The Wisdom of the Voters

After a long, contentious election campaign, it appears that Joe Biden has been elected President and that Congress will remain divided with the Republicans continuing to hold the Senate.  In other words, the American people have rejected Donald Trump but have voted to keep a partially conservative Congress.  I consider this to be a good outcome.

What will be the practical effects of this new balance of power?  Consider:

  • The pandemic is far from over but the economy continues to recover briskly even as the daily coronavirus infection rate is growing. The unemployment rate dropped to 6.9% in October from 7.9% in September.  A vaccine is expected to be available soon.  President Biden might decide to declare a national mask mandate but this will have little effect beyond the many statewide mask mandates already in place.
  • Additional economic stimulus will now be more sparing with the Republicans retaining control of the Senate. It will be carefully targeted toward the shrinking number of people who are still adversely affected by the coronavirus.  Such an approach is more fiscally responsible considering our rapidly growing national debt.
  • The wish list of the progressive left is stymied. No banning of right-to-work laws nationwide; no $15 an hour national minimum wage. It is much better to let the states decide such issues for themselves, just as Florida adopted its own $15 minimum wage last week.
  • Identity politics may be on the wane as Trump received 45% of the Hispanic vote statewide in Florida and 36% in Texas. In California, voters upheld the existing ban on affirmative action in college admissions, public hiring and contracting.
  • Limited, decentralized, democratic government was a big winner on Tuesday.  In addition to all of the above reasons, 160 million Americans voted this year, 67% of all registered voters, an enormous turnout. Since each state sets its own rules and voting procedures, there is much less likelihood of widespread fraud.

Conclusion.  The presidential election proceeded very smoothly.  The country voted for divided government, rejecting President Trump but retaining a Republican Senate.  Such an arrangement will promote practical, consensus-oriented legislation well serving our politically polarized country.

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The Real Issue in the 2020 Presidential Election: Do You Want Limited, Decentralized Government or the Opposite?


If you haven’t voted already, then on Tuesday you will vote for either Joe Biden or Donald Trump.  Or, more simply, whether or not Trump has four more years.  Even though I haven’t said explicitly who I will be voting for, it should be obvious to the readers of this blog.

I am in favor of limited, decentralized government.  Here are some pertinent examples:

  • The pandemic. Our country’s strategy to combat the pandemic is decentralized.  No national mask mandate.  The governors are in charge of policy for their own states.  Especially the governors must decide how quickly they can reopen their economies.  The red-state governors are doing a much better job of this than the blue-state governors.
  • The Electoral College. The U.S. was founded as a republic, i.e. a collection of states, with many governmental responsibilities of their own.  It would dilute state authority to elect presidents by the national popular vote, rather than by electoral college vote, as we do now.
  • The Supreme Court. Newly sworn-in Justice Barrett is of high moral character with an outstanding record of constitutional originalism and textualism on the federal bench.  She is the type of person we need on the Supreme Court.

  • Global warming is real and California has a severe forest fire problem. But no amount of more renewable energy or more electric cars in California will stop the drought.  Worldwide, carbon emissions are still increasing, due especially to China and India.  What California can do to reduce forest fires is to adopt better forest management procedures (i.e. cleaning out underbrush and dead trees).  Such action is directly under the control of state officials.
  • National issues. Even in a republic like the U.S. with a decentralized government, there are many responsibilities that only the national government can fulfill, such as foreign affairs, military strength, administering welfare and entitlement programs, and much more.  Congress and the President should focus on purely national issues and let the states do the rest.

Conclusion.  It is a relief that the presidential election campaign is almost over and that the country will make a decision, one way or the other.  Even though big issues are at stake, our country is very strong and democracy will survive and flourish for many years to come.

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What Will Replace the U.S. Based Liberal International Order?

As the tightly contested U.S. presidential election draws to a close, what effect will the outcome have on U.S. foreign policy?  I have already discussed this question in two recent posts.  First of all, we should not overly fear the rise of China, because China’s population, and especially its working-age population, will soon be in decline.  Secondly, Trump’s nationalistic and populist leanings are here to stay, regardless of how much longer Trump, himself, remains in office.

