This is an objective guide to the US 2020 Presidential election from an economist ‘s standpoint. Since the economy is the number one determinate criteria for people voting on the margin, and will swing election results, I think a guide to US economic issues is relevant. I also have a brief candidate guide to the 2020 election at the end.
The problem is politicians do not understand the issues, and many economists are clouded by political bias. In contrast I do not like politics and will tell it like it is. You can debate me in the comments.
- I teach college and getting a Ph.D. in Economics with a focus on monetary economics.
- The following are the issues the politicians and economics will not tell you but are the reasons behind the economy.
- The election 2020 will come down to two candidates. Trump versus Sanders or Biden. Bloomberg is an elitist and not electable.
Main economic issues in the 2020 election:
- Worker pay – Medium income is up, but is it?
- Government spending – We have a one-party system.
- Inequality – Wealth is up, but for the rich.
- Taxes – Everyone has their view of what is fair.
- Unemployment – In the US, underemployment is the issue. A lot of talented people working for peanuts.
- Inflation – If you define inflation as the CPI, there is nothing to see here, but if you look at the real world, you will see a different picture.
Worker Pay in the US
Real worker pay is an average pay, which is put in real dollar terms when compared to the CPI. However, there are two problems with this:
The CPI is a narrow measure of prices. They measure only a slice of the pie, with known statistical flaws. Therefore, the defined and measured CPI does not reflect what you are experiencing at home. Hence, your real income might be down compared to your parents. For example, medical and college tuition is astronomical. Real Estate is hardly debatable, for example, my ‘poor’ immigrant grandparent’s townhouse is worth a million dollars today. Even a home built in the 1900s was better quality and had more land than a cookie-cutter HOA homes of today. The average age of first time home buyers today is plus twenty years than it was way back when, and steep mortgage with student debt and credit card debt.
It also does not account for the substitution effect. That is, people are substituting organic or at least locally grown apples with heavily sprayed low-quality apples from abroad (e.g. Mexico and China). With my ‘poor’ immigrant grandparents, everything was organic and local, and the milk was delivered their door. Therefore, it is not an apple to apple comparison for any product. Therefore, using the CPI to measure ‘real’ income is not a factual representation of people’s real buying power.
The number is an average. Since we know the Gini co-efficient is increasing, and this indicates the rich are getting richer and the poor poorer, the question is why? High-income earners skew the statistics. Yes the average is up, but because the super rich have more not the middle class or poor.
You need to be objective and think critically when looking at economic statistics.
In conclusion. even with with the biggest boom of all times, we are about equal in real income to the 1990s if you look at the Federal Reserve data and do not question it like I have above. I do not think we are better off in America considering wealth effect goes to the high income earners and a negative wealth effect goes to Xers, Millennials and generation Zs who are students are highly in debt getting inferior educations and do not have that first home,but do have a long commute. If the bubble bursts then real income will again decrease and veil will be removed from the economy.
Money is the second half of every economic transaction
What can be done to fix the lack of real income growth for the middle class? A large part of the problem with the lack of real income growth is monetary, that is connected to the Federal Reserve Bank. This is abstract and that is why politicians in the 2020 election will not address it. They do not understand it or can not make a campaign slogan out of it.
Can you image the slogan “money is the second half of every transaction… and central bank policy exacerbates the income disparity’.
Both the Republicans and the Democrats support central banking and stimulus policy. Therefore, no matter who gets elected this will not have a large impact on your paycheck. Non free market fiat money is the problem in the economy and without a “sound money” policy you will not get ahead and it will perpetuate inequality and a business cycle. You can debate me on this, but it is true.
For your paycheck to increase, we need to eliminate the Federal Reserve, so actual savings is connected to real investment. No capital goods or real prosperity were ever created with printing paper money.
Low interest rates create mal-investment that distort the capital structure. People who should not get money get money. The money is pumped into the system to keep the aggregate numbers looking stable. But they are not.
President Trump is a little closer to eliminating the Federal Reserve bank than the Democrats, however, it will not happen. Evidence is how he has a few quasi Gold standard appointments to the Central bank.
However, he will not follow through with the elimination of the Federal Reserve as he does not have the courage or understanding too. As much of a maverick he puts himself out there as, he is not, because he the government has a stranglehold on money, but the Democrats are not any better.
All other issues like import restrictions and tax cuts or raising the minimum wage are for economics 101 students to debate. The real issues is we have free market in every commodity except the most important, money.
