This is a somber day for America, given this weekend’s events and our political strife in general.
This only exacerbates the concerns we all have about our significant fiscal and economic issues.
In light of all of this, I thought I would try to focus on some positive perspectives today.
Reasons for Optimism
Andy Kessler, Arthur Laffer, and Tyler Cowen are all old.
Two are in their sixties and one is in his 80s. All three have lived through the tumultuous 1960s (with numerous assassinations) as well as many existential scares including very real concerns about global famine, ozone depletion, acid rain, running out of oil, nuclear Armageddon, and the fervent belief in the late 1970s that America’s best days were long gone.
All three are astute observers of American culture, history, and economics – and all three remain very optimistic about America’s future – despite the enormous obstacles we’re now facing. None of them are particularly political either, as all three have openly disdained both of the Presidential candidates.
Beating American Defeatism – The Country That Attracts Capital Wins!
Andy Kessler is an engineer, author, WSJ columnist, and former Silicon Valley heavyweight. He recently wrote this column: Beating American Defeatism – The U.S. enables innovation, while the rest of the world is mired in statism.
He points out that despite our problems, America continues to crush the rest of the world in technology, AI, pharmaceuticals, entertainment, space, and more. This is because America’s system is a huge magnet for global capital – which is the lifeblood of any economy.
This is why other resource-rich countries can never get off the ground – they can’t attract capital. America’s reserve currency, rule of law, democracy, and opportunity are what attract capital in ways that no other country can.
So, yes, much of our economy is overregulated, some countries are passing us up in old-guard industries, and many aspects of our economy face major obstacles.
But – there are thousands of entrepreneurs unaffected by everything going on right now, attracting billions of capital still, and building things that will make our future very bright no matter what happens now, in November, or over the next few years.
We’ve Been Here Before
Arthur Laffer is a famous 80-something economist who loves Bill Clinton, lives next door to Al Gore, and advised Ronald Reagan (point: he’s not wedded to a team). He is utterly unphased by our challenges today, reminding us that the 1960s saw far more political turmoil – with four major assassinations (JFK, Malcom X, MLK, and RFK) that rocked the nation as well as numerous bombings and violent political protests.
He further reminds us that in 1980, America was in total despair – with runaway inflation and a very depressed economy that had not grown for years. To the shock of everyone though, the economy was completely turned around – primarily because of changes in tax and regulatory policy.
Mr. Laffer is adamant that we can again easily foster that kind of economic growth and pay off our debt with similar changes to our tax and regulatory policy.
Here is Mr. Laffer on a recent Julia La Roche podcast: We’re In The Middle Of A Massive Redistribution Revolution That’s Destroying Growth | Dr. Art Laffer. Despite the title, his optimism is infectious.
AI Will Truly Save Us
Tyler Cowen is another renowned economist and blogger who was on this recent podcast: Can AI Fix Our Debt Problem? | Tyler Cowen.
His primary points are that AI and biotech innovations will foster so much productivity growth and innovation that we can outgrow our deficit (similar to Mr. Laffer’s perspective). AI will be very disruptive, completely changing education and the jobs landscape – but the revolution will be very beneficial for everyone.
China May Be Ok After All…
I’ve blogged a few times about the issues facing China – tens of millions of unsold and underwater homes, a massive debt crisis, a demographic crisis, etc. But then I listened to this podcast: Why The Chinese Real Estate Downturn Won’t Sink The Chinese Economy | Ben Harburg. Mr. Harburg says that many Chinese industries (especially autos and electronics) are thriving, and that real estate is not going to crash the economy. The reason: Chinese mortgages are “full recourse,” meaning that borrowers cannot walk away without creditors pursuing them like borrowers can here in America. This is a very good thing because a collapsing China would be a desperate China – which is not good for anyone.
Conclusion
Yes, we will face tremendous turbulence. But a lot of old guys who’ve seen it all before remain quite convinced that America will shine again.
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