John Cochrane posted his response to an interesting Wall Street Journal question that I had missed from about a month ago. It asked:
“If you could propose one change in American policy, society or culture to revive prosperity and self-confidence, what would it be and why?”
The answers varied:
Return to Constitutional Government
Fix the Jobs-Killing Tax Code
Encourage Two-Parent Families
Limit Government and Restore the Rule of Law
Look to the States, Not to Washington
Unleash Molecular Medicine
Liberate Uber—and the Lemonade Stand
Listen to Peter Drucker On Regulations
Focus on Developing Human Capital
Set This Goal: A Great Teacher for Every Child
Pull the Plug On Crony Capitalism
Move Elections To Weekends
Cut Taxes and Watch The Economy Take Off
Make a Grand Fiscal Bargain
Inspire Real Hope, Not The Bumper-Sticker Kind
Head Off the Looming Pension Tsunami
Deregulate Labor Markets Now
Fix the Way We Do Public Works
Find a Better Way To Tax the Rich
Rediscover Men’s And Women’s Differences
Transform Education With the ‘Long Game’
I sometimes catch flak from readers for not proposing policy fixes at times. As a market analyst I tend to focus on how things work so I can better understand the probability of various future scenarios instead of using my understanding of the system to try to fix what I perceive might be wrong with it. But I did propose one big idea a few years back – an innovation initiative that would create a public/private hybrid entity to help fund entrepreneurial pursuits. I don’t think there’s any shortage of innovation in the USA. As someone who’s gone through the process of starting small businesses I know how awful it can be trying to fund that operation from the start. And it’s exceedingly difficult. I think this explains, at least in part, why start-ups are becoming an increasingly rare thing in the USA. And that’s a sad state of affairs given that there’s no lack of wealth in the USA. Imagine how wealthy we could really be if we could unleash a small business boom through public/private partnerships that helped leverage the scope of the public sector with the creativity of the private sector? Anyhow, maybe I am dreaming, but that’s my big idea.
But enough about my silly ideas. I really wrote this post to hear YOUR idea. You guys had so many great thoughts yesterday on the potential recession causes so when I came across the Cochrane post I thought this was a perfect one to throw to you all. Let me know what you think. And while the WSJ question was US centric I’d like to hear global ideas if they’re out there. And hey – no bad mouthing my idea. That was already done when I first posted it!
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
Sofabulous
A philosopher to be appointed to every school
Politicians are incentivised to get re-elected. This requires adopting and reflecting back the easy to grasp conceptions of the people (eg manage the economy like the household budget) – with simplicity easily trumping truth and relevance. The only solution seems to be enhancing the people’s critical faculties.
John Daschbach
Unfortunately for some reason critical thinking at the political level appears inversely related to the need for critical thinking. There may well be a purely evolutionary psychological reason for this. When things are not going well people become more tribal and protect what they perceive as their own tribes interests. Many of the suggestions above, including Cullen’s, are understandable in this framework.
But you are correct, it is people’s critical thinking that is important. In another context, a person went off on the efforts to raise the minimum wage and a friend responded with a number of links to the most recent aggregation of minimum wage research. Although the original poster claims to have a college degree they said they didn’t care about any facts or research because it was always liberal and anyone knew that more government was always bad for the economy and so there was no basis for discussion. Even though you couldn’t pass 8th grade with that level of critical thinking they feel fully justified in taking a pure ideological and anti-intelligent stance.
I don’t think there is any way to deal with this level of thinking in our system. It is a complete rejection of critical thinking (intelligence). The Reptile brain takes over (e.g. anything Government does is to be feared)
Regarding the minimum wage, the data has enough variance that the first order critical thinking conclusion is that we don’t know. It doesn’t appear to have a demonstrable causal effect in either direction sufficient to derive a meaningful conclusion regarding overall employment.