The debt clock is clocking in around 23 trillion, and this does not include state, local, corporate, or personal debt. Everything around you is funding by debt. With the debt and the deficit, neither party will cut. They keep saying we will grow out of it. I am an honest economist. We will not.
Read my lips. The government cannot grow their way out of the debt bubble. We are in an economic boom and the debt has increased. The boom will stop and the debt will expand.
Do not get upset if I write the truth below. Rather debate me in the comments.
Trump is a Keynesian like Obama and Bush as will be any Democratic choice for President. Trump understand free market economics, but practices government expansion. His 34 Billion dollar increase for more tanks and flamethrowers could have been allocated back to your family.
His spending increases are funneled to the special interest of war. The issues is we do not have a legally declared war.
The Democrats will not cut military spending either. So do not think if you vote Democrat you will get some kind off shift of resources from tanks to food, science and education. It will not happen. You will get an increase in both. Military spending is almost a religion in the US and the drum beating takes advantage of people’s real love for this country. Military spending, if you include benefits, is about 2/3 of the discretionary budget. I am a conservative patriot, yet I am looking at this honestly and objectively.
Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.5 Star General, President, Supreme Allied Commander WWII – Eisenhower
1984 one party system
Ancient Rome, the British Empire under King George III or the Russians and Chinese today, spend a fraction of what we do on military in percentage terms.
Defense is when someone invades your country, and congress legally declares war and respects article 8 of the US constitution about a standing army. We have an empire and like England had a mantra ‘make the world England’ with Kind George III. We have a similar mantra to make the world like the US, ‘safe for democracy’. The issue is it is making you poor and the US weak. A country is strong because of its technological advantage. This comes from the free market not government. Debate me on this in the comments as I am a patriot.
If we spend 1 Trillion a year in the US, on science or just give it back to you, we would have flying cars by now and cure countless childhood diseases.
Only Libertarians understand the spending issue, unless someone can show me a candidate in the 2020 election that would cut the military down to the constitutional understanding. Have we become the empire the American revolution stood against?
Spending on social security and medicare are much more complex and beyond the of this article. However, both the Democrats and the GOP have ‘ideas’, yet neither would have an impact, unless it was privatized.
Health care as an economic issues depends on one simple question: Do you believe in social medicine? I do not believe central planning improves what the collective unconsciousness of individuals can achieve.
I personally go aboard for basic health care and pay cash because it is so expensive in the US. Better is to have a free-market health care system in the US and then it would be affordable as the market would create pricing for low and high-income individuals, just like there is a store like Walmart for others. Trump supports a free market in health care.
The Democrats want to make health care their issues as it buys votes. But the reality is, it would make decrease the quality of care.
We are heading towards the debt wall at an accelerated pace. Therefore, for the 2020 election it does not matter as Presidential candidate who is a contender, understands it or is serious about it.
Several factors cause income inequality. A minimum wage increase helps some and hurts others. The primary driver of the disparity in the US right now is the Federal Reserve or the central bank.
This is hard to believe unless you understand the issue.
The primary driver for this inequality that can be easily controlled is central bank monetary policy; that is, there is always a ‘first and ‘last’ receivers of money. The Fed pumps money into the system into 30 select banks, and this trickles down. The ‘first receivers benefit and the ‘last receivers’ do not. This creates inequality. Unless they when they pump money they would instantaneous and proportionally transformer it into your bank account the money of every US citizen, which would not happen, it is an unfair distribution.
It does to the fat-cats and big-wigs as the central bankers twirl their mustaches and drink lemon flavored ice water in cushy conference rooms.
Most people in politics in the US do not understand this. There is always a first and last receiver of monetary policy. When monetary policy is transmitted, this exacerbates the Gini coefficient and creates inequality. The net result is you have the super-rich and everyone else.
Minimum wage or more rules or regulations are a drop in the bucket compared to the problem of money. I would say global competition and other factors are in play, however, the market should level the playing field through arbitrage coupled with increasing opportunities and education for all. Yet, there needs to be something to sustain and perpetuate inequality.
If the US were on a gold standard, income distribution would improve overnight. It would not be a utopia, however, real savings would be connected to real investment, rather than monetary pumping.
The Democrats and Republicans will not address this. Perhaps Trump might if he sweeps congress in 2020. So that would be a check-mark in his favor, but I am skeptical until he makes definitive statements towards this.
However, if you try to redistribute income via the tax system, this results in slower growth for all. This is a Democratic idea. It does help to some extent, but not a long-run solution.
Taxes are not the issue; it is spending. I favor a progressive tax system, but better would be to cut government spending 90%.
