Dow 20,000: Cause for Celebration or Concern?

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President Trump meeting with business executives, source: nymag.com

Not too long ago, the Dow Jones Industrial Average (an index of a number of benchmark stocks, often used as a measure of the overall health of the stock market) hit the landmark number of 20,000, its highest peak ever. In the few weeks since it has continually closed at higher and higher records. This is due largely in part to the election of Donald Trump, who has promised tax breaks and deregulation in an effort to grow the economy to his promised 4% GDP growth, the type of economics Reagan Republicans have been pushing for quite a while now.

A little background: Ronald Reagan introduced “Reaganomics” to the world in the 1980s. The basic idea is that by cutting taxes and deregulating, you free the market to grow on its own outside of government control. This is also referred to as “supply side economics” (and also “trickle down economics” by its detractors) because the theory is that policies that increase supply (supply of capital, supply of goods and services, etc.) are the most effective at driving economic growth.

On the other hand, the prevailing theory on the left is Keynesian economics. This is a theory opposite to supply side economics in that Keynesians believe that the most effective policies to drive economic growth focus on the demand side of the equation, especially in economic recessions. This is why Keynesians love policies like stimulus bills that put capital in the hands of consumers, which is believed to drive growth because the more money in your pocket, the more likely you are to spend it on a good or service.

It seems, with President Trump, the theory is that a federal government under Obama and the Democrats have hamstrung economic recovery with too much regulation – environmental regulation, banking regulation, etc. In order to reach his target 4% GDP growth, Trump is going the path of supply side economics, which Wall Street was swooning over even before any policies were enacted.

Opinions:

Reagan inherited an economy very different from the economy inherited by Trump. Fed interest rates were around 20%, with rampant inflation, relatively high unemployment numbers, and an energy crisis. Compare that to today, where we have quite the opposite situation – historically low interest rates, low inflation, low unemployment. Reagan’s policies worked (arguably) at the time under a totally different set of circumstances – they increased supply when supply was in trouble. Neither supply side or Keynesian economics work universally – they are both responses to specific economic conditions. This is why the stimulus bills under Obama were such a success and pulled the world out of the clutches of depression – it bolstered demand when demand was failing.

Dow hitting record highs is exciting, but also a little frightening. The economy has been growing, however slowly, but Wall Street is somehow going wild. It is a largely psychological boom, with very little change in the real market, in people’s everyday lives, to back it up. GDP growth has disappointed, real incomes have stayed stagnant, real unemployment (which accounts for people who have stopped looking for work) is improving but still high, and good jobs remain relatively weak. Demand is still very much the area most in need of improvement today, and increasing supply at this point is not going to have the same effect it had in the 80s. Deregulation is going to suck more growth towards the top 1% while simultaneously destabilizing the market by taking away key laws aimed at preventing another crash, making the economy more volatile and more recession-prone.

Even worse than this, however, are the huge economic problems that are being mostly ignored. The Euro is in trouble; most of the European Union is still in the process of quantitative easing (inflating the money supply to mask debt). China is dealing with a real estate bubble. Domestic factors like student loan debt and a retiring baby boomer generation are trends that are slowing growth to a halt. America has a stronger case to ride out another recession than the rest of the world, but we are not (and cannot be, regardless of how much Trump wants to try) immune to the factors at play around the globe.

If we want economic growth in 2017 and beyond, real economic growth, the type that improves the lives of everybody involved – we need to let the market run free with 21st century propellers of growth. Energy independence, automation and robotics, free trade, medical and retirement care for our aging population – these all represent massive growth opportunities if taken on responsibly. A long overdue investment in infrastructure – not just repairing but modernizing our outdated infrastructure to meet new demands – is one area where the Trump administration gives me hope that it can put us on the right track, at least economically speaking. Most of all though, growth has to come from innovation and entrepreneurship, from creating value out of the power of the mind.

What we are seeing right now in the DJIA is not real growth, it is Wall Street profits. The fact that President Trump wants to reject transition in a hope to protect 20th century jobs, while simultaneously rubber stamping a Republican supply side economic plan, is not only irresponsible but could be a recipe for disaster in the coming years. Now is not the time.

Travel ban temporarily halted

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Courtesy of Democracy Now, democracynow.org

Surprising nobody, there are two prevailing narratives going around now about the president’s travel ban. Aroused by conservative and liberal media, the two narratives seem to be something like this:

  1. This is a Muslim ban, which discriminates against innocent people who are different than “us” (read: white Christians), or
  2. President Trump is tightening our borders, and this executive order (XO) is an emergency measure to keep out potential terrorists from seven of the most dangerous countries, and is no different than what Obama did in 2011 against Iraqi immigrants.

Here are the facts:

  1. While not a “Muslim ban” as there is no religious test enshrined in the XO, the seven countries listed are predominantly Muslim countries, and the XO also specifically excludes Christian refugees (and for this reason, it might be unconstitutional).
  2. The ban was enacted in such a way that innocent people (permanent residents, green card holders and those with visas) were being detained without a charge and without due process of the law, which also might be illegal under the 14th amendment, where all people, not just citizens but people, are entitled equal protection of the law in the United States. There are a number of supreme court cases on this.
  3. The similarities to President Obama’s order in 2011 are slim. Obama slowed a particular type of visa from one country after a few individuals were found to be improperly screened. Nobody was detained without a charge, no refugees were deported, it was temporary (six months), and it was grounded in a specific threat.

