The President, the Economy, and Other Important Stuff

Let me begin by saying something that’s been apparent since President Biden took office on January 20, 2021. Everything our President knows about economics could be etched on the head of a pin with a jackhammer. Okay, that was a bit hyperbolic, but based on his political record during all those years as a senator from Delaware and as Barack Obama’s Vice President, Joe Biden really hasn’t learned very much. One suspects he’s been well-controlled by a team of handlers since he first ran for the U.S. Senate back in the early 1970s.

I’m not the only one who thinks ill of our President’s capabilities. Back in 2016, when Vice President Biden was competing for the Democrat nomination for President, his boss wasn’t too flattering about Joe’s abilities. An aide quoted Obama saying, “Don’t underestimate Joe’s ability to f**k things up.” Crude but revealing. Obama isn’t alone among those who know Joe well. As Robert Gates, President Obama’s defense secretary, once put it, Biden has “been wrong on nearly every major foreign policy and national security issue over the past four decades.” Judging by his actions during that past 20 months, Joe hasn’t changed. But yesterday, campaigning for a truly incompetent senatorial candidate in Pennsylvania, Obama and Biden stood on a stage hugging each other as Joe called those who disagreed with their far-left policies “idiots.”

But let me focus on the economy President Biden has given us. I’m not an economist. Although I took lots of economics courses in graduate school, they had little positive effect. I sat through courses in macroeconomics, microeconomics, and international economics. I even studied econometrics one quarter. I managed to get an A in that course, but I remember absolutely nothing, except that the professor was a bit creepy…but I won’t go into that. Heck, it was the early 70s, a time of ubiquitous creepiness. And yet, through it all, and with the help of a few books by Milton Friedman, Jude Wanniski, and Arthur Laffer, I actually learned a few things that have inexplicably remained in my aging brain. For example:

• The Law of supply and demand actually works. Ignore it at your peril.

• Inflation is caused by government and by no one else, because only government creates money. Inflation results from government printing too much money so it can spend lots of money. This leads to all that money chasing too few goods, so prices rise. But in a real sense inflation’s root cause is the demand by citizens for government largess. That’s right, folks, you and I are the real cause because too many of us love to receive “free money” from the government. The solution? Stop asking the government for expensive goodies, and instead tell the folks you elected to slow the increase in the quantity of money; that is, tell them to stop spending so much. After all, it’s not their money; it’s ours. And because the folks that create all that money always want more of it, they increase taxes, something that only makes things worse because it drives up the prices of goods and services. If you and I hope to see inflation drop, then, we must vote for politicians that intend to reduce spending and cut taxes. Nothing else will work.

• Speaking of taxes, here’s another truth: If you tax something, you will ultimately get less of it. Taxation is a cost to both producer and consumer. Taxation, then, has a significant effect on the basic law of supply and demand. If the government taxes something, its cost is reflected in the prices paid at every level. Demand then decreases, affecting supply.

• I’ve never been a believer in taxing businesses, for the simple reason that businesses really don’t pay taxes, at least, not as you and I do. I don’t mean they’re tax cheats, not at all. Like you and I, they write their checks to the U.S. Treasury. But if we take a close look at taxation, we’ll note the differences between businesses and individuals. When the government increases personal taxes, you and I can try to increase our income, but that’s not easy, at least not in the short term. Most often our only real alternative is to spend less by cutting back on our expenses, which has a negative effect on the economy. Businesses are different. If government increases their taxes, businesses look for ways to reduce production, equipment, and other variable costs, and seek means to increase sales. But they also take a hard look at their workforce. Cutting their workforce and expanding technology can be an effective means to lower costs. Increasing taxes on business, then, often leads to increased unemployment. But cost-cutting steps take time to implement, so businesses have only one other option: they raise prices, thereby passing on the increased cost of taxation to their customers. The result? Increased taxes on businesses are ultimately paid for by you and me because the stuff we buy costs more. Over-taxation of businesses and individuals, then, has both short- and long-term negative consequences.

• Energy is a key driver of modern economies. Drastic changes in energy production or energy sources will cause major disruptions to the nation’s economy. This is especially true when we try to replace highly reliable energy sources with far less reliable alternative sources. Clueless politicians simply do not understand or ignore the hidden costs, the national security implications, and the additional infrastructure demands that arise when they make major policy changes on such critical issues as energy.

Now these truths are neither accepted nor understood by our President. In fact, President Biden seems to believe that prosperity comes not from the free-market economy but from the government. This, to use one of the President’s favorite terms, is pure idiocy. A government-run economy is simply socialism; and socialism, whenever and wherever it has been tried, has failed miserably. To believe in socialism, then, is to be historically ignorant. In truth, to be a socialist is to be remarkably stupid. Okay, that’s a bit harsh. Only the useful idiots recruited by the hard-core socialists are the stupid ones. The hard core, the true believers, are well aware that socialism in all its forms does not bring about the paradise they promise. Unlike the useful idiots, they know the truth; and the truth is that socialism will give those in charge near unlimited power. And power is what they seek. Back in 1962 one of my professors at Georgetown, referring to the problems that plagued Ancient Greek democracy, said something I’ve never forgotten: “Power is sweetest when it is wielded secretly.” Perhaps behind the scenes at the White House there are a few folks savoring the sweetness of the power they have managed to acquire.

Watching and listening to our President, one senses there is a cadre of true believers who secretly run the show and set policy. Ideologically they obviously reside among the far left and have had no difficulty moving “moderate Joe” in their direction. They seem to have been less successful controlling our Commander-in-Chief during his public outings, hence the repeated gaffes and embarrassing senior moments. Even discounting his age, I think I can confidently predict that Joe Biden will be a one-term President.