A Changing of the Guard, and the Reality of the American Economy
By Colin McEvoy on January 18, 2017
Each morning at Buckingham Place in London the guard changes. It takes about 45 minutes and is resplendent with all the pomp and ceremony one would expect upon royal grounds.
With no monarchy of its own, the American republic has no daily equivalent. We do, however, pour unending focus, attention, and speculation upon the changing of the office of the president every four or eight years.
For a country founded upon the rejection of monarchy and the adoption of self-government, the American public, press, and political class have come to treat the American presidency as a type of monarchy, assigning unprecedented levels of responsibility, accountability, and control to the leader of the executive branch.
This week, the guard changes. The ceremony surrounding that change has been going on for nearly two years in the form of an election. In that time, the American president is credited, discredited, praised, or condemned for the cause and effect in all major events that took place in America and most major events in the world. The stock market. The economy. The American auto industry and manufacturing. Crime. Poverty. Inter-factional war in other sovereign nations. Dictatorships. Annexations. Immigration. Health care. Cyber war. Terrorism. And the list goes on.
In our new black and white, partisan there-are-no-facts, the-truth-is-what-I-say-it-is world, blame for all that is wrong – and credit for most that is good – is typically placed upon the shoulders of the new American monarchs. It makes everything simple, understandable. We get to pick our heroes and our enemies. They are responsible, no one else, certainly not us. It sells on partisan radio, television, the web, and the never ending punditry that pretend to be books.
It creates a law of unintended consequences. In an effort to sell, motivate, and control, the chattering classes and the politicians themselves have bestowed power, authority, and responsibility upon the presidency that doesn’t exist. Oddly, much of this has been done by ideologues who eschew a strong central government in preference of local and state control.
It is, however, not accurate. A President Trump will not restore American heavy manufacturing of the 1970s any more than President Obama alone caused the stock market to soar or former President Bush caused the Great Recession of 2008-2009. There is a difference between contributing and cause and effect.
The reality is the American economy and the global economy drive forward or slide downward every day, month, and year based on the actions and decisions of tens of millions of business leaders, workers, entrepreneurs, designers, developers, bankers, and innovators. In a free market, capitalistic economy it is the collective actions, opportunities and decisions in relation to each other that determine if there is still a factory at the end of your street and how much you get paid for your labor. Technological developments, robotics and artificial intelligence will drive the economy and impact jobs much more than trade policy, immigration quotas or interest rates.
It is easy to assign credit or blame for all good or bad that occurs during four years or eight years of a president. This discounts the actions of the Congress, the courts, state governments, local governments and the vast and autonomous private sector pushing and pulling every day and leading the way with its innovation and investment. We should be grateful we don’t live in an old-fashioned monarchy or a state-controlled economy, which ultimately will fail as it pulls back the reigns on innovation and free markets, see Venezuela and Cuba today.
The writer Michael Lewis’ newest book is The Undoing Project. The story of the groundbreaking work of Israeli-American psychologists Daniel Kahneman and Amos Tvesky on cognitive bias, and the human desire to underestimate uncertainty. We like things certain, simple, black and white with clear categories of good and bad. Kahhneman’s book of a few years ago, Thinking, Fast and Slow, outlines the behavioral economics theory for which he won the Nobel Prize. It is similar to the theories espoused by Leonard Mlodinow in The Drunkard’s Walk: How Randomness Rules our Lives.
In many words, these books tell us what we intuitively know. Sometimes things just happen, particularly when there are many, many factors and people involved. Finding direct cause and effect is rarely clear. Last week, the Wall Street Journal reported that the last full month of President Obama’s presidency marked the 75th straight month in which the U.S. added jobs, which is an economic record. This fact will be denied by some, embraced by others, and countered by the rest depending upon how it fits into their exiting views. My belief is that it would be okay for all to accept this as a fact if we didn’t believe that one person owns its creation. This is my little wish for the future as we change our guard this week.
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