A Change Of Control Is Just A First Step

Economic Growth Is Not Overnight Magic

Our economy stinks. Inflation stinks. The stock market is losing double-digit percentage value and it hasn’t hit bottom yet. Worldwide, economies are in the tank too because when America gets a bad cold, the rest of the world gets a terminal illness. America is still the economic straw that stirs the drink despite what the Chinese might think.

The above chart is inflation in America since 1924. Joe Biden is the worst President of the 21st century, and most probably the worst President of the last two centuries. President Reagan tamed inflation and you can see it graphically in this chart.

The mid-term elections are coming and it looks like the Republicans will run the table. Big. How big? How about close to a veto-proof majority big?

However, winning an election with a change is just the first step. Even in the Trump administration, the bureaucracy is rife with traditional Democrats and hard leftists. Biden will still be president until he resigns or his own party decides to make him the fall guy. Do not be surprised if Democrats impeach their president in 2023. That’s how bad it’s looking.

The strong levers of power reside in the Executive Branch. The legislature is a check and balance. You can’t run a country from the legislature. It’s a reactionary body.

A lot of people think that there will be a change overnight. They will be disappointed. Our economic problems aren’t surface-level problems. It’s not a window to be scrubbed.

Years ago, Economist John Cochrane outlined a path to strong economic growth in his blog. It’s important to remember that economic growth isn't “more stuff”. As Cochrane says, “It's about the quality of life, the length of life”. That’s why the Founding documents of America talk about the “pursuit of happiness” not the pursuit of luxury goods.

Economist Russ Roberts has done a lot of research on “happiness”. He’s found that over the years, America has done a decent job increasing standards of living but could have done better. This video does a great job of explaining it.

Cochrane accurately says that the debate between the parties degenerates into more or fewer taxes. He goes on to point out that the real issue is distortions in the tax code.

Because we have built this gigantic bureaucracy, we have all kinds of subsidies and regulations that contribute to distortions. The gigantic bureaucracy also brings big-time money into politics through lobbying. Corporations can lobby for regulatory changes that advantage them, and kill competition. Corporations also figure out ways to lobby for loopholes in the tax code.

A lot of the inflation we are seeing today is baked into the cake. It won’t go away overnight if the Republicans win solidly. It will take years to remedy and the Federal Reserve driving up interest rates is not a panacea either. The government created way too much money during Covid and it shows in the chart.

It’s clear that we made terrible policy decisions that are crushing people. We should have never shuttered our entire economy and we should have never helicoptered money to citizens. Broken supply chains will take years to repair and if American companies decide to bring manufacturing back to the US to ensure supply chain stability, that takes years to build too.

If Republicans want to do right by Americans, they need to overhaul the bureaucracy and the tax code. Kill all subsidies and price supports. Don’t have the government decide what investors and innovators should be doing, let the market decide. Flatten and simplify the tax code. Reagan dropped the capital gains tax and it changed the way investors looked at investing money. For what it’s worth, a 0% capital gains tax would do a lot to help cure inflation. The individual rates should be made flat, with little to no deductions. Basically, something like an 18% flat tax. Corporations don’t pay taxes. Why not make the American corporate tax rate 0% so companies can increase wages, increase production and create jobs? If we want to “make America great again”, the path forward isn’t tariffs and all kinds of new rules.

To make America great again, government will have to take five steps back and let things happen.

The newly elected Republicans will have to think differently than the old RINO Republicans. I hope they are up for the challenge. I hope they are up for the firestorm that will come from the media and the left-wing socialist Democrats who abhor losing power.

A lot of people will say the above is “radical”. All the stuff being proposed today by the Democrats is incredibly radical as well. Worse, it has roots in systems that have destroyed people. Even worse, their proposals centralize power into the government and that is long-term terrible for people as we have experienced.

Why not try the capitalistic free market system without government intervention and see what happens?

What’s the worst that could happen? We have tried the government's first government intervention economy since the New Deal in 1933. The New Deal created all kinds of problems that we have to remedy now.

If we got rid of a government-first economy what would happen?

• Special interests find themselves out of jobs.

• Accountants have to do something other than taxes.

• Non-Government organizations dedicated to preserving anomalies in the tax code and regulation go out of business.

• Power decentralizes from a few streets in the District of Columbia to all points beyond from sea to shining sea.

• People and businesses would make better decisions

Reagan took office in 1980. It wasn’t until 1982 that things started to turn a little and weren’t until his second term that things really started to take off. I entered college in 1980. I was able to get a job in 1984. That didn’t happen for people like me from 1975-1982.

Taking power away from socialist Democrats is just a first step.