The political scientist, Michael Beckley, has a more extensive discussion about this in the current issue of Foreign Affairs. Says Mr. Beckley:

  • The era of liberal U.S. hegemony is an artifact of the Cold War’s immediate afterglow. In the coming decades, rapid population aging and the rise of automation will dampen faith in democratic capitalism and fracture the free world at its core.  The burdens of caring for older populations and the job losses resulting from new technology will spur much competition for resources and markets.
  • In the next 50 years, only Australia, Canada and the U.S. will have growing populations of working-age adults. China will lose 225 million working-age adults, 36% of its current total.  By 2050, Russia’s spending on pensions and medical care for the elderly will increase by 50% as a share of its GDP and China’s share will triple.  In the U.S. such spending will increase by only 35%.

  • The wide-spread adoption of smart machines will reduce the United States’ economic dependence on other countries. For decades the U.S. has chased cheap labor and resources abroad.  Now, automation will allow the U.S. to rely more on itself.
  • This rise of smart machines will also help the U.S. contain the military rise of its rivals. Drones and missiles will be capable of destroying enemy invasion forces.  The U.S. can capitalize on a fundamental asymmetry in war aims: whereas U.S. rivals need to seize and control territory (Taiwan, the Baltics) to achieve regional hegemony, the U.S. needs only to deny them that control.
  • The working-age populations of U.S. democratic allies will shrink by 12% over the next 30 years, while their senior populations will expand by 57%, the same problem facing China and Russia. Such challenging conditions will inevitably breed nationalism and extremism.
  • At the same time, North America will be the only region with all of the ingredients necessary for sustained economic growth.
  • The post-cold war order has fostered the most peaceful and prosperous period in human history. As it recedes, the world will become a more dangerous place with the return of great power mercantilism and new forms of imperialism.  A major example is China’s Belt and Road Initiative and its attempt to create a closed-off, parallel internet.
  • A nationalist mood has taken hold in the U.S. But warding off authoritarian powers such as China and Russia can be accomplished with advanced technology even while foreign bases are being eliminated or cut back.  Overall, this represents a realistic realignment of U.S. foreign policy rather than a retreat from the world.

Conclusion.  “The best hope for the liberal world order is that the U.S. find ways to channel growing nationalist impulses in internationalist directions.”  For example, the U.S. has previously undertaken liberal campaigns for selfish reasons.  It nurtured a community of capitalist democracies to crush Soviet communism.  The secret is to figure out how to continue this kind of outreach in the new, coming nationalistic era.

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The Long Term Social Effects of the Pandemic

With the number of new coronavirus cases in the increasing, we are reminded that the pandemic is not yet over and that each of us needs to continue to act in a responsible manner by practicing social distancing and wearing masks in some situations.

The longer the pandemic continues, the more profound will be its lasting effects on American society.  The social science scholar, Nicholas Christakis, has taken a stab at delineating many of these social effects.  For example:

  • A vaccine won’t give us an early exit. A vaccine may not be widely available before the U.S. achieves herd immunity, which will likely occur no later than 2022.
  • Providing medical care over the internet is now not just permissible but even widely encouraged. Telemedicine has achieved a big advance in the last few months.
  • Many restaurants have now reopened but often at only 50% capacity. Of the 15 million people previously employed in restaurants as waiters, cooks, etc., half of them have lost their jobs.
  • Many other small retail firms have gone out of business, often replaced by the growth of giants like Amazon, Walmart and Target. More people will continue to work from home which means a much lesser need for office space.

  • Cramped-in apartment dwellers may want more living space prompting them to move to less dense urban areas. This will have a major effect on the real estate industry.
  • Working conditions will change. Before the pandemic less than half of shift workers had access to paid sick leave.  But a contagious disease makes it clear why this is a bad idea. Many companies, from Apple to pizza delivery businesses, are now providing paid sick leave to hourly workers for the first time.

  • Covid-19 may drive up wages in the U.S. The pandemic has emphasized the country’s dependence on all sorts of low-wage workers.  This will likely lead to better pay in the future.  In part this could take the form of more paid sick and family leave as well as more flexible work schedules and child-care subsidies.

