The Guardrails Hold, Almost
Odd country, ours. Most of us are coming off a weekend in which we ate too much, shopped (on- and off-line), and celebrated the pause in campaign ads and the wide choice of football games on the flat-screen, high-definition television sets in 81 percent of American households (52 percent have multiple sets). Some 54 million of us traveled to be with families or recreate themselves, an increase of almost 5 percent from last year, which is a testimonial to the increased after-tax incomes of many families. Most gave thanks for our many blessings: freedom to say and write what we think, even ugly thoughts; the rule of law; and a growing economy that has at last begun to share its benefits more widely. Yes, those benefits are denied to too many-many families are suffering the effects of national disasters, floods in the East, wildfires in the West-but there are no riots in the streets, and America remains the destination of choice for the tired, poor masses yearning for jobs, not always to the delight of all our citizens.
And yet, and yet. . . . We are what George Will calls a “fury-saturated” nation, topped by a political class so dysfunctional it is setting a tone that is destroying the optimism of investors-witness a stumbling stock market in the face of rising profits. Democrats are threatening impeachment while Trump is pursuing an accelerating trade war and estrangement from traditional allies-not the sort of certainty and calm investors crave.
Democrats, who have won control of the House of Representatives, know that either Senate Republicans or a veto-wielding president will nullify any legislation they might persuade their fractured majority to enact. So they are concentrating on moving political discourse from nasty to nastier, while President Trump is contributing to the elevation of that discourse by referring to one congressional investigator, Adam Schiff, as “Adam Schitt” in his tweet-stream.
In a country that is generally well fed and housed, with the living standard of the poorest the envy of much of the world, sour is the mood du jour. The ever-helpful New York Times, unable to find enough Trump lies, gaffes, and vulgarism to fill its pages on a day before Thanksgiving, provided a list of “Safe Topics to Discuss This Holiday Season,” politics being too likely to result in food fights, sulking, or prematurely shortened visits. “Safe topics” include the weather, the difficulty of the trip to attend the gathering, football, clothing, and other non-incendiary stuff.
To be fair to the politicians, not all the blame for the sour mood can be laid at their door. The decline in share prices since October has reduced the value of the 401Ks some of us are fortunate to have. Never mind that share prices are about where they were at the beginning of the year. Rising share prices create a mood of well-being even for those who do not participate in stock markets in a major way, which is why Trump takes credit for the ups while remaining silent during a downturn, or blaming it on the Fed.
Then there is the housing market and the Federal Reserve’s policy of raising interest rates in search of the “natural rate of interest”, which it reckons-“guesses” is a better word-is 3 percent, compared with the current level of 2.25 percent, and a not-so-long-ago rate of 1.0 percent. That has a knock-on effect on mortgage rates, now at a point where many potential borrowers cannot afford the monthly charges and are renting instead of buying. That makes for unhappy Millennials and disappointed sellers, the latter “trapped” in houses with mortgage rates often below 3 percent, making the incremental cost of a new home and mortgage off-putting. There is no limit to the suffering of some homeowners.
The prospects are grim: The economy will slow, interest rates will rise, new safety-device-laden cars will cost more, the price of new iPhones will be beyond the reach of all save the most coddled teens, the president and the Democrats will continue to snarl at each other, with the press weighing in on the side of the leftiest Dems, and only one team will win the national championship in college football, leaving millions of graduates of other schools distraught, often for hours and hours on end. The cost of maintaining a pet will rise, causing hardship for Americans who already spend almost $70 billion annually on the care and feeding of their pets-up $3 billion from 2016-including the increasingly ubiquitous “comfort animals” that humane doctors feel more and more of us need to survive a flight. Vegans will continue to make at least some people feel guilty as they tuck into anything except “plants.”
Fortunately, we are likely to survive these multiple woes. My bet is that in 2019 we will top the record 46 million turkeys we consumed this year, gird our loins for the 2020 election campaigns, and fail to notice that, as Charles Krauthammer pointed out before his passing, the Constitutional guardrails put in place by the Founding Fathers are holding.
Holding in the face of direct crash into them by the president of the United States; holding in the face of incompetence and possible fraud in vote-counting in Florida; holding in the face of candidates who refuse to concede when the vote count goes against them; holding in the face of grumbling about the electoral college system.
In the end, that is what counts. Whether the market capitalist system can hold in the face of the new infatuation with socialism might be a different story.