The year 2019 was a great year for the American Institute for Economic Research; in the broader America, it was a volatile one for ideas, a great one for economic growth, and as divisive a time politically as one can imagine: certainly the most estranging of my near 50 years. With the end of the Mueller investigation, the start of an impeachment process, an approaching election, and ideological battlefronts opening in nearly every social milieu, there was never a shortage of issues to analyze over the past twelve months.
From among those I wrote about, I chose the following as the ten most notable of 2019. There is a central theme: the problem of government that knows no limits to its power, a government that imagines itself identical to the people over which it rules. Which is to say: fascist ideology.
The demand for “a leader”, despite more than enough evidence of the insidious nature of figureheads, is an irrevocable feature of pre-election banter, and has resurfaced as Democratic candidates claw and slither over one another to seize the party nomination. Considering the pseudoscientific nature of the concept of leadership — assuming as it does enough manifestations to make the term meaningless (in addition to falling under a plethora of inconsistent/contradictory definitions) and largely existing to craft narratives — it is at best a delusory and more often malefic feature of political figures. You may need a leader; I do not.
The President’s unusual propensity to talk tough (sometimes issuing monarchical decrees) while simultaneously whining about being challenged also caught my attention. In a year where virtually every amenity of daily life was reclassified as a public good, the institution that is represented by intense scrutiny of the Chief Executive, “Presidential harassment”, is the one most freighted with moral imperative. How will we know when government officials are sufficiently surveilled by the public? When the rewards are small enough, and the headaches large enough, that no one wants to run for office. The din of chief executive grousing suggests a good start in that direction.
While not a new proposal, age-old schemes regarding punishing “Wall Street” (a vacuous and wholly dishonest classification, in light of the vast range of size and business activities among modern financial firms) for mostly imagined crimes has resurfaced. With heaps and gobs of political plans being put forth — and nary a single budget hawk to be found within 100 miles of Washington D.C. — inevitable questions about affordability have risen, and the suggestion of a tax on financial transactions is back. In a spirit of reductio ad absurdum I show how such a tax could similarly be imposed upon (or shared by) Hollywood, with the added bonus of (a) not impacting the critical liquidity of financial markets, and (b) allowing many of the people and organizations most supportive of revolutionary change to finance it themselves. Surely a tax of $79,000 per second per new film (and/or $18,350 per word for scripts; in either or both cases, up to a total or $266 billion annually) isn’t too high a price for the actors, writers, producers and directors to create the world so many of them regularly invoke.
Crypto prices declined notably in 2019, and the long-term viability of many coins and tokens, not least of which Bitcoin, were increasingly called into question. Nevertheless, both the President and the Secretary of the Treasury took aim at them this year, calling the crypto sector as a whole a “national security issue.” In light of the long-term decline in the value of the US dollar (prominently displayed just inside the entrance of the offices of the American Institute for Economic Research) and growing international calls to diversify away from a single reserve currency, Mnuchin and Trump’s pronouncements ring starkly out-of-touch. International (and individual) efforts to diversify away from the US dollar mounted in intensity throughout 2019.
The growing sickness of the most radical fringe of the Democratic Party was, to me, laid bare during a broadcast of 60 Minutes in early 2019: in it, the inimitable New York Representative Alexandria Ocasio-Cortez (“AOC”) was asked about her frequent factual errors, misstatements, and rhetorical clumsiness. By responding that moral rightness is more important than truth or accuracy — a certifiably candid moment for her — the connective tissue binding all mass movements which seek power at any cost was exposed. Make no mistake: just under the skin of every Antifa window breaker is a goose stepping Brown Shirt, and every hypernationalist advocating that the U.S. turn the Middle East into a parking lot scarcely conceals a bearded Haymarket bomb-thrower.
The widening embrace of the concept of negative interest rates (real or nominal) in the European Union is a story which has eluded most of the mainstream media and even many financial news outlets, but which has major and in some sense ominous implications. I recall, nearly twelve years ago, arriving at my trading desk just after Lehman to find the shortest term Treasury Bills yielding negatively: those, of course, were extremely short-term securities issued by the most credit-worthy sovereign issuer in the midst of the deepest economic crisis the world had faced since the Great Depression. But issuing medium- to long-term debt securities with negative yields turns economic calculation on its head and, writ large, may lead to credit rationing by central banks and ultimately an utter disconnect in the coordination of savings and investment. It begs the question: is there any such thing as unconventional monetary policy anymore, or have the floodgates given way to policy abandon? Are we all, now, the experimental rats in the economic mazes of central bankers; were we ever not?
The proliferation of data and statistics brings both benefits and hazards. In 1963 Oskar Morgenstern cautioned economists and laymen alike regarding the perils of financial and economic quantification, noting that while the perception of exactitude is reinforced by econometrics, problems of accuracy and precision in social sciences must at least be as bad as in the exact sciences and are likely much worse. As I show using recent research demonstrating widespread errors in baseball, and note in the recent about-face in policy orientation by the Federal Reserve, the infatuation with quantification in the social sciences is unwarranted and may serve to promote even more indefensible expectations.
The introduction of what amount to internal passports — the Real ID scheme — after many years of quiet political negotiation came so quickly, so quietly, and with such tacit acceptance that I was taken aback. Setting aside semantics, and while there are a few exceptions, the short list of nations (present and historical) which the United States is joining by requiring state-issued identification to travel internally is not a proud one; certainly not one espousing the proudest traditions of personal liberty. Yet Americans seem resigned to aggressive complacency in the name of protection. (For good measure, I point out the flaws that already exist within the Real ID program, and make a prediction I deeply hope to be proven wrong on.)
Virtually all of the ‘2019 in review’ articles I’ve seen so far make no mention of the 35-day government shutdown, which although starting in 2018 ran throughout January of this year. In this article I highlight and provide a context for what I believe is one of the most important issues facing Americans today: the massive, tax-fed, unelected bureaucracy that wields growing (and underappreciated) power as the consciousness or “soul” of the American state. Rather than seeing a dark, deep-seated conspiracy involving shadowy actors, I theorize that the deep state is first and foremost a product of spontaneous order.
The growing obsession, both within the academy and as a focus of political proposals, with economic inequality – inequality of wealth, income, access, and by other measures – has been more than competently tackled by several of my colleagues at AIER. Yet aside from the numerous data errors and interpretive misrepresentations found within the most popular works, a fundamental aspect of the egalitarian railing has frequently gone unexamined: what does it matter? Assertions regarding the alleged inevitability of social unrest, disruption, and upheaval resulting from inequality are often made, yet there is essentially no substantiation of such; and most such assertions would be unfalsifiable anyway. One could be forgiven for interpreting the obsession with inequality as less tied to improving standards of living than to some confused and often angry fixation upon wealth.
With Presidential, Congressional, and Gubernatorial elections in 2020, a fascinating (and sometimes frightening) Democratic presidential primary, and the U.S. economy growing while testing certain limits (full employment, record stock index levels, and record budget deficits) – there will be more than enough to cover and analyze in the coming year.
Happy New Year, and thank you for reading.