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73. Radical Candor: Recession & Renewal
In this newsletter, we need radical candor in our relationships, public policy, and economic situation, which U.S. recession and high inflation are from bad D.C. policies but there's hope in states.
Welcome back for another round of takes on ways to let people prosper by yours truly. There’s been a lot in the news this week, I was interviewed by Neil Cavuto on Fox Business about the economic situation, property tax relief is getting more attention in Texas, and local spending limits are needed now. Let’s get to these topics and more.
I read Kim Scott’s book Radical Candor a while ago but the lessons learned keep resurfacing. It helped me develop new ways to deal with conflict at work and in life. “‘Radical Candor’ is what happens when you put ‘Care Personally’ and ‘Challenge Directly’ together.” In other words, it’s important to build strong relationships with those around you before the interaction can blossom and allow for helpful candid criticism and praise. I often avoid conflict which can help me gain insight on an issue before discussing it in-depth, but it can also be a detriment if put off and let fester. This book provided guidance on how to deal with those situations and more.
We need more radical candor these days from our politicians, employers, co-workers, media, spouses, family members, kids, and us to stop beating around the bush with the truth. It won’t solve all problems but it could help reduce much of the absurdity. And it could help provide a renewal in our relationships so that there is more trust and understanding of what others are going through without passing judgment so quickly. This doesn’t mean that we should seek conflict but rather address things that bother us earlier on in a respectful, empathetic way so that it doesn’t fester and we can learn to love more. Join me in working to do this!
Speaking of radical candor, I shared the hard truth about the state of the economy during a recent interview with Neil Cavuto on Fox Business (my first interview on his show).
I believe the U.S. economy is currently in a recession as real (inflation-adjusted) gross domestic product will likely be negative in the first two quarters of 2022. And given the high inflation and likely higher soon, this is a painful situation that we haven’t experienced in 40 years. Stagflation is a hard beast to slay but it must be done quickly with large increases in the Fed’s interest rate target by dramatically reducing its balance sheet. And this should be paired with pro-growth supply-side policies from President Biden and Congress like reducing regulations, spending less, and cutting taxes. Unfortunately, the supply-side policies are unlikely going to happen with the current officeholders in D.C. so the Fed is the only game in town and the economic situation will get worse before it gets better. Please watch and share my interview.
The truth isn’t pretty but is necessary for families and employers to determine how to make the best decisions for their future. I’m an optimistic economist, which is usually an oxymoron, so bringing up a pessimistic view is tough for me. But it’s the truth when I’m looking at the data, talking with people, and seeing the happenings in the world around me. Fortunately, I’m always optimistic because I’m saved by Jesus Christ so I know there’s a bright future no matter the situation. But that doesn’t keep me from fretting about my fellow humans as my calling is to let people prosper. Prospering is not the current situation so I’m working more diligently and feeling more overwhelmed to find solutions. Unfortunately, my free-market policies aren’t likely to get anywhere in the current Congress or in the Biden administration. Sure, I had tension while working at the White House during the Trump administration where radical candor was scarce as politics was the main game in town, but nothing like the current administration.
With regards to tension, let me practice some radical candor with you. My more free-market views when it comes to issues such as immigration (my take: need comprehensive reform with a market-based visa system instead of just border security) and international trade (my take: need more multi-lateral trade agreements instead of tariffs to put pressure on countries like China that don’t play by the rules) led to additional tensions in the Trump White House. That tension remains in many current economic and political discussions, but I have learned to appreciate it as I learn from it with a growth mindset (another good book that I’ll get to soon). I also feel a great deal of tension as a classical liberal with the movement to conservative nationalism or populism that government is the solution when the government is most often the problem. In fact, the U.S. economy is considered a mixed economy, but if you really look at the commanding heights of the economy (e.g., transportation, education, healthcare) we are further toward extractive institutions of socialism. This is because the government spends a large share of total spending in these areas reducing the freedoms of people by overspending, overtaxing, and overregulating. And movement too often gets into culture wars and other woke issues so that it gets more votes or clicks but avoids a principled approach to a better world.
Our founding fathers of America would be upset by the direction we’ve been taking for at least a century. I look forward to the day when there are more presidents like Jefferson, Harding, and Coolidge who are interested in reducing the size and scope of government, unlike many of the views by Hamilton and others.
More freedom is how we get our country back along with the freedoms that we hold dear. As we soon celebrate the 246th Independence Day on the 4th of July, there’s a lot going on in the world but we still live in the most prosperous country for everyone in it (even if it’s going to cost a lot more to celebrate our freedom!).
Instead of focusing on the negatives, my radical candor to you is that we should be more optimistic about the future, know that God has us in His hands and that we will conquer whatever economic situation hits us because Jesus already conquered death for those who trust in Him. That is the path to true renewal.
Okay, I’ll step out of the pulpit now (HA!) and get to the key economic issues going on!
TAKE ON ECONOMIES & POLICIES IN STATES
Here’s the latest on the Texas economy and how it compares with other states.
My latest co-authored research on local government spending limits compares the budgets in 7 cities and 7 counties in Texas with our Responsible Local Budget based on growth in state population plus inflation for a consistent limit across the state to help keep places affordable for Texans.
Good article that summarizes our research on local spending limits.
Texans are most concerned about affordability issues, which there are solutions.
Texas and all but four states contracted in Q1:2022, so tax relief is needed.
Texas spends plenty on behavioral health services, but it’s not spending it well.
Iowa passed a conservative budget there and provided tax relief.
Need school choice like Arizona just passed with education savings accounts.
State policies matter for people’s decision to move.
TAKE ON ECONOMIES & POLICIES IN U.S.
My latest co-authored commentary on the state of the U.S. economy.
U.S. recession appears here…quick contraction after so much “stimulus.”
Ouch…this hurts. But it was expected with an inflated boom that must bust.
Inflation is always and everywhere a monetary phenomenon…globally!
Inflation-adjusted wages have been rising and reached record highs before 2020.
We need less government to fight the recession and rebound more quickly.
Environmental regulations are holding us back tremendously, this will help.
This sort of economic reasoning is what gives economists a bad rap.
Some give social media too much credit for the ills facing society.
Stop this insanity of giving welfare to the rich through student loan pause.
It’s been a trying time this week as our youngest son wasn’t feeling well. But he is doing better and things are looking up. I’m on vacation next week to celebrate our freedoms and have some much-needed rest and time with family. I’ll be on the road some this month as I take my views of free-market economics on the road. Last week, I was in Houston speaking to the Houston Young Republicans group. It was a great time as I talked about where we’ve been, where we are, and where we’re going in the economy. It was mostly a pessimistic outlook but my optimism is that we will see states lead the way and that the November elections will bring more fiscal sanity to Washington in January…I can dream! And speaking of dreams, it was a dream to have had the opportunity to be interviewed by Neil Cavuto this week!
GOAT#1 Milton Friedman hits the nail on the head with the need for school choice.
I’m praying that we will pray more and believe that the Lord has everything we need.
Thank you for reading and sharing this newsletter. Many blessings to you and yours!
Why Let People Prosper: We believe an inclusive institutional framework with individual liberty, intact families, robust civil society, competitive capitalism, and a constitutional republic best supports abundant opportunities to mitigate poverty and let people prosper. This prosperity isn’t just material but spiritual, psychological, social, etc. that satisfies human desires. Given this understanding and my experience and research as a free-market economist, I provide trusted views on economies and policies. Please subscribe & share.