Conclusion.  As the pandemic eventually subsides, life will return to a “new” normal, with major changes in employment and living conditions.   On the whole, these changes will reflect improvements in the quality of life in the U.S., especially for lower-income workers.

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The Economic Stakes in the 2020 Election

I continually try to clarify this blog’s point of view. I am a (mostly) non-ideological fiscal conservative and social moderate. One of the great strengths of our democracy is the constant competition between the two main parties. If one party gains too much influence, then the other party will make a comeback in the next election.

I have stated in recent posts that I like Donald Trump’s emphasis on populism and nationalism, and that progressive policies are often ineffective. 


Today let’s look at the economic policies proposed by the two presidential candidates. First of all, the Committee for a Responsible Federal Budget takes a dim view of both platforms. It projects a national debt under the Biden plan of 128% of GDP in 2030 as compared with a debt of 125% of GDP in 2030 under the Trump plan. These are both huge increases from the current level of about 100% of GDP today. While much different from each other, their platforms are quite similar in terms of new debt incurred.


Now let’s turn to the economic effects of their policies, a more complicated subject. Here is one analysis by Casey Mulligan from the University of Chicago, “The Real Cost of Biden’s Plans.” 

• New regulations implied by Biden’s plans will cost the lowest income quintile of Americans 15.3% of its total income.

• A ban on fracking, required to meet his goal of 100% clean energy by 2035, will alone cost the lowest income quintile 6.8% of annual income.

Conclusion. Many things are at stake in the 2020 presidential election, but economic effects are among the most important. In this regard, there is a clear difference overall between the two candidates.

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How Well Do Progressive Policies Work?

I am a fiscal conservative and a social moderate.  I have not yet endorsed a presidential candidate and probably will not.  However, I have definite views about major political issues, and I discuss them on this blog.  For example, I like Trump’s nationalist and populist leanings.

Today I report on another hot political issue, the effectiveness of progressive policies.  Joel Kotkin, the Ex Dir of the Urban Reform Institute, has an interesting article, “Blue Today, Bluer Tomorrow” in the current issue of the National Review.

Mr. Kotkin points out that:

  • The worst places for minorities are generally those metro areas that are bluest, such as New York City, Los Angeles, San Francisco, Chicago and San Diego. They do best in southern metro areas such as Atlanta, Raleigh, El Paso, Nashville and Phoenix.
  • Blue strategies such as affirmative action, higher taxes, expanded social programs and more regulation have not slowed down poverty’s spread. Between 1980 and 2018, the number of high-poverty metropolitan census tracks have doubled while the wealth gap between these areas and affluent areas have grown.
  • Today our core cities suffer a level of inequality far worse than in the countryside or suburbs and more closely resemble social conditions in Mexico. Rather than supporting a robust middle class, core cities suffer an ever-wider gap between the two critical constituencies – the highly educated professional class and the urban poor.
  • The recent wave of riots, the most widespread in 50 years, is not likely to make cities any more attractive. Yet in the face of these threats to public order, many blue-city politicians have taken a remarkably hands-off approach to looting and other forms of violence.
  • Urban policy is just one example of blue policies that are hurting the poor and working classes. Once a major energy producer, California is now coping with gas and electricity prices that are among the highest in the nation.  For all this suffering, California’s junior Green New Deal has provided little benefit for the environment.  The state, not including the ruinous effects of fires, ranks a mediocre 40th in per-capita greenhouse-gas reduction over the past decade.
  • Blue-city K-12 school districts are notorious underachievers. Many core-city school districts such as Philadelphia, Baltimore and Detroit, produce extraordinarily bad student test scores.  Some mostly red states such as Tennessee, Kentucky, Texas and Ohio are already shifting resources to skills education that is more practical for many minorities and working-class whites.
  • The woke agenda represents only 8% of the population. Conservative traditionalism represents only 25% of Americans.  Roughly 2/3 of Americans are thus in the “exhausted majority.”  Even nominally progressive millennials, once they begin to raise children, buy houses and start businesses are likely to reject the more intrusive policies pushed by New Left urbanists.
  • Forcing the two parties to go after suburban and small-town voters is the country’s best long term political hope. “Here lies an opportunity, born of massive blue failures, to forge a new politics that is fundamentally pragmatic and reflects the middle-class aspirations that have long defined and blessed this country.”

