President Barack Obama famously asked candidate Donald Trump, “What magic wand do you have?” when speaking about Trump’s plan to revive the economy. Three years into his presidency few argue that the economy isn’t doing well -- and the magic wand is plain for all to see.
Big government proponents like Obama and the lot of Democrat 2020 presidential aspirants will never understand that the magic wand is the American people -- if only government would get out of their way. That is what Trump has done -- reduced government interference -- and, in response, American ingenuity and hard work (now less hampered) has produced greater prosperity. They did the same when Coolidge, Kennedy, Reagan and Bush 43 reduced taxes as well.
At its core, economics is rather simple. It is the study of human behavior. Since we are the same beings as countless generations before us, we act with regularity.
So, when Macy’s announces a sale on Friday, people change their behavior and go to Macy’s on Friday instead of Thursday -- just to save twenty dollars or so. When that bi-partisan group of presidents reduced taxes and, some of them our regulatory burden, they put the economy on sale. The cost of doing business in America was reduced and people responded by investing and spending more.
That dynamic, in the laws of economics, is defined as the Law of Demand. That law of human behavior dictates that the more something costs, the less of it is produced or sold. You see, we are price sensitive beings -- and that applies to jeans, cars, houses, jobs, income and the economy as a whole.
That is why Ford sells more cars then Bentley. It is the reason stores hold sales.
President Obama and the 2020 Democratic presidential candidates either are incapable of understanding it (although they live it when they shop sales) or, because of their big government/socialist mentality, they don’t care.
Recently, Obama tried to take credit for the state of the economy. There are two lies within his trying to take credit for that. First, the economy was declining by the end of his second term. Indeed, the last three-quarters of his presidency saw growth decline as follows: from 2.3 percent to 1.9 percent to 1.8 percent (see the trend) and he never achieved 3 percent growth in any of his eight years.
Second, Obama advertised that he would raise costs on the economy and then he did just that. Imagine how a store would do if it was raising prices. Obama (a) dramatically increased regulations (adding over $100 billion per year in costs and over $22 billion a year in 2015 alone) and (b) overall taxes increased under him as well.
In the final analysis, Obama significantly increased the cost of doing business in the United States. By now, given the Law of Demand, you should agree that it is metaphysically impossible for Obama to claim credit for today’s economy.
You cannot raise costs and say that is the reason sales increased. Indeed, economic activity suffered under Obama -- the growth that occurred did so despite his cost-hiking policies.
President Trump did what countless leaders in history have done going back to 2350 B.C. when the Sumerian leader Urukagina reduced regulatory costs and taxes on countless items from fisheries to having to pay a tax for a divorce. When Reagan did the same in the 1980s, growth jumped to as high as 6.75 percent in a quarter whereas the wandless Obama had the weakest economic growth of any president.
We know the socialist Sen. Bernie Sanders, I-Vt., will never appreciate the above. Socialists do not believe people are good at their core -- they believe behavior must be coerced and they completely reject the notion that government destroys incentives when it raises tax rates.
All of which brings us to former New York City Mayor Michael Bloomberg and his $5 trillion+ tax increase. It defies logic, of course, to believe the private sector is better off drained of $5 trillion dollars. Tax increases also run afoul of the Law of Demand.
You would think a businessman would get that. After all, would Bloomberg's company grow faster if it was taxed more? Of course not.
Bloomberg’s quote that women would be “appreciated for their brains, [if] they’d go to the library instead of to Bloomingdales” has made the rounds again. Memo to Mike: Bloomingdales is a block from your office in New York City. Visit it. They hold sales for a reason and you might find out what women and other men know.
As for the rest of the Democrats running for president, they would do well to pick up an economics book as well -- one that follows human behavior, not one that tries to coerce it.