roosevelt’s ever-changing policies prolonged the great depression, in my mind. Yet, Trump makes him look like the sole of consistency. Nothing seems safe. Even if you negotiated a trade agreement in Trump’s first term, the president unilaterally pulls out and enacts new terms. Do we have allies? Do we have friends? What are the rules? For how long?

We hear of dozens of nations lining up to come to terms. Maybe they just want answers to these questions. If I’m having problems going about my business under these circumstances, imagine what leaders of nations are going through.

There used to be rules of the road to avoid unintended collisions. When I grew up, it seemed everyone had a copy of Emily Post’s “On Etiquette” or something similar. While this may seem quaint today, it served a practical purpose, preventing misunderstandings that could create ill will when intending none. Simply forgetting to send a thank-you note or a reply sends the wrong message and ruins friendships. If you don’t intend a slight, do the right thing.

We have rules governing relations between nations, the government, and the people in the U.S. When someone runs roughshod over regulations and conventions, what’s the message? Some of them are treaties and legislation signed into law. Can you do your thing without regard for others, without sowing distrust and anger?

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Bad Books

Dave Davis Commentary, Policy, Uncategorized , , , ,

We’re at a point where it is impossible to comment on the present administration’s policies. Trump’s pledge to end both the Ukraine and Gaza wars quickly has dissolved into continued bloodshed, with only a few hostages returned and some prisoners exchanged. The administration apparently may move away from peace efforts. We must wait for information on what the administration is up to now.

There are three ways our tariff policy could go. First, Trump could come to his senses and reverse most of these taxes. The loss of trust in the U.S. will remain, but it mayn’t get worse.

On the other hand, if Trump truly wants us to produce everything within our borders, he has to raise the walls so high that nothing comes in from abroad. Of course, if nothing comes in, we take in no revenue—just higher prices and less choice.  

The third outcome may be an expanded version of Trump’s first-term approach: imposing tariffs and negotiating a patchwork of cut-outs and individual deals with countries, industries, and companies.

If I had to bet, I’d go with the last option. An endless procession of supplicants competing for favor is a narcissist’s dream. Of course, granting favors to those best appealing to his vanity would be a mercantilist economy on steroids—cronyism rules. Will this work better now than in the past?

While waiting for the fog to clear, it’s a good time to deal with the sudden spate of books and articles on Biden’s cognitive decline by people who were aware of it or should’ve been aware the former president wasn’t on top of his game.

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Haven’t We Seen This Movie Before?

Dave Davis Commentary, Policy, Uncategorized , , , ,

You’re settling in to spend an evening watching an interesting-sounding movie, only to realize you’ve already seen it. That’s the feeling I got when Trump suddenly reversed course and paused some of his tariffs for 90 days. The reason the administration and, indeed, Trump himself provided is that all those seventy-five nations already ripping us off, except for China, were lining up to lift their tariffs and other actions and finally move to free trade while leaving China on the outside. It’ll take time to accept their surrender.

Prominent countries named as heading up the list of supplicants were Japan, Malaysia, Vietnam, and Australia. These names rang a bell. Haven’t we sat down with these countries and others and worked out a lowering of tariffs and other trade restraints in the past? Then it came to me; we negotiated a trade treaty with these nations and seven others that accomplished these goals. It was called the Trans-Pacific Partnership (TPP). Negotiated over several years by then Secretary of State Hillary Clinton, who claimed “the deal set the ‘gold standard in trade agreements.” Twelve countries’ representatives O.K.’d the Treaty in 2016. It only needed to be sent to the Senate for approval by the new president.  

What happened then needs to be recalled and appraised in light of what is happening today. Donald Trump campaigned against the treaty, claiming it would join the already-in-effect NAFTA treaty in destroying middle America. This stance reflected his anti-free trade stance going back to the 1980s. What is surprising is that Hillary Clinton turned on her handiwork.

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