What If There Is No Low-Hanging Economic Fruit? 

Joe Biden is in an economic-political bind, partly of his own making and partly more than a century in the making: He is a hostage of our national religion, the cult of the magic president. 

In this case, it is the president-as-rainmaker, the guy who is responsible for the economy—a belief founded on very little other than pure superstition rooted in ancient magical beliefs about national/tribal leaders as intercessors between men and the gods, who by their personal virtue and ceremonial correctness ensure material prosperity. If the rains are timely and the crops abundant, then the king has done right. If there is disease or drought, then … 

In the (very) old days, a sacral king who lost the mandate of heaven might expect to be ritually murdered by his successor, but now we just have elections—unless you take Donald Trump’s lawyers seriously, in which case apparently we can expect doddering incumbents to murder their would-be successors. As a tradition-minded conservative, I have to say that I prefer it the other way around, but that’s a longer story.

(In case you haven’t guessed it by now, that is the subject of my next book. I haven’t sold it yet, because I didn’t want to write it under a deadline, but it’s getting close to completion—if any of you acquisitions people out there want to save yourselves the 15 percent agent’s fee and buy direct, now’s the time.)

Biden has fallen into the trap that almost every other out-party presidential candidate has walked into since the Great Depression: He ran in 2020 claiming that his opponent’s sins and incompetence had led to the worst economy the nation has ever seen, or at least (as the ritual incantation goes) “the worst economy since the Great Depression.” Consider this, from Jennifer Rubin’s 2020 column in the Washington Post, headlined (because ritual incantation is repetitious by nature) “Joe Biden responds to the worst economy since the Great Depression.” Rubin wrote:

With unemployment numbers at their worst level in 90 years, former vice president Joe Biden did not have to strain during his economic address on Friday to come up with a devastating argument against President Trump. Emerging from his basement, the presumptive Democratic nominee took off his mask—metaphor alert for the difference between Biden and the science-denying president—and pounded at Trump.

Real (meaning inflation-adjusted) GDP growth—the most meaningful measure of overall economic performance—averaged just more than 1 percent during the Trump administration. Not great, but a little bit better than what Barack Obama could boast of when he was running for reelection in 2012 after four years of growth averaging a little under 1 percent—which did not turn out to be “devastating” for him. 

The Trump years saw both the best and worst single quarter of U.S. GDP performance, owing largely to COVID-19. While the COVID era was unusual in that the economy was unusually and dramatically affected in the short term by government policy (at all levels; and, at the federal level, not only at the White House), Trump’s apologists (and here the religious term apologist is, of course, entirely apt) might plausibly argue that we should just take the steep decline of 2020 off the books when judging him. Similarly, Barack Obama’s apologists might plausibly argue that we shouldn’t really count the dismal performance of 2009 against him, since he had inherited the wreckage of a financial crisis that had not begun under his watch. If, arguendo, we let their apologists set the terms, then the Obama economy and the Trump economy aren’t really that radically different: about 2.2 percent real GDP growth (minus 2009) for Obama vs. about 2.5 percent average growth (minus 2020) for Trump. Again, this entire exercise assumes a level of connection between the president and the economy that is based on, as the economists say, approximately squat, but bear with me for a minute. 

We have had presidents with radically different economic ideas and radically different economic rhetoric. But what we haven’t seen, for the most part, is really radical outcomes that can be linked in any meaningful way to the temporary occupant of the nation’s chief executive office. Real GDP growth averaged 3.5 percent under the conservative administration of Ronald Reagan and 3.9 under the centrist Democrat Bill Clinton. Both Reagan and Clinton would protest that they inherited economic messes from their predecessors (high inflation in the Jimmy Carter years and a mild recession at the end of the George H.W. Bush presidency), but they also both benefited from developments they had very little to do with—Clinton especially, whose presidency was buoyed by both a technology-driven economic boom with its roots in the 1980s and the end of the Cold War, a project to which Reagan and his allies had contributed mightily. 

But there are other factors to consider, of course, such as the fact that the president is not an economic dictator. Congress, though Americans may forget the fact from time to time, exists. Bill Clinton’s worst instincts were countered by the combative conservatism of House Speaker Newt Gingrich, while Reagan’s willingness to accept deficits as the price of getting at least some of his priorities through Congress was abetted by Speaker of the House Tip O’Neill, an old-fashioned, big-spending Massachusetts Democratic machine boss. We talk about “Reagan deficits” and the “Clinton surplus,” but it would be just as accurate to speak of the Tip O’Neill deficits and the Newt Gingrich surplus, though we’d probably be better off accepting that in both cases the rivalrous character of American democracy was working as it is supposed to. How policy gets made is complicated, how it is implemented is even more complicated, and measuring the effects over the long term is insanely complicated. It is easier to just pay attention to the one guy we hear about in the news every day and then correlate his presence in the Oval Office with a couple of relatively simple metrics, whether GDP growth or gasoline prices or unemployment or inflation. That is so crude as to be meaningless for any purpose other than political propaganda, but that’s what we do. As the poet Paul Valéry helpfully put it: “Ce qui est simple est toujours faux. Ce qui ne l’est pas est inutilisable”—“If it’s simple, it’s wrong; if it’s complex, it’s unusable.” Those are words to live by. 