From my understanding, the travel ban has been temporarily halted nationwide. Because of the legal concerns outlined above, and because federal judges believe the case against the XO is likely to win – the order was halted to prevent “irreparable damage.” Their words, not mine.

Opinions:

I side with Chris Christie on this one – that this XO was overly broad, hastily implemented, either lacked or contradicted input from experts (the same experts the Trump administration has trouble trusting), probably makes our country less safe… the list of problems goes on and on. There is a big difference between tightening our borders, and broadly banning travel from an entire region of the globe in such a way that detains permanent residents and innocent people (sometimes even heroes who risked their lives to aid American soldiers), infringing on their rights

My personal values are that restricting refugees, who chose to flee to save their families rather than side with Assad or ISIS, is not an act of strength but an act of weakness. Some feel that we need to tighten restrictions on travel in order to prevent jihadists from killing innocent Americans on American soil, and even though the United States has one of the most extensive vetting processes for refugees in the world, I can understand where those people are coming from. There is nothing wrong with fearing a toxic, disgusting, and violent ideology from spreading to our home. However, something that isn’t up for debate is that the president is not a king. The rule of law is universal in America; it applies to all of us, even (and especially) to the president.

It’s my guess that, at the very least, parts of this order will be ruled to be unconstitutional. We will see how this plays out in court. But for now it is halted, and I believe that’s a win for civil liberties, and ultimately for democracy.

 

Opening statement

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Source: gallup.com

People tend to jump to conclusions these days, given that we are living in one of the more divided political climates in our country’s history, and think they have a person’s entire worldview figured out based on what positions they take on certain issues. Hell, sometimes people take one look at me and think they have my entire worldview figured out, let alone if I take a stance one way or another. Therefore, I find it worthwhile to explain my core values before I start with commentary.

If I had to rank my political values, at the top of the list would probably be human rights. I believe that humans are born with inalienable rights; that the right to life, liberty, and pursuit of happiness are not granted by some external power (such as the state), but are inborn. This is according to natural law – all power structures based on denying a living creature their inalienable rights is destined to fail. Civil liberties – those rights belonging to members of a civil society – are also at the top of my list of priorities. In our modern democracies (or rather, representative republics, which I will call “democracies” for sake of argument), rights must be respected by the state in order for the state to survive at all. Our civil liberties, whether enshrined in the constitution or not, must be respected by the state because in a democracy, power is given to the state through consent of the governed. Any democracy that ignores this rule is also destined to fail.

Second to human rights in my political paradigm is a value that I hold strongly, and one that gets me in trouble with people on all sides of the political spectrum. I am in favor of any policy that, to my analysis, allows more people to live better lives. Notice here I said “people,” not just Americans, or any particular group, but people – human beings. I hold many other values of course, but if any policy or idea ultimately allows more people to live better lives, I will override my values and support it. For example, it is for this reason that I support fracking (hydraulic fracturing of shale gas), as it is clear to me that it helps more people live better lives in that it provides a large economic boost, especially to my home region, and natural gas burns cleaner than oil and provides energy independence to the United States more than any other current energy source. Which leads me to my third point.

In the world today, things are complicated. It’s hard enough to make a room of ten people happy. Try making a room of 350 million people happy (or 7 billion if you look at the whole planet). Therefore, no solution to any issue as complex as the issues we still face today is going to make everybody happy. Any broad issue that had an easy solution has already been solved. We already decided that it’s better to feed people than let them starve, that democracy works better than totalitarianism, that the automobile is a better way of getting around than horse and buggy, you get the idea. The issues we are still facing today, or new ones that spring up, are often issues at all because there is no easy solution. As a voter, as a member of society, we have to come together to realize sometimes we have to take the good with the bad, and have a conversation about which of our values we want to prioritize to move things forward, just like I did here. This is how we move forward as a society – dialog, discussion, a reasoned debate about our values, and most of all listening to each other.

It’s for these reasons that I consistently vote for Democrats. Not because I whole-heartedly agree with everything in the Democratic platform, not because certain candidates personally inspire me – but because more often than not, I feel that Democrats have prioritized my values moreso than anybody else. This doesn’t mean I am beholden to Democrats just because they’re my home team. I barely even consider myself a liberal, though I’ll use the word to save from a lecture on my beliefs. I am a malleable person; as a member of a malleable universe I have no choice. I will take each issue and process it and come up with my own stance on it regardless of which party or group of people is for or against it.

I felt I had to get this out of the way before I approach any issues or problems in our society today, or else face being labeled one thing or another. I’m sure that will happen anyways, but now I can at least say I laid this out beforehand.

Anyway thank you for taking the time to visit. I plan to make this a blog that attempts to bridge the political gap by finding common ground with those who feel different than I do, by not only explaining my positions with well-sourced posts, but attempting to do so in a way that is unitive rather than divisive. I welcome any discussion in the comments section, and I hope we can all take this time to discuss our views and ultimately move forward together.