Welcome to another installment of Swamponomics: Liberty Nation’s dive into the week’s morass of top news stories and the stream of economic fallacies that have been accepted as conventional wisdom by swamp creatures for years.
First-World Problems
We live in both prosperous and interesting times. There are those who would go to Starbucks, turn on their Apple laptops, connect to the coffee shop’s AT&T Wi-Fi, log in to their Facebook accounts, and complain about the excesses of capitalism, the exploitation of business, and ostensibly the vastness of the free market. What it must feel like to suffer from first-world problems!
The Atlantic’s Amanda Mull penned a piece, titled “There Is Too Much Stuff.” The purpose of the article is to essentially complain about having too much choice and too much stuff – as if this were a bad thing.
Citing an endless stream of sandwich bags, beach towels, coat hangers, mattresses, and suitcases, the staff writer grieved that “infinite, meaningless options can result in something like a consumer fugue state.” She even had the temerity to claim that “variety isn’t infinitely valuable,” mainly because it causes “choice anxiety” and “the human brain can’t contend with the vastness of online shopping.” Underneath her article is a video labeled “America’s Shopping Problem,” which delves into the world of the nation’s “dopamine-fueled shopping addiction.”
What is the first world coming to? Are we that rich, bored, and ungrateful that we need to posit in 1,200 words that choice is anxiety-inducing, variety is bad, and shopping is a problem? Indeed, many people who often whine about this type of first-world issue have not experienced a life where you have too few choices. Soviet Russia, Zimbabwe, Venezuela, rural North Korea (Pyongyang is gradually adopting the free-enterprise system), and pre-superpower China are examples of places where the people did not have enough of the essentials, let alone a “mountain of Amazon boxes” in their homes.
It is true that five or 5,000 different coat hangers at your disposal might not seem critical to your life. However, it is also correct that if there are that many hangers available in the marketplace, then it is likely that there are an equal number of choices of other items far more important to your life.
Let’s take milk as an example, a dairy beverage enjoyed by millions of Americans. But milk isn’t a one-size-fits-all drink because men, women, and children have different needs. There are dozens of milk varieties: low-fat, fat-free, 1%, 2%, lactose-free, organic, non-organic, and many more. Then, you get into the dairy substitutes, such as almond, coconut, rice, and hemp milk.
Andrew Yang’s Humanity First
Andrew Yang has proposed a so-called Freedom Dividend. This is $1,000 per month for every adult just for breathing. He recently tweeted that the United States “can easily afford” a universal basic income (UBI) because “we are the richest society in the history of the world - $20 trillion GDP up $5 trillion in the last 12 years alone.”
It is true that the U.S. is wealthy, but the government, which would handle this monthly payment, is not.
Here are some numbers to take a gander at:
$22.3 trillion national debt.
$985 billion budget deficit.
$500 billion to service the federal debt.
$20 trillion Social Security liability.
$31 trillion Medicare liability.
$125 trillion in unfunded liabilities.
And that’s just the tip of the iceberg.
Yang has proposed to institute a 10% value-added tax (VAT) that would penalize the production of goods or services companies create. Despite championing it as a “fair tax,” it is anything but because it is a tax on living that makes life more expensive.
Credit should be given to Yang because the public would have a choice between receiving welfare benefits or applying for the $1,000 monthly income. One of the main problems with a UBI is that proponents typically want to add this on top of the welfare state, not replace the bureaucratic and expensive monstrosity.
US Falls in Competition
The United States fell in global competitiveness last year, says a new report. According to the IMD World Competitiveness Center, Singapore surpassed the U.S. and Hong Kong to become the world’s most competitive economy. The last time this happened was in 2010.
The Southeast Asian city-state has been using all the ingredients needed for a “recipe for competitiveness,” noted Arturo Bris, director of the Switzerland-based organization. Singapore has a lot going on: advanced technological infrastructure, a vast supply of skilled labor, better immigration laws, and less red tape to start businesses. In fact, according to Bris, Singapore is now “a poster-child for the world economy today, and not surprisingly it made it to the top position this year.”
Other countries in the top 10 were Switzerland, the United Arab Emirates, the Netherlands, Ireland, Denmark, Sweden, and Qatar.
So, what happened to the world’s largest economy? Well, the trade war is what sent the U.S. from the top spot to No. 3. While it was the best economic performer, the researchers said America’s competitiveness was hurt by rising energy prices, sliding technology exports, and the fading effects of President Donald Trump’s tax cuts.
Because the U.S. had been able to import cheap goods, from steel to electrical machinery to plastics, it could not manufacture its high-tech products at a lower cost. Whether it is aerospace technology or automobiles, U.S. companies had an advantage that is now dissipating thanks to the U.S.-China trade dispute. Just like consumers who have enjoyed a stronger purchasing power over the years, businesses did so as well. But now those days are gradually coming to an end.
Conclusion
One of the chief principles of economics is TANSTAAFL: There Ain’t No Such Thing as a Free Lunch. There is a cost to everything – monetary and otherwise. If we have too much choice, then the cost is spending the time to find what you want. If we want a new entitlement, then it needs to be paid for – tax, borrow, or print. If we want to be economically competitive, then we need to rein in expenses. Nothing comes free.
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