Again, we’re not really talking about economics here—we are talking about rhetoric. If you are Joe Biden in 2020, then you have to satisfy the national superstition by arguing that the economy is the worst that it has ever been, that this is because of the president, and that you’ll change it. Then, you have to run again four years later arguing that the economy is terrific, even though there have been no radical changes in economic policy and even though you have no power to make radical changes in economic policy. Congress, not the president, writes the tax laws and appropriates funds. Of course, presidents can do things on the regulatory side, which is important—for instance, blocking the construction of important new energy infrastructure, as the Biden administration has done. Presidents can goose the animal spirits by sending signals of various kinds, moving the national mood this way or that—but that’s all pretty tenuous, arm’s-length stuff. On many metrics, the economy of the Obama years looked a lot like the economy when Gerald Ford was president—but not because Obama and Ford were similar presidents or had similar ideas or similar economic priorities. The U.S. economy keeps looking like the U.S. economy because the United States does not stop being the United States when we change presidents or change presidential parties. 

And so, if you are Joe Biden coming into office in 2021—or if you are, hypothetically, Nikki Haley taking the oath in 2025—you look for the low-hanging fruit. There’s more fruit to be had if your party has a nice majority in Congress, but, very often, that isn’t the case, because Americans have long revealed a preference for divided government. Sometimes, history hands you a gift: Opening the economy up after the COVID shutdowns all but ensured reasonably good outcomes when it came to GDP growth and wages—but it also let loose a lot of inflation that was already baked into the economic cake by incontinent COVID-era spending, most of which was not, strictly speaking, related to the pandemic. 

One problem for American presidents: There isn’t a lot of low-hanging fruit. 

I recite this litany fairly often, but it bears repeating: The U.S. economy is really, really remarkable. As much as Americans bitch and moan about the price of a gallon of gas or a dozen eggs, as dour and down-in-the-mouth as we can be about our economy, examining the actual economic facts leads to an unavoidable conclusion: The United States is a country without economic peers.

Our economy is bananas productive. Compare the United States, a very large country (we have the largest population behind India and China), to the rest of the world in terms of GDP per capita, meaning economic output per person. There are a few weird countries ahead of us, including a handful of tiny gazillionaire enclaves (Monaco, Luxembourg, Lichtenstein), a couple of relatively small oil emirates (Norway and Qatar, which together have fewer people than Los Angeles County), Ireland (a prosperous country of 5 million, to be sure, but also a statistical mirage driven by the fact that a big chunk of the world’s corporate profits sit in Irish accounts for tax purposes), and two happy little islands of real-deal capitalism: Switzerland and Singapore. Switzerland, at 8.9 million people, is the largest country ahead of the United States on the GDP/capita rankings. With all due respect to my friends taking their ease in Montreux or bebopping around Monte Carlo in their eco-conscious Stradale hybrids, that’s not much more than statistical noise.

Consider our big political competitors on the world stage, who also are economic competitors. China and Russia both have GDP/capita figures in the same range as such economic peers as Bulgaria and Mexico. At $15,400 per capita, Russia (the slightly wealthier of the two, with China at $12,600) is a lot closer to Kazakhstan ($11,400) than it is to, say, Panama ($17,400) or Guyana ($19,000). China would have to move up a few places to equal Costa Rica or perennial basket-case Argentina. China and Russia are a lot closer to Cuba ($10,400) than to Malta or the Bahamas, each with a GDP/capita more than twice China’s or Russia’s. Troubled Puerto Rico is nearly two-and-a-half times as prosperous as Russia—and nearly three times as prosperous as China.

Now, move up the list and compare the United States ($75,300) to some top-tier countries and you’ll find GDP/capita that is 35 percent higher than Canada’s, 54 percent higher than Germany’s, 65 percent higher than that of the United Kingdom, twice the European Union average, two-and-a-half times that of Spain or Saudi Arabia, about five times that of Russia and  six times that of China. The only countries even notionally within striking distance are very small, very wealthy countries such as Iceland (GDP/capita about 99 percent of the U.S., fewer people than Wichita, Kansas) and Denmark (89 percent of U.S. GDP/capita, population of Cook County, Illinois.) The nearest big country is Australia, with 85 percent of U.S. GDP/capita and fewer people than Texas.

