‘And I can’t help but blamin’ your going
‘On the coming, the coming of the roads.’
Peter, Paul and Mary
‘Bill, you just don’t understand how we feel. This whole country was going down the drain. Now we have someone in the White House who might save it.’
This weekend, we drove down to Virginia for our sister’s 50th wedding anniversary. There, we got into a long discussion with an in-law, an avid Trump man.
It helped us understand why readers are so revved up by the new administration.
It also helped us refine a non-emotional way to score Team Trump’s moves.
Which policies are likely to make America great again? Which will not?
We’ll lay out the logic. You decide how it will play out.
So far, we’ve counted at least three positive economic moves by Team Trump: a freeze on Obamacare implementation, tearing up the Trans-Pacific Partnership (TPP) trade deal, and pruning funds to the United Nations.
All may reduce the burdens placed on American families…at least as far as they go.
Tomorrow, we look at some of his moves that are likely to cut the other way.
But for now, remember the formula from yesterday’s Diary:
W = rv (w-w – w-l)
Wealth (w) equals the real value (rv) of win-win (w-w) transactions minus the cost of win-lose (w-l) transactions.
We realised two things over the weekend…
First, this formula is far more fertile than we had thought. And second, it needs amendment.
When we say ‘wealth’, we’re not talking about GDP. We’re not talking about ‘growth’.
We’re not trying to guess stock prices or interest rates.
Instead, we are aiming — modestly — to overthrow all modern economics and provide a deeper insight into what real people actually want.
A simple choice…
Here’s a question for you: Which would you prefer?
You grow up with an inferiority complex. You hate your mother. She hates you. You compensate by starting a successful business, hiring thousands of people, and making millions of dollars.
You work night and day. Your wife hates you, too. And nobody much cares when you drop dead at 40 after battling a terrible, disfiguring disease for years.
You come from a good family. You always feel loved. You marry the woman of your dreams. The two of you have a small family and live on a small farm.
You never make much money. In fact, you eat mostly from your own garden. But you are in good health and live happily into your 90s.
Which would you choose?
The problem with economics — especially the voodoo variety as practiced by the witch doctors in universities and at the Fed — is that it cannot tell the difference. It can’t measure quality. It can only measure quantity.
So it focuses on quantity of output — new roads…trade…and dollars earned and spent.
Everyone assumes more is better. So economists are always trying to get more people into the first example. Not the second. More jobs. More factories. More malls. More credit.
The fellow who creates and spends a fortune is the hero of the trade. He has more stuff.
This concept of ‘economics’ is warped and confused.
And it leads to popular delusions — for instance, that more infrastructure spending is ‘good for the economy’, or that government deficits ‘stimulate’ growth, or that more inflation ‘creates jobs’.
Trillions of dollars have been misspent as a result.
We have a solution — so breathtakingly simple…so bewitchingly useful…and so shockingly revolutionary…we can hardly believe we didn’t steal it from someone else.
And perhaps we did. We just can’t remember whom.
So, let’s get to the amendment:
S = rv (w-w – w-l)
We’ve replaced ‘w’ for wealth with ‘s’ for satisfaction.
And there is the whole secret: Economists can measure wealth. They can’t measure satisfaction.
But our formula tells us — beyond a shadow of a doubt — how to get satisfaction…and how to know, for sure, if President Trump’s government programs will help us increase it.
More to come, as we see in which direction the US is really heading…
For Markets and Money, Australia
From the Archives
The Dow Jones Is Masking the Glaring Problems in the US Economy
By Vern Gowdie | 30 January, 2017