A conservative friend, no doubt a little upset about the pressure under which President Trump finds himself to which I made reference, asked me a question on Facebook today:
Have you looked at your 401k lately?
Well, no, not as such, although I keep an eye on the entire portfolio.
But this gives me an excuse to talk about choices of metrics. This is an important topic, I think, which is sometimes under-addressed by media and citizens alike, because using the wrong metric can and almost always will lead to bad conclusions.
My friend’s implication is that the economic system should be the metric by which we measure “how well we’re doing.” But I have my doubts that this is an appropriate measure.
First, it’s quite self-centered. If my self-worth inflates by a magnitude or two, but all those around me sink by 90%, is this a good thing or a bad thing? Frankly, I suspect there’s a problem. It may be one of those problems where the villagers show up at my door with pitchforks and torches.
In addition, this metric reminds me of something that has irritated me about some progressive arguments I’ve seen on The Daily Kos, where a few members were puzzling over the failure of conservative voters to vote their self-interest. I’m sure some conservatives make the same argument, only they see self-interest differently. And, for those of us who understand the concept of self-sacrifice and why it’s actually a selfish action, my observation may seem amiss. But taking the whole vote your self-interest thing face value, it turns elections into contests over which group is larger in terms of benefiting from lower taxes or higher taxes, stronger development or weaker development, etc. In particular, that first clause, concerning taxes, is deeply misleading given the Kansas debacle.
Disregarding a side road labeled Self-interest is not necessarily economic, my second point is to ask, what use is wealth when we risk inflation? The tax change bill passed by the Republicans and signed into law by a boastful President Trump has done little to boost the economy, but more importantly it’s pushed us toward the cliff of inflation and/or national bankruptcy, as noted by the folks at the Bipartisan Policy Center recently:
The federal deficit so far for Fiscal Year 2018 reached $532 billion in May, which is 23 percent higher than the same period last year, according to monthly data released today by the Treasury Department. The total deficit remains on track to reach roughly $800 billion for the year.
In the month of May alone, the federal government ran a monthly budget deficit of $147 billion, which was 67 percent higher than the deficit in May 2017, according to the Monthly Treasury Statement.
Key drivers of the year-over-year deficit increase through May included:
- Gross interest spending rose 12 percent to $318 billion, a $33 billion increase relative to 2017
- Corporate tax revenues fell 25 percent to $124 billion, a $42 billion decrease from 2017
- Federal spending, excluding interest payments, increased 5 percent to $2.4 trillion, a $122 billion increase relative to 2017, driven in large part by increased spending on health care and defense programs
“Nine years into our economic recovery from the Great Recession, it is indefensible that we allow the deficit to grow unabated,” Shai Akabas, BPC director of economic policy, said. “These growing deficits are not a surprise, we have been warning about them for years.”
The Laffer Curve, while it may function in certain circumstances, is not a universal phenomenon, and so we’re now facing enormous new debts incurred by those with faith, rather than belief, that lowering taxes will increase economic activity. Turns out it’s not that simple. And to finance the debt? You-know-who may turn to printing money.
Therefore, an increase in my 401K is not impressive if inflation is eating it alive, and, worse, for those of us on a fixed income, it’s fucking disaster. Now some people would just shrug and state that it’s their problem for being, say, elderly, but I remember the United States as a polity, a political entity the purpose of which was the common defense and the common welfare. Throwing people off the cliff for not being as business-savvy as the rest of us is not how we started out – but it may be how we end, as those who would be discarded instead storm the mansions of the wealth and rid us of them.
Relating to the previous point’s conclusion concerning the common welfare, a third point is that measuring my self-worth doesn’t tell me anything about the trend lines of those structures around me which I require. A hypothetical might be the terminal degradation of all the farming land in Minnesota. A less hypothetical, and just as concerning, is our health system’s own health. There are many press reports on President Trump’s assault on the ACA, to the extent that I no longer use the term ObamaCare, but TrumpCare, because he’s taken it over. I know that members of my extended family are now worried about having health care at all in the future due to the continued assaults by Trump and other conservatives on the ACA. If the health of my neighbors and family is at risk, what do I care for my 401K?
Fourth, liberty. Yeah, I just said liberty, and by that, I refer to the authoritarian tendencies of President Trump. Of what use is money if our political system is damaged beyond repair? We need to remember that our economic system is secondary to our political system, or, better yet, our economic system is contingent on our political system. Capitalism may work in non-liberal democracies, but honestly it doesn’t work very well and often degrades into mercantilism, or perhaps doesn’t ever climb out of the black hole of mercantilism.
This suggests that our first metric must be the health of our political system, as was foreseen by the Founding Fathers. Given its current distress as President Trump continues to display so much incompetency that I honestly believe he’s afflicted with dementia, it seems entirely foolish to look at a 401K as the measuring stick of the current Administration, as well as the GOP so incompetently in charge of Congress.
Or, the 401K metric simply sucks. It tells us nothing of importance.
