October 15, 2021
President Joe Biden and the Democratic Congress have had only nine months to implement their leftist “economic” agenda, but we are already seeing the damage. I put “economic” in quotations because leftist policies have nothing to do with economics; they are all about ideology.
When you take an introductory economics course, one of the first things you will learn about is the concept of the “economic man.” The idea is that an individual will usually behave in a way to maximize his or her self-interest. In the field of economics, self-interest is generally discussed in terms of maximizing income, leisure, and security, while minimizing costs, unpleasant work, and risk. Obviously, this model has its shortcomings. It does not take into account, altruism, imperfect knowledge, and a host of other factors that have nothing to do with economics. Nevertheless, this description of human nature has great value when determining how most humans will behave under most circumstances.
The clowns we have making policy decisions in Washington, D.C. totally ignore this idea of the economic man. You want a couple examples? Biden’s Press Secretary Jen Psaki will look into the camera and tell you that higher unemployment benefits will not result in greater unemployment. That is nonsense. Higher unemployment benefits drive down the cost of leisure. When the cost of something goes down, the economic man will “buy” more of it. When you subsidize leisure though higher unemployment benefits, you get more leisure/unemployment.
Biden seems frustrated that the economy is slowing down. It is slowing down because gasoline is about $1.00 per gallon higher than when he took office. People can’t afford to do as many things that involve travel as they could do a year ago. In addition, there is general inflation that is driving prices up in grocery stores, hardware stores, and everywhere else. What does the economic man do when stuff costs more? He buys less stuff. Moms still have to buy groceries for the family, but the new carpet or refrigerator might have to wait. When people buy less stuff, the economy slows down. I can get a third grader to understand this in about five minutes, but the president of the United States does not understand it.
On September 27, 2021, Madam Psaki informed us that it would be “unfair and absurd” to suggest that businesses would raise prices in response to increased taxes. Alrighty then! What does the economic man do in response to a tax increase on his business? He finds a way to recoup the additional cost. There are a limited number of ways to do that. All of them involve either increasing revenue, or reducing expenses, or both. Of course a price increase is one potential solution. To say otherwise is . . . “absurd.”
Liberals defy many other laws of economics and are then shocked by the results. In the last 18 months the government has put trillions of dollars into the economy. What has happened? We are seeing the signs of potentially devastating inflation. However, when asked about the next multi-trillion-dollar spending bill he proposes, Biden literally stated that adding on more spending would “reduce inflation.” Of course, that is absolute nonsense. I’m not sure if it is better that our president is that dumb or that dishonest.
We’ve got a ticking time bomb here folks. If inflation runs away, the Federal Reserve will have no choice but to raise interest rates to slow it down. Higher interest rates will slow down the economy, make housing less accessible to the middle and lower classes, along with a host of other bad things. It will also exacerbate our federal debt problem. “Other than that, how was the play, Mrs. Lincoln?”
Oh well, at least I get to feel nostalgic. I feel like I’m 17 again, and Jimmy Carter is in control. In the infamous words of John Fogerty, “I see the bad moon a-risin’. I see trouble on the way.”