Serious Side Effects

[yankees60]

Don't know how many of your are familair with John Mauldin. Read his book. Get his frequent emails but rarely read them. But did read this one.
Quite good. Some excerpts below.

https://www.mauldineconomics.com/frontl ... de-effects

Serious Side Effects
John Mauldin John Mauldin
|
February 7, 2025


The same is true more broadly. Every government policy choice has side effects. We elect a congress and president to make those choices. Now, that’s not necessarily bad. It is just how democracy works. Election outcomes reflect the majority’s will at a specific time, but not perfectly. Everyone has their own unique set of preferences. Even if your candidate(s) win, you still won’t like everything they do. It’s a messy process in the best of circumstances. Worse, even if you share the current government’s goals, the side effects can still hurt you.

Both parties are composed of various and diverse interest groups. That goes especially for Republicans this year. It seems a new coalition is shaping up. Will it have legs? Was Trump elected merely to be a wrench and change things, or can this new coalition actually develop a somewhat common vision? I guess we will find out in 2028.

Today we’ll talk about side effects, and whether the cure is worse than the disease.



This is the problem with trade wars. If you back someone into a corner, they can get creative and find other options. Limit chip access and some Chinese company creates DeepSeek. It’s generally inefficient and unnecessary, raising prices for everyone.

If, as I think, Trump is using tariff threats as a way to get other concessions, this should all end quickly.




In the last election, both parties promised significant change and often polar opposite outcomes. A plurality of voters picked Trump, who was actually quite specific about what he wanted to do.

And now that he is doing it there is a great deal of weeping and wailing and gnashing of teeth. By the way, if Harris had won, it would just be different parties weeping and wailing. I want to talk about some of the things that are happening and try to put them in context.

I want to preface this next section with the observation that we have been switching leadership in the White House and Congress every 4 to 8 years with regularity for the last 40 years. I see no reason for that to change in the future, at least until after the crisis. So those who are frustrated with what Trump is doing today should get their turn in a few years. That seems to be the way we do it. Especially in a sharply and narrowly divided country.

I think one of the reasons Trump won is that Democrats simply went too far in the pursuit of certain policies and ideology (call it woke or whatever) and government spending, plus pressing for more taxes. I would caution my conservative friends that the surest way to lose support in 2028 is to similarly go too far. That is not to say that the status quo, especially in the budget and deficits, doesn’t need to be severely pushed back. Bipartisanship that violates first principles is not to be sought, but bipartisanship in many areas should be pursued. It will sometimes be a tough line to draw, but draw it we should.

Let’s look at some basic principles. Trump is accused of being authoritarian (to put it nicely). And he is in the sense that he is setting certain rules and doings things that significant portions of the country don’t agree with. But also things that he promised he would do.

It would not have been any different under Harris. Biden (or whatever unelected officials were executing policy for him, even if he appointed them) was also doing things that a significant portion of the country didn’t agree with and they felt that Biden was being authoritarian.

None of us like to be told to do things that we don’t want to do or that we feel are unfair—by authorities who are acting, well, authoritarian. It can be as small (in the grand scheme of things) as allowing transgender men to participate in women’s sports (rare but annoying) to larger things like DEI to global trade policy and defense strategy and wars.

There are those who like many of the things that Trump is doing to reduce the budget and expose what they considered to be bad policies and corruption. And Trump did explicitly say he would do that and is now delivering on that promise.

With that said, I find the hysteria in the mainstream media to be so overblown as to be almost comical. Mainstream media is now more focused on clicks than actual journalism. “Doomscrolling” gets clicks.

Those in the “resistance” should be aware that everything that is being done has been vetted by squads of attorneys. The president has broad authority in certain specific areas. Is there going to be some overreach? Absolutely. And that is what the courts are for. And Congress. I and most Americans grew up thinking that if you were born in the US, that gives you citizenship. There seems to be a debate on that. I have no idea, but I will be curious as to what the Supreme Court says about it.

There will be lots of things that will be sorted out in courts. SCOTUS will likely be busy for the next few years. But let’s look at just one recent casus belli.



USAID, et al.
The US Agency for International Development, which was supposed to be a tool of helping less fortunate nations and advancing US soft power, has now been exposed as a slush fund for many left-wing policies, an organization that had no serious adult supervision, Many reports suggest the agency has been doing things a large majority of the country would oppose.


Yes, I get that USAID supports feeding the poor, helping refugees and all sorts of wonderful humanitarian programs that are truly needed. The vast majority of American citizens would support those.

Let me make a side bet. Come to me in 12 months and point out which one of those truly important programs didn’t survive under the auspices of the State Department. I am fairly confident they will.



I have been voting since 1972. I voted for McGovern and Carter, and then mostly Republicans except some years when I voted Libertarian because I couldn’t vote for the Republican nominee. But all were against waste and fraud and corruption. And the waste and fraud and corruption has just gotten bigger.

We are using antiquated computer systems with COBOL software older than my kids (the oldest is 47). No private business could survive doing that. I hope Musk and crew can even find half of those improper payments, not to mention waste and fraud. And that’s before they get to the military and defense budgets. I am all for robust defense, but I’m also for sane budgeting and controls and not open-ended black holes for what Eisenhower warned us about: the military-industrial complex. We continue to fight the last wars. In an era of drones why do we need $200 million planes? There may be good reasons but politics, as in spreading procurement throughout every congressman’s district, should not be one of them.

It won’t be easy. Remember the 1990s efforts to close unneeded military bases? This will be 10 times more difficult but also 10 times more necessary. It is not going to happen magically and it’s going to create a lot of noise.

I picked on two items, but this is going on all across the government. We need to get used to the volatile nature of the current administration. There are some things Trump does I just don’t get. I have no idea why he thinks the US should control Gaza or Greenland.

But I do want a more efficient and smaller government. And I want transparency in our government agencies. I want less fraud and waste. I want a budget deficit that is smaller than nominal GDP growth, which is going to be extraordinarily hard to accomplish without serious cuts. And a lot of congressional help on future spending and getting entitlements under control.

Going back to the beginning, this type of volatility is precisely what we should expect as we come to the end of the cycle and a crisis begins to develop. If we get a different government in 2028, expect more of the same, just different issues. Until a true crisis develops and we are forced to cooperate.