Common Sense Economics
It’s past time for some economic myth-busting: the American government is not “starved” for revenues.
America’s Internal Revenue Service and the U.S. Treasury collect more taxes annually than any nation in history, but, for years, the government has spent far more than Treasury receipts. America’s national debt currently exceeds $32 trillion. Nonetheless, President(ish) Joe Biden, elected Democrats, vulnerable elected Republicans, and the American left insist that America must spend more.
They’re wrong. And sensible people know it.
But America’s political class doesn’t care.
In 2007, Nobel laureate Thomas J. Sargent, Economics Professor, NYU and Senior Fellow at Stanford’s Hoover Institution, warned them in an address to graduates at Berkeley.
Dr. Sargent called economics “organized common sense,” and listed some “valuable lessons” which economics teaches objective practitioners, but which are commonly ignored by the politicians who control our massive, overreaching government and by ideological economics academicians who rationalize, excuse and support them.
Among other things, Sargent said:
“Many things that are desirable are not feasible.”
“Individuals and communities face trade-offs.”
Nonetheless, politicians disregard sensible tradeoffs and mandate unfeasible programs. For example, governments imposed draconian COVID regulations without considering the effects on education, small businesses, the economy or the public health effects of isolation, masking, missed diagnoses of unrelated illnesses, and untested vaccines.
Sargent: “Other people have more information about their abilities,…efforts, and… preferences than you do.”
Yet, public officials impose one-size-fits-all policies.
One-size-fits-all coronavirus vaccine mandates resulted in fewer workers, higher inflation, and increased vaccine hesitancy. Forcing compliance on 84 million Americans working for employers with more than 100 employees was never based on science.
A recent White House executive order seeks to “expand access to affordable, high-quality” child care with a policy that imposes the administration’s own ideas on working families, while ignoring parents’ preferences for work and caregiving.
Sargent: “Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.”
“In an equilibrium of … an economy, people are satisfied with their choices. That is why it is difficult for well-meaning outsiders to change things for better or worse.”
Nonetheless, politicians seem surprised that public welfare policies that make single motherhood a career choice and remove incentives for education, work, marriage and sexual and social responsibility produce single mothers, multigenerational welfare recipients, scofflaws and slackers.
Sargent: “In the future, you too will respond to incentives. That is why there are some promises that you’d like to make but can’t. …The lesson here is this: before you make a promise, think about whether you will want to keep it if and when your circumstances change. This is how you earn a reputation.”
“Governments and voters respond to incentives too. That is why governments sometimes default on…promises that they have made.”
President(ish) Joe Biden has broken campaign promises on national healing, “restoring decency to the White House,” transparency, eradicating COVID, and others, thereby shredding his credibility and reputation at home and America’s abroad.
Sargent: “Most people want other people to pay for public goods and government transfers (especially transfers to themselves).”
Public officials are transferring wealth from (while ruining) America’s middle class to generous special interests and to other Americans who vote reliably for the politicians who advocate the transfers.
Sargent: “It is feasible for one generation to shift costs to subsequent ones…”
“When a government spends, its citizens eventually pay, either today or tomorrow, either through explicit taxes or implicit ones like inflation.”
Lawmakers have mortgaged America’s future. Elected officials have spent or committed trillions of dollars of wealth Americans – including many millions unborn – have yet to earn, and saddled future generations with debt that is not only currently unsustainable but one that our children and grandchildren will find impossible to repay.
Soon, interest on the national debt will be the largest expenditure in the federal budget – larger than defense or Social Security. Debt service is an expenditure for which American taxpayers receive absolutely nothing.
This massive accumulation of debt by America’s political class is both irresponsible and immoral. Nonetheless, Washington Democrats continue attempts to coopt enough squishy congressional Republicans to spend even more.
Politicians and economics ideologues ignore responsible voices like Dr. Sargent in their own interests and at America’s peril.
It’s past time for common sense Americans to reclaim their government – and their families’ futures.
https://www.pottsmerc.com/2023/07/10/jerry-shenk-common-sense-economics/
