Mudsock Heights

Mudsock Heights

Illustration Credit: Dennis E. Powell

Politics or Economics?

By Dennis E. Powell | Posted at 11:35 PM

In 1974 my friend and mentor Sylvia Porter, the financial columnist, was summoned to Washington by the president, Gerald Ford.

She had been asked to head a government effort to reduce inflation, which as a result of the 1973 Arab oil crisis had risen to 12.3 percent. When she got there, she was dismayed. The program consisted of red campaign buttons bearing the message “WIN.” Ford said the letters stood for “Whip Inflation Now.”

“Buttons?” said the feisty Sylvia. “All you have is buttons? That’s your entire plan?” She was on the next train back to Pound Ridge. Securities traders quickly got the buttons and turned them upside down so that they now said “NIM” for, the traders said, “No Instant Miracles.” I never saw any of the buttons in the wild. The whole thing was a flop.

It wasn’t the worst flop in modern presidential meddling with economics. Richard Nixon in 1971 had instituted a 90-day freeze on wages and prices due to a 5.8 percent inflation rate. You could tell it would fail: The New York Times supported it. And when the 90 days ended, inflation zoomed. The dollar had collapsed and exchange rates had gone haywire.

Inflation stuck around. Jimmy Carter, through his own actions and the result of circumstances, experienced inflation rates that by the end of his term were over 13 percent. Mortgage rates hovered near 20 percent and economics professors schooled in the economic guesses of John Maynard Keynes spoke of the tradeoff between inflation and unemployment — reduce one and the other will rise.

Under Carter, inflation and unemployment combined — it was at the time called the “misery index” — reached 22 percent. Carter made speeches to ask the country to stop inflatin’. The country lacked confidence, Carter said, moral and spiritual confidence. (Fooling around in the newsroom, the Boston Globe’s editorial following one of these speeches carried the internal slugline, “Mush from the Wimp,” which somehow survived and made it into more than 150,000 copies of the paper before it was caught.)

Ronald Reagan came to office. His idea was that if you reduced taxes, the money would be invested in companies that would put people to work, increase market competition, and as a result reduce prices, cutting inflation and unemployment simultaneously. He did that and it worked, following a year of what’s known as the Carter recession.

It is no surprise that we have high inflation today under Joe “Bugout” Biden. The betrayer of Afghanistan and Israel knows nothing about economics, either. He has always been driven solely by the next election throughout his remarkably accomplishment-free life. Principle — right and wrong — this considerations is a stranger to him. Whatever he thinks today would bring him the most votes is and always has been the position he will take. If his handlers’ appraisal changes, he will say something entirely different tomorrow.

Politics and economics are always at odds, and without principle politics wins. Economics tell us that if you want a job done well, you hire someone who can do the job well. Current politics, encouraged and often enforced by the government, tells us that this is not the chief criterion, when it is a consideration at all; instead, what’s of more significance is his or her skin color or sexual orientation. Perhaps when you buy an item you specify that you want a version made by a Samoan nonbinary. But surely you know that if this is the leading criterion, quality is of lesser importance. Good, fast, cheap: pick two.

There’s a joke, or was, about the dispute between politics and economics: During the cold war there was a huge military parade in Moscow. After the tanks and the rockets went past, there was a rank of men wearing suits and carrying briefcases. “Who are they?” the Soviet premier asked an aid. “Those are the economists. You can’t imagine the damage they do.” Communism, based on a faulty theory, has never worked. Democracy, influenced by popular whim, has never worked. Our form of government, a republic, is the only one with a chance of success, but we’re eroding our republic as quickly as we can, I’d argue beginning with the 17th Amendment to the Constitution.

Bugout Joe has an inflation problem. It’s no surprise. Wise men said it would be “transitory.” They were wrong. Yesterday I bought gasoline and paid $4.29 per gallon. That’s about twice what it cost when Biden took office. Likewise groceries and everything else. He has bidened-up the economy, well and truly.

And it was on purpose.

Influenced by the likes of John Kerry, Biden has sought to put the oil industry out of business, which has reduced the quantity of petroleum available and by the unbreakable law of supply and demand has increased prices. He has done this because at Kerry’s “environmental” behest he wants to increase the number of people driving impractical electric cars. Neither he nor Kerry seems to have noticed that the electricity for powering those impractical cars has to come from somewhere. Often, that somewhere is coal-fired power plants. It’s not reducing pollution, just moving it around a little — remember the conservation of energy from high school chemistry?

(Kerry has done damage in a different field, too: by currying favor with Iran in hope of a treaty that everyone knew would be meaningless, he prevented Biden from being tough with that medieval theocracy, watering the seeds of the situation we find in the Mideast today. When Russia invaded Ukraine, Kerry’s comment was that he hoped Russia would be mindful of the potential environmental damage.)

So we have, thanks to them, permanently high gasoline prices, with no alternative. Biden has loudly advocated for electric vehicles. Next to no one has bought them.

(It would be possible to make a practical and useful electric car or truck, by employing the process used by train locomotives for decades: gas or diesel powering a generator that in turn would run an electric motor and charge batteries that would power the motor. Much more elegant than “hybrids,” which replace one breakable system with two, or cars that need to be plugged in.)

American auto makers cannot give away the electric cars the Biden administration demanded they make. Car makers both here and abroad are backing away and in some cases abandoning their all-electric plans. It turns out that a bottom-rung pettyfogger who turned to politics due to union support is no better at running the auto industry than he is at running the economy, the military or, when you get right down to it, anything else. (Remember, always remember: Joe Biden was the one man in the situation room who argued against going after Osama bin Laden.)

There is no better illustration of his senile confusion than the announcement yesterday that he is imposing a 100-percent tariff on impractical electric cars made in China, doubling their price to consumers. His fealty to the United Auto Workers union is apparently greater than that to John Kerry. When it comes to following the instructions of union bosses, environment be damned: forget electric cars unless they’re overpriced. Between his sucking up to Islamic extremists and his bowing to the UAW, you might think he’s running for mayor of Dearborn. But, dammit, it’ll be American impractical electric cars that consumers don’t buy! That’ll larn ‘em, dadgummit! (Tariffs are always political rather than economic. Even when Reagan imposed them on memory chips, making me pay $200 per megabyte for memory expansion in my first 80386 machine.)

With high fuel prices, the cost of everything else increases. You probably know that the goods for sale at the grocery store were not grown or manufactured in the store. They had to be brought there. Using vehicles that are powered, one way or another, by fossil fuel. Double the price of fossil fuel and you increase the price of everything that is transported.

Because everything costs more, employees demand higher wages, and sometimes get them. That further increases prices. A reasonably bright 6-year-old could understand it. Biden either can’t or he’s not interested.

(He’s lately been saying that when he took office, inflation was 9 percent. He’s lying.)

You might have noticed that Bugout Joe has the reverse Midas touch. Everything he touches gets worse. If he were running against anyone except the contemptible Donald Trump, the 9 percent he talks about would be the portion of votes he could expect to receive in November.

It will all come home to roost, of course. This doesn’t worry what’s left of Bugout Joe. He’s a follower of John Maynard Keynes. So he surely has on a note card reminder Keynes’s single most famous sentence, which has meaning to all of us but especially to the corroded octogenerian chief executive, and which perhaps he thinks will free him from the consequences of his malfeasance:

“In the long run we are all dead.”

Dennis E. Powell is crackpot-at-large at Open for Business. Powell was a reporter in New York and elsewhere before moving to Ohio, where he has (mostly) recovered. You can reach him at dep@drippingwithirony.com.

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