Innovators, the lifeblood of the American economy, are wilting from a lack of financial oxygen caused by Bidenomics. Only the recovery of those innovators can return America’s economy to robust health. The lucky thing is that no planning is needed for recovery, just removal of the policies restricting the free flow of funds to those willing to take calculated risks.
Bidenomics signifies economic policy by means of dismisinfoganda. Policymakers and their pundits-in-pocket dismiss some information, fail to rid their analysis of misinformation, spread disinformation, and use the tools of propaganda to push economic nostrums instead of the proven cure, not suffocating investors and innovators. Examples now abound in the economic policy arena.
Here are a few key ones:
Dismiss information: Real wages, which are to say the purchasing power of people’s paychecks, have been declining for some time. Instead of focusing on that widespread pain, though, Bidenomists focus on the employment numbers because they seem stronger.
Misinformation: Bidenomists push ESG scores as if they actually relate to real world outcomes, even though they are just weighting formulas based on assumptions, not data and causal connections. For example, so-called green metrics do not take into consideration the fact that solar panels and wind turbines rely on fossil fuels in their production, transportation, and disposal.
Disinformation: Flip-flopping on the definition of recession might mean you are a thoughtful economist, but it probably means that you are a Bidenomist, trying your darndest to avoid the “R” word so you can ram through a tax hike under the guise of an inflation reduction bill. According to Big Daddy Keynes, governments should borrow and spend during downturns (call them what you will), not raise taxes.
Propaganda: America has resembled an Orwellian hellscape regarding Covid for several years. No joke, people are beginning to sue over the government over the tactics it used during the pandemic. The Duckspeak has clearly spread to education and now economic policy.
Innovators are already being crushed by the high cost of capital. Interest rates are increasing, as they must to combat inflation, but risk premia are also increasing. Investors, in other words, need a bigger spread between the presumed safety of Treasury bonds and other investments, especially the riskiest types of venture equity. My erstwhile colleague at NYU’s Stern School of Business, Aswath Damodaran, calls it “the retreat of risk capital.”
Four risks in particular are particularly salient:
Policy reforms that would quickly restore the free flow of financial oxygen to innovators, restoring them and the economy to health, include:
Such policies would lower risk premia and inflation and hence lower the cost of capital to levels that give innovators some room to breathe. True, most innovators fail in the best of times but only when they do not produce sufficient value, not because of the arbitrary decisions of some Bidenomist. When it comes to economic growth, ‘tis better to have tried to innovate and failed than to never have innovated at all.
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