The United States has 330 million people putting out economic value per person that is, on average, a lot higher than in high-performing countries such as Germany and Sweden. Our current unemployment rate is under 4 percent, lower than it was on Donald Trump’s last day in office or Barack Obama’s or Ronald Reagan’s. Inflation remains troublingly high by recent standards, but not much different from what it was during the Reagan years. U.S. oil-and-gas production are at or near record levels. Among the world’s 30 most valuable companies, two are Chinese, one is Swiss, one Dutch, one Saudi, one Danish, one Taiwanese—and 21 are American. France’s most valuable company makes expensive luggage. The largest U.S. firm is, depending on the day, Microsoft or Apple, each worth nearly eight times the value of LVMH and six times the value of Novo Nordisk, Europe’s largest publicly-traded firm. Prosperous as Norway is, its annual GDP is less than Walmart’s annual revenue. U.S. firms dominate technology, led by the world’s most valuable makers of consumer electronics (Apple), of graphic processing units (Nvidia), of software (Microsoft), of automobiles (Tesla), of pharmaceuticals (Eli Lilly), along with Alphabet, Meta, Amazon, etc. Culture, media, finance, design, engineering, energy, robotics—U.S.-based firms are dominant in every sector.

Economically, that’s all wonderful. But politically, it is, oddly enough, kind of a problem. One Apple or Meta or Eli Lilly would be enough to transform the economies of most countries. Most countries would be happy to have one Harvard, MIT, or Stanford, one Sequoia Capital or Andreessen Horowitz. Switzerland’s biggest company is Nestlé—for perspective, consider that Switzerland’s GDP would be about a tenth larger if Berkshire Hathaway were based there and about 15 percent larger if Apple were. The U.S. economy is so large, so productive, and so complex that even the idiotic and impractical promises presidents routinely make in their State of the Union addresses would—if implemented perfectly—amount to a squirt of piss in our economic ocean. There is not very much that a president can do—even in two terms—that would have a radical positive effect on the U.S. economy.

(Big negative effects are somewhat easier to achieve: Trump’s trade restrictions, for example, probably cost about 245,000 jobs, i.e., the equivalent of all the Amazon jobs in California and Texas combined.)

Even assuming a cooperative Congress, the things that would need to be done to have a very large effect on the U.S. economy would involve a lot of heavy political lifts for projects that would, for the most part, take a long time to show their real benefits. And probably the biggest thing we could do—fixing our defective K-12 education system and thereby unlocking a great deal of human capital—would be a state-and-local project with the federal government playing a marginal role.

There are two things on my wish list that would, I believe, make a big difference: The first is fixing our entitlement system, thereby putting federal finances on more stable footing; the second is reforming the tax code, preferably by getting rid of the corporate income tax entirely. (Corporate profits would still be taxed, but they’d be taxed once, when they become individual income in the form of dividends, capital gains, etc.; even a revenue-neutral version of that would substantially simplify taxes, reduce compliance costs, and eliminate incentives for a great deal of unproductive tax-avoidance behavior.) I am always perplexed by U.S. politicians who complain about overseas tax havens when it would be so easy for the United States to be the tax haven—would you really want to park your money in Bermuda if Austin and Palo Alto and Boston were options?  

Assuming that the American electorate weaned itself off the ol’ meth pipe for a campaign season and elected a president who wanted to do these things, and assuming that president’s party enjoyed a comfortable majority in Congress, it still would be pretty hard to get those things done: Populist Republicans and class-war Democrats are united in their desire to avoid doing anything that looks like something Big Business might want—and to do so while simultaneously reducing future Social Security payments, raising the out-of-pocket cost of Medicare, probably increasing some taxes to boot would be, politically, pretty tough. So what we’ll get is what we always get: Republicans and Democrats promising incentives for this or that industry on the theory that these will “bring jobs home”—and then complaining in five years when companies avail themselves of those incentives in ways that raise their profits or reduce their taxes—i.e., if the incentives actually do what they are designed to do. 

All the other stuff—fixing the schools, sorting out the worst of our health-care issues, figuring out the rest of the federal fiscal picture, dealing with questions of supply-chain resiliency, etc.—is pretty hairy. We’ll do it, of course—when we have to, when looming catastrophe makes action necessary—but in a way that eliminates much of the benefit that could be had out of intelligent reform undertaken now. 

A woman explaining her support for Donald Trump recently told the New York Times: “He’s the only savior I can see.” This was in a story about U.S. evangelicals’ fondness for the thrice-married serial adulterer, pathological liar, and occasional pornographic performer who commands their devotion. That they misunderstand their religion is obvious enough. And, like most Americans, they misunderstand the president’s role in the economy, which is modest. What’s interesting to me is that the economic error and the religious error are, properly understood, the same error, one that people have been making since before they were building temples to Alexander the Great.

