John Andrist: You Just Can’t Corral the Economy

What kind of system do we have in this country?

Some say it’s a republic, some say it’s a democracy.

My conclusion is it is a market system. We can modify it, curse its shortcomings, try alter it, or regulate it. But you can’t overcome it. Neither can the rest of the world.

Most of our efforts to change or humanize it eventually lose. None of us like it’s tendency to concentrate wealth. But it happens no matter what we want.

Russia tried to replace it with communism. So did China. And yet the only place socialism has ever worked is in Scandinavia, where it was been married to market economics.

That’s a strange marriage, but if there should ever be a divorce, my bet is market economics will be the survivor.

Curse it if you will, and feel free to stand up beside Bernie Sanders if you choose. But no matter what we say we believe, we somehow  choose to practice the art of buying low, and selling high in our daily lives.

[mks_pullquote align=”right” width=”300″ size=”24″ bg_color=”#ffffff” txt_color=”#000000″]Curse it if you will, and feel free to stand up beside Bernie Sanders if you choose. But no matter what we say we believe, we somehow  choose to practice the art of buying low, and selling high in our daily lives.[/mks_pullquote]

Any society that totally rejects market principles is destined to join  failing Cubas and Venezuelas.

When markets are neutered, you get things like America’s health care debacle. Costs soar to unattainable levels, when competition is halted.

Most certainly market economics create a plethora of problems. Take politics, for instance. Wouldn’t it be great to get money out of politics? Nobody has figured out how.

Or take lotteries. Government lotteries return only about 40 cents on each dollar spent, and a disproportionate share of the revenue comes from lower income folks.

But those who buy the tickets don’t care. They still buy more tickets as the prize goes up, even though they are more likely to lose.

The rich get richer, primarily because they can afford to sell at a lower price.

Amazon is now the biggest purveyor of goods in the world. They just bought Whole Foods, and they are dropping prices at their outlets in an attempt to kill their competition.

Traditional grocers have been hurt. Their stocks are down 20 percent. Walmart is trying valiantly to challenge Amazon. Who will win? Interestingly, you and I will decide, but the easy answer is economics.

Most consumers are fighting their own daily battles, too busy to squeeze a study of economics into their game plan.

That’s not all bad, as long as we understand we ourselves are the authors of the things we mostly curse about our system.

For example . . .

President Trump has made market economics work for himself, but he clearly doesn’t really understand it.

Despite what he says big companies keep finding ways to invest abroad and they make money doing so.

The president campaigned on punishing them with tariffs and taxes.

The tariffs make goods more expensive, so consumers get kicked, not the companies. Taxing foreign profits sounds pretty good. So we do it, always have.

The problem is, we create an incentive for them to leave those profits abroad, investing elsewhere  — instead of bringing the profits back home to invest in things that lift our own economy.

It’s like a balloon. Pinch it on one end, and it pops up someplace else. Politicians can’t stand things they can’t control. So they constantly tinker with the system.

But usually any success they seem to have just hides the bulge poppng up elsewhere.

None of us like to see excessive wealth and obscene profits. They do happen in a market system.

But stop it and you create one of those bubbles that can only deflate.

In every society when you stamp out wealth, you also squash the little guy. The little guy only gets lifted after the rich get their cut.

Economics always trumps politics.