I’m a WhatWorksocrat

With elections on the horizon I’m often asked who I’m voting for, Trump or Biden? My answer is that I can’t stomach either candidate. I don’t think I’m unique.

Biden may or may not be cognitively challenged, but what he definitely is, is a Progressive. You will recall that in his inaugural speech he said he would represent all Americans which meant he would be slightly left of center. Either he lied, forgot, or thinks his welfare statist policies (what Bernie Sanders calls “democratic socialism”) are centrist. These folks pushed through a massive $740 billion spending bill that is mis-labeled “The Inflation Reduction Act.” It should be labeled the “Inflation Increase Act,” which is exactly what will happen.

If you ignore Trump’s ADD, Narcissistic Personality Disorder, and the January 6 thing, his policies were only marginally better than Biden’s. He too was a very big spender. He is also anti-free trade. Tariffs are just another tax on American consumers and help only a very few union workers (we can argue about this when I write about free trade). His immigration policy of disparaging Latino immigrants as criminals, rapists, and moochers was despicable. Before you throw this in the trash, I am not for open borders, and I believe our present policy is chaotic and wrong. We need workers, but we just can’t have an open door to the world for those fleeing corrupt dictatorships. We need to let qualified people in, laborers, and techies. His isolationist foreign policy is naïve and harmful. We aren’t Fortress America anymore. The world is too small and interconnected. And yes I support our efforts to help Ukraine. 

Bottom line on Trump: you have no idea what he’s going to do. Biden: I know what he’s going to do.

Let me suggest we start a new political party: the WhatWorksocrats. Let me explain.

Presently each side of the political spectrum proposes policies that promise beneficial outcomes. They are usually politically expedient policies – i.e., they are short-term solutions that either don’t work as promised, and/or are wasteful and inefficient, and most often result in unintended negative consequences.

I believe policies should be adopted that actually work as promised. Using economic science to examine a program before it is implemented would save we taxpayers trillions of dollars. Why economics? Economics is the science of determining which social policies work and which don’t. 

Of course it isn’t that easy. Most legislators believe that since the ends are noble, then surely the means employed to achieve those ends will work. It doesn’t work that way. Most of these plans use top-down means which ignore human nature and usually fail or result in unintended consequences.

Take Social Security (SS) as an example. According to the Congressional Budget Office (CBO) they will not be able to fully pay beneficiaries by 2034.

The shortfall is because (1) benefits are indexed to inflation requiring ever higher annual payouts, (2) people are living longer, (3) a declining workforce means there are fewer workers to support beneficiaries, especially as Baby Boomers reach retirement age, and (4) present tax rates will not be enough. Basically they give away more than they can afford.

Every dime you now pay into Social Security goes to pay current beneficiaries. In 1940 there were 42 workers for every beneficiary. Today it’s about 2.8 to 1. If the worker ratio continues to decline it may be politically difficult to put the funding burden on the few. There is also the problem with the Congressional Budget Office’s (CBO) future inflation projections, which I believe will be higher (~5%) and which will increase benefits and funding requirements. 

The government’s solutions: raise SS taxes even more, and/or raise the retirement age, and/or cut benefits (by about 25% per CBO data). My guess is that the retirement age will be climb to 70 and SS taxes will increase. Politicians love to hand out money and yet they promise to not touch benefits.

State pension funds are even worse. 

But there is a solution. Many municipalities and states are changing their retirement funds from defined benefit plans (you get $X no matter what), to defined contribution plans (you get a return based on the amount you paid in). This is something that free market economists have been advocating for years and it works. The Reason Foundation has successfully advised municipalities and states whose defined benefit plans were driving them into bankruptcy.

In other words, there are economic solutions that work to achieve desired results. Before expensive legislation is enacted, the economic consequences should be independently analyzed to see if the results claimed will occur. It’s something we WhatWorksocrats will advocate on our political platform.

Perhaps this is just a fantasy, but economic analysis, what we call the economic way of thinking, does work. Perhaps our new party will bring attention to solutions that work and voters will demand reform. At least this is my dream.