Conclusion.  Our country is in a big political mess right now.  Progressive left policies, so currently in vogue in many blue cities and states, are making things worse.  But there is hope in the political center if it can figure out how to assert itself.

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The American Dream Is Still Alive and Well

As we recover economically from the coronavirus pandemic (with the unemployment rate continuing to drop), we should not lose track of the many things that the U.S. is doing right.  I have been focusing on this in my last few blog entries and pointing out how important it is to return to the economic growth we were experiencing before the pandemic hit us hard in March 2020.

Today I report on a recent study by Michael Strain from the American Enterprise Institute, “The American Dream Is Not Dead,” as summarized by James Pethokoukis also from the AEI.

Consider that:

  • Wages have not been stagnant for decades. As the figure below shows, during the past three decades, wages for typical workers have grown by at least 20% (perhaps as much as 33% depending on how they are measured).  It is unreasonable to describe (as does the main-stream media) this growth as stagnant.

  • Household income growth has not been stagnant for decades. As the figure below shows, the median household saw market income plus social insurance benefits increase by 28% from 1990 to 2016.  And income after taxes and transfers grew by 44% over this same period.

  • Most Americans in their 40s are doing better than their parents were during their 40s. Again, looking at the chart below, 86% of today’s 40-somethings who were raised in the bottom 20%, have higher incomes than their parents did when their parents were in their 40s.  This represents huge upward mobility from the bottom of the income distribution.

Conclusion.  Of course, the pandemic is a temporary setback, but let’s keep in mind how well the economy has been doing in recent years.  “If you work hard and play by the rules, you can get ahead.  Your effort will be rewarded.  America is a place where you can build a better life for yourself.”

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The U.S. Is Mostly in Very Good Shape

As we continue to pull out of the pandemic and life gradually returns to normal, it is pertinent to think about other big issues facing our country.  As most of you know, I live in Omaha and, Nebraska now has, for August 2020, the lowest unemployment rate in the country at 4%.  So things tend to look good from where I am perched.

Let’s examine the severity of some of the bigger problems facing the U.S. today:

  • The Pandemic. The number of new daily coronavirus infections is steadily decreasing.  The unemployment rate dropped from 10.2% in July to 8.4% in August.  So the most important measures are moving in the right direction and we are already recovering from the pandemic.  Our decentralized policy of reopening the economy as quickly as possible with the governors in charge is working well.
  • Racism. The killing of George Floyd in late May while in the custody of the Minneapolis Police Department has led to a summer of racial discontent.  Yes, there is still (mostly) latent racism in the U.S. but it is steadily decreasing as blacks continue to move up the economic ladder.
  • Inequality and Poverty. Inequality gets the most attention in the media but (lack of) poverty is really a better measure of social progress.  And we are making steady progress in reducing the poverty rate.
  • Political Polarization. The split is largely geographical between the blue coastal states and the red interior states.  The two sides barely talk the same language. The presidential election is unlikely to resolve these differences especially if it is close and the results are contested.  For me, the worst thing about polarization is that it makes it impossible for the two sides to work together to address our debt problem.
  • The National Debt. The pandemic has turned our already bad debt problem into a severe problem.  After the pandemic subsides, we need to become far more serious about getting our massive debt under control.  The excessive cost of healthcare in the U.S. is a major component of this problem.
  • The China Threat. China is our biggest competitive rival by far.  However, the U.S. has many advantages in this ongoing economic and military struggle and should be able to maintain its dominent unipolar status for many years to come.
  • Other Foreign Policy Issues. The U.S is withdrawing most troops from the war zones of Afghanistan, Syria and Iraq, and also some troops from allied countries such as Germany and South Korea.  This represents an intelligent policy of using military resources as sparingly as possible while still defending vital U.S. interests around the world.

