NOVEMBER 3, 3019 – Recently on Facebook I saw a Barron’s post recommending recession-proof stocks. Lots of comments followed, many by “investors” with nasty, hyperbolic attitudes toward Elizabeth Warren. Take this one, for example:
Has anybody listened to one word Pocahontas [sic] has said about what she wants to do to our economy? No stock will be worth owning if Elizabeth Warren wins.
I oppose the thesis that Trump is great for the economy and that Warren would be terrible. As oft stated even by my dad—the most conservative among economic conservatives—presidents get way too much credit when the economy hums and way too much blame when the economy slumps. What’s so often ignored by people of all political stripes is that our economy isn’t under total command and control of the government. Plus, there’s often a long lag between policy implementation and full economic effect.
I know. Conservatives live in perpetual fear of “socialist” creep; progressives think Bernie’s brand of “socialism” will cure all economic woes. However, these views overlook or overstate a stubborn reality: we’re the most capitalistic economy in the world. Sure, it’s regulated by thousands of rules, but as much as those rules might frustrate business owners and managers, they don’t constitute “socialist hell.” And if Warren (or Bernie) shouts, “I’m gonna make college/healthcare/home ownership [socialist] free,” without wholesale amendment of the Constitution, little of what they espouse will ever become law.
So, back to Barron’s stock picks. I wouldn’t bother with them. Any expert’s “picks” are little better than darts at a board. Unless you live hermetically sealed from the rest of civilization, you can’t beat the market (i.e. the economy) completely or for long. The economy is like an immense tide that ebbs and flows based on daily decisions by billions of people. Sure—a minuscule portion of those decision makers exercise vastly outsized influence, but ultimately, every-day consumers drive the world economy.
Yes, Trump’s erratic trade policies could trigger countermeasures by other countries, which, in turn, could send the global economy down the slide. Or a Warren or Bernie election could trigger panic among the Wall Street crowd. But when it comes to overall economic conditions, monitor tidal action, not political developments.
I’d alter my “tidal view” in the face of a runaway movement to amend the Constitution; a drive to abolish Congress and hand the Executive branch exclusive command and control over our $20 trillion economy. But that ain’t happenin’ soon.
I’ll give Bernie and Warren one thing: whether our economic tide ebbs or flows, we need to address the chronic disparity of income. Even in robust times the economy underperforms because major swaths of society are hanging on by their fingernails. Their needs in distress—from housing to transportation to childcare to education to healthcare—become major unaccounted drags on the greater economy. There is a cost to everyone for everything. That includes the societal wide cost of turning blind eyes to the plight of people who struggle.
(Remember to subscribe to this blog and receive notifications of new posts by email.)
© 2019 Eric Nilsson
