Political Notes 2022 07 15
Biden has become a scapegoat
Much of the inflation was baked into the economy before his inauguration. In panic mode from the pandemic, we dropped too much money on an economy while constraining supply in a massive way never seen. He may have made it worse and would have made it much worse if a mere two Democrats had not stopped the BBB fiasco.
Opponents, inside and outside of his party, focus on his age, but no one would care about Biden’s age if the economy was sound, crime was contained, and the border was secure. Biden is a mere scapegoat for his own party’s feckless policies. Bad policies are nor magically transformed by better massaging; that is merely putting lipstick on a pig.
If the Fed succeeds in wrestling inflation down Biden will also get the credit if it happens soon enough.
It’s the Culture Stupid
I used to think everybody votes their pocketbook, but culture seems to be playing a bigger role. It is less about the correct stand on transgender and pronouns than that lack of any civil tone. Screaming at SCOTUS members at public restaurants may get the approval of a few radicals but it alienates the independents that could be persuaded. Demonization makes compromise impossible and in a divided nation the inability to compromise legitimizes violence. Intolerance, cancel culture, and rage is unacceptable to most Americans and will show at the polls.
Identity politics has contributed to tribalization, deference to victimhood over responsibility, and a tolerance of criminal behavior that has led to soaring crime rates. In the pursuit of woke ideologies, governments have abdicated their most fundamental responsibility.
Money is not the economy
It is easy to throw money at a problem. It is much harder to reconcile tradeoffs and market realities. For a century our political economy has been demand centric because of the dominance of Keynes (reading far more into Keynes that he probably intended), but that is because the supply side did its work quietly whether because of or despite government regulation. When the world economy was shut down while trillions were dumped on consumers the supply side could no longer be taken for granted.
We are now facing potentially catastrophic food shortages, made worse by the Ukrainian war and green policies gone awry in The Netherlands and Sri Lanka.
Our political elite took supply for granted. They confused dollars with goods. Demand stimulus is a very short term and limited tool. If we get into debt to stimulate demand, what happens when we pay it back? Debts are always repaid – one way or another- even if you are not a Lannister.