Conclusion.  The U.S. is responding appropriately and well to most of the biggest problems we face.  The biggest exception by far is our out-of-control national debt which will turn into a huge new financial crisis if not strongly addressed as soon as the pandemic subsides.  The current highly politicized political climate is the primary impediment to progress on this issue.

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How Is the U.S. Doing in Overall Social Progress?

The coronavirus pandemic is not over but the U.S. is already steadily recovering from it.  The number of new daily infections is continuing to drop (see chart) and the economy is also recovering well as evidenced by the drop in the unemployment rate to 8.4% in August from 10.2% in July.

As we continue to monitor the above pandemic-related numbers, it is appropriate to turn attention to other important economic and social issues as well.

The Social Progress Imperative (Institute) has just released a new report ranking most of the countries in the world on “quality of life” factors as of the end of 2019.   The U.S. ranks only 28th in the world on its list!  Here are the statistics for the U.S.:

The areas in which the U.S. ranks low (see the attached chart) are:

  • Inclusiveness.  In particular, there is too much discrimination and violence against minorities and too little equality of political power by socioeconomic position.
  • Personal Safety. The U.S. has a high homicide rate, too much “perceived” criminality, and too many traffic deaths.
  • Health and Wellness. Access to quality healthcare is insufficient, life expectancy is too low, and there are too many premature deaths.
  • Environmental Quality. Greenhouse gas emissions are too high and there is not enough biome (environmental community) protection.

My evaluation of this rating.  Several of these ratings are justified.  We have too many homicides (mostly in big cities).  We certainly have a lot of traffic deaths.  Carbon emissions are too high although they are dropping steadily.  Our biome protection is pretty good.
All of the remaining shortcomings in American society, as listed above,  are related either to minorities and/or to poverty.  But there is a strong connection between social and economic progress as shown by the chart below from this same report.

In other words, these social shortcomings will only be reduced as minorities continue to move up the economic ladder.  This requires more personal agency, i.e. more acceptance of personal responsibility for their own welfare, by individual minority citizens.

Conclusion.  The quality of life in the U.S. has some shortcomings but should be rated higher than 28th in the world.  The whole country should not be down-rated because too many minority citizens are not yet experiencing the high quality of life that a large majority of Americans do experience.

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Why the U.S. is so Strong; the Vibrancy of our Underlying Economy

Good news for the U.S. economy.  The August 2020 unemployment rate is 8.4%, down from 10.2% in July.  This shows how well the U.S. economy is recovering from the coronavirus pandemic.

Of course, the pandemic is a hit to the economy but it is a temporary hit as our rapid recovery demonstrates.  The key factor is the underlying strength of American business.  A robust free enterprise system coupled with a free democratic political system.

Edward Conard from the American Enterprise Institute describes the power of the American economy in his recent book, “The Upside of Inequality.”  As Mr. Conard says:

  • U.S. employment has grown twice as fast as employment in Germany and France since 1980. America has achieved this employment growth at medium household incomes that are 15 to 30 points higher than other high wage economies such as Germany, France and Japan.
  • As the economy grows, it values innovation more. Successful innovators such as Jeff Bezos and Bill Gates, become wealthier than innovators have in the past.
  • Information technology has opened a window of new investment opportunities and increased the productivity of the most productive workers. Moreover, in today’s knowledge-based economy, companies can scale to economy-wide success with little need for capital.  Successful innovators need not share their success with investors.
  • Without much need for capital, start-ups become all-or-nothing lotteries. The chance for enormous payoffs attracts a larger number of more talented gamblers.  More gamblers produce more outsized winners and more innovation.
  • Their success provides American workers with more valuable on-the-job training, at companies like Google, Facebook and Apple, than they can get in other high-wage, but slower growing manufacturing-based jobs.

Conclusion.  The outsized success of America’s 1% has been the chief source of growth exerting upward pressure on domestic employment and wages.  The success of America’s top 1% is an asset, not a liability.

Next:  If the public mistakenly blames the success of the top 1% for the stagnant wages of the middle class, while leaving the true sources of slow-growing wages – trade, trade deficits and immigration – unaddressed, a dangerous feedback loop is likely to ensue.  More on this soon!

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