Trump made progress by cutting the corporate tax. This does create jobs. However, it is not enough. He transferred it to the US debt. If we cut taxes for the middle class and the impoverished by the same about it might have a similar effect. I would say the Democrats have a check-mark on tax cuts. There are a few candidates that want to balance the budget.
Ultimately we need a balanced budget amendment. Neither political party will support this or they will exclude military from any cuts. They would say yes balanced budget excluding military and this mean that spending on that sector would increase.
This is not an issue in the US for the 2020 election. It will become an issue if the US raises interest rates. What is the problem is everyone is thrilled to get a 15 dollar an hour job. I am getting a Ph.D. in Economics and Finance and 20+ years of consulting experience, and I get paid OK. I know a lot of people with a college degree that are waitresses.
Underemployment is the issue. The solution to have a basic life is debt. You can not claim the economy is healthy if the country is underemployed, worker force participation is low, and debt is increasing. Even me, I ride credit card debt.
President Trump is trying to help this with fairer trade practices. Yet, to some extent, it is the fact that we are now competing with the whole world, there is no way to stop it and it is very competitive out there.
Federal Reserve Bank goals are are contrary to the a free market. Can you image the government setting a goal that every apartment rent in the US should be $1,000 a month? Or oil prices should be set at $3 a gallon at the pump to create stability. Let the markets work.
Inflation is not the measured CPI. It is what you personally experience. Neither party can address this. Prices are determined by the market. In a growing economy, there should be deflation as production becomes more efficient. The Central bank does not allow this to happen and inflates the economy and distorts the capital structure. Prices are up and you are told by the government there is no inflation, but what do you think?
If you want to compare your living standard to the world or others in the US, go here: Cost of living comparison. It is created by actual user data.
Since the conclusion of the above post is neither party, Democrat or Republican has any wisdom on economics issues and only harms the economy generally with spending and debt, then I will vote on non-economic issues. I am an Economist and I see little difference in policy between the two parties. At this juncture, I will vote Republican (life issues) or Libertarian.
2020 Presidential Election Candidates
Donald Trump – The de facto GOP nominee, if the economy is stable he will get reelected. If not he will not. As a rough prognostication, if unemployment is below 4.4% in November of 2020 then Trump wins. If he wins the US Congress Trump, could make changes, but until I see pronouncements such as ‘balance the budget or ‘eliminate the Fed’, I am not overly impressed. I understand he is against a wall of opposition, however, he never declared himself as the candidate that would return the US to small government. Full disclaimer, I will vote for him because of his political stance on ‘life’.
Bernie Sanders – He is the man to beat. He is a well-intentioned individual but a self-proclaimed ‘socialist’. It makes him un-electable. He has charisma. He may have appeal to under 30 voters, but they are the most undependable. If you see France as the ideal economic country, this is the candidate for you. Stirs emotions with an appeal to justice, but it is justice has the cost of surrendering individual liberties. The US with President Sanders would be better off if it was Colonel Sanders than Berrie.
Mike Bloomberg – Part of the New York Elite. He can throw money at the election and gain power. But bear in mind, he will try to do the same for the US. And throwing money at a problem does not solve it at its root.
Joe Biden – Pro stimulus in the 2008 crisis, but also voted for a balanced budget amendment in 1998. Subsequent voting record indicated big on spending. Biden would not be a game-changer for the economy, however, it would not destroy the US either economy either. More rational than Hilary Clinton towards the allocation of scares resources.
Elizabeth Warren – Break up tech companies and regulate the market. Would crash the economy.
Why cannot the Democrats get a life candidate who wants military cuts, free market and is family orientated? For example, even thought I am free market, I do not mind a universal basic income if the waste was cut out of the bureaucracy. For example, if every US citizen were to get $12,000 dollars a year from the government, this would save the US money by cutting other programs.
My Ranking of Candidates for President
- Joe Biden
Libertarian Candidate for the 2020 Presidential election
If there was a realistic Libertarian Candidate for the 2020 Presidential election I would vote for them. With Adam Kokesh and Arvin Vohra as Libertarian candidates in 2020, I do not see their chances as realistic, even if they are idealist, perhaps they are too extreme. Rob Paul is currently the best embodiment of these ideals, though not a candidate. The idea is a belief that humans are innately good and if freedom is maximized society as a whole benefits on par with Adam Smith and the ideas of the founding fathers. In the end it is about making the world a better place.
I will update this post so subscribe and check back. I will watch the debates with anticipation and see if any candidates touch on any real economic issues.
Let me know if you find issue with anything I have written above. The GOP, Democrats do not understand economics from the 2020 election.