Economics for English Majors

Not going to do a lot more economics here, given the above, but I will note this from the Daily Upside. Reporting on the neck-and-neck contest between Apple and Microsoft for top position as world’s most valuable company, the newsletter writes: “They’ve been playing King of the Hill (or at least Sand Hill Road) since the start of the personal computer era, which by the way they started.” 

Sand Hill Road is a metonym for the venture-capital industry, with many of the industry’s prominent firms being based on or around Sand Hill Road, which runs through Palo Alto and Menlo Park. Neither Apple nor Microsoft is based on Sand Hill Road: Apple is out in Cupertino, and Microsoft is up in Redmond, Washington. On top of that, venture capitalists tend to invest in start-ups and in projects of that nature. Do you know who does not need venture-capital funding? The world’s largest and second-largest (by market capitalization) firms. This is like writing that Walmart and Tyson Foods are duking it out for King of Wall Street instead of, you know, King of Arkansas.

(Kings of Arkansas, incidentally, would be a great name for a band.)

Words About Words

From The Dispatch’s comments section:

I understand that our target audience are the persuadable, not the convicted, but I’m not aware of any candidate that can, or has, brought in as many new voters as Haley would require to surmount, Trump’s lead. Maybe someone has, I really don’t know.

To which another commenter replied:

I think you mean “the convinced” not the “convicted.” I certainly hope so, anyway.

Convict and convince are closely related words, both derived from the Latin convincere (persuade, convince, argue), which builds on vincere, meaning to conquer or to overcome. We use similar forms in modern English, e.g., “overcoming objections” or “overcoming doubts.” Convict is used in contemporary English almost exclusively in its criminal sense, to find someone guilty of a crime or, as a noun, someone who has been convicted. But we still use conviction to mean belief or a kind of ethical commitment. 

I think what we might have here is one of those funny little subcultural markers that show up from time to time. I hear the word convicted used in a non-legal sense pretty often in one context: among Evangelical Christians. Sometimes, its meaning borders the legal meaning: Someone might read a verse in which Jesus looks past the deed and into the heart—

You have heard that it was said to those of old, “You shall not murder, and whoever murders will be in danger of the judgment.” But I say to you that whoever is angry with his brother without a cause shall be in danger of the judgment.

—and say, “I read that verse and was convicted.” But in similar contexts, it also is used to express a kind of religious convincing that does not necessarily involve personal guilt. 

“I am convicted that this is the right course of action.” Convicted in the sense of having a conviction doesn’t exactly square with the dictionaries, but it is a fairly common usage—and, it seems to me, an intentional one. Maybe it is just a way to gussy up convinced. But there’s a little bit more to it than convinced, too, a sense of being morally or ethically convinced rather than convinced as a matter of fact. 

I am open to the innovation, but not convicted of its desirability. 

Elsewhere

You can buy my most recent book, Big White Ghetto, here.

You can buy my other books here.

You can see my New York Post columns here. 

Please subscribe to The Dispatch if you haven’t. 

And Furthermore …

It is always interesting to me where pseudoscience bothers our progressive friends and where it doesn’t. My own read on this is that the people who used to say (and maybe still do say), “I f—–g love science!” are just culture-war fighters with a little bit of additional pretense. 

The New York Times will get its dress over its head if some foot-washing Baptist vice principal at a rural school in Texas lets an “intelligent design” pamphlet inside the building, but is happy to publish pure pseudoscientific bulls—t such as this piece, in which it recommends a massage roller “to induce a process called myofascial release to break up those adhesions.” Myofascial release” is pure pseudoscience, like the “innate intelligence” of chiropractic, the “adhesions” that can be “broken up” are not really real things (that isn’t how muscles work), and the whole thing is largely derived from “rolfing,” an old-fashioned school of quackery adjacent to acupressure. If this were an article about, say, hydroxychloroquine, the editor who signed off on it would be fired for his credulousness. But some pseudoscience is fashionable, and that, apparently, is what really matters.

In Closing

Some 159 years ago this month, Republicans in Congress had what might have been their finest hour, passing the 13th Amendment to abolish slavery. The amendment was supported by 100 percent of House Republicans and opposed by 77 percent of House Democrats. Today’s Republicans are not what they once were—they are far from the Party of Lincoln—but I do not think the Democratic Party ever has really been made to have a reckoning with its past. 

We also have been talking a great deal about the 14th Amendment in recent months. An interesting thing about the 14th Amendment: Not a single Democrat in Congress voted for it. Not one. Interesting, no?

That being said, I wonder whether today’s Congress would pass the First Amendment if we didn’t already have it. I don’t think they would. Do Democrats in 2024 really cherish freedom of speech, of the press, of religion? Do Republicans? If they do, they are not making it obvious that they do.