Antony Davies: The End of Your Social Security
Tom welcomes a new guest to the show, Antony Davies. Antony is a professor of economics, speaker, author, and podcaster.
Antony Davies explains the importance of working from first principles. If you don’t start with fundamentals problems can compound as we see regularly with government. Concepts such as minimum wages can have unforeseen consequences. Every action comes with a trade-off and a cost.
People generally have the belief that government can do things better for the common good. Inevitably, people pursue what they perceive to be in their own interest. On average the politician who really wants to be elected will be elected. Voters aren’t good at scrutinizing the political motives of politicians. So they will tend to not vote for the optimal person. This can have disastrous consequences since politicians will promise the moon and much of the public will believe them.
Health care is one of the most highly regulated industries in the United States. Employers began paying for insurance for employees because of past wage control policies. Today, we create additional regulations in an attempt to repair these past issues. Inevitably government only compounds the prior problems. He says, “The solution is to get the government out of the playing field.”
Foreign producers due to climate are able to grow sugarcane for a third of the costs of U.S. producers. This led the U.S. sugar industry to lobby for tariffs. These tariffs created a lot of jobs and thus votes but the citizenry did not realize why sugar became more expensive.
He discusses the national debt the fallacy of “we owe the money to ourselves.” Unfunded liabilities are not legal obligations because the government can change the rules. However, it is money they have promised to pay out and most people would consider not paying a government default. Today unfunded liabilities are between 100 and 200 trillion. Repaying it is a mathematical impossibility. There is no way the government will ever make good on it. It’s quite clear that the U.S. Government is running out of places and people from which it can borrow money.
Taxing the rich today is a problem primarily because we’re running out of rich people. The amount of money the government requires now vastly exceeds the wealth of billionaires. If we confiscated all the wealth of the billionaire class we would only cover the expenses for a year. No matter what the government does the income from taxes never seems to be able to exceed 18% of GDP. The balance sheet of the U.S. government is terrible when compared to its liabilities. The U.S. is currently bankrupt, voters just haven’t realized this yet.
For now, they will do their best to make the minimum payments. Soon, however, they won’t be able to cover the unfunded liabilities. The Fed is on a tightrope between inflation and suppressing rates. A dollar has value because you can buy something with it and as you print more money you spread the dollars more thinly. What we want is more goods and services, not more money. Inflation is insidious as most people don’t understand that it’s a form of taxation.
Antony explains why central bank digital currencies will fail to solve many of the governments’ problems. In addition, they bring greater risks of taxation and control.
Lastly, he discusses the CDC’s recent overreach and involvement in the housing markets. The Federal government lacks the constitutional authority in many areas. Legally these policies should be done at the state level.
Time Stamp References:
0:00 – Introduction
1:10 – First Principals
3:56 – Equality Tradeoffs
6:37 – Unintended Consequences
15:05 – Problem is Government
15:59 – Sugar Industry
20:09 – Virgin Plastic Tax
22:20 – Gov’t Debt Myths
30:22 – Taxing the Rich
34:40 – Gold & Gov’t Assets
36:41 – Supply/Demand
38:58 – Debt Servicing & YCC
44:00 – Political Appetite
47:48 – Printing & Inflation
52:47 – Desert Island Scenario
53:52 – Inflation & Crypto
56:26 – Stores of Value
57:40 – CBDC Concerns
1:00:40 – Eviction Moratorium
1:05:34 – Cooperation & Coercion
1:08:00 – UBI Vs. Welfare State
1:10:29 – Wrap Up
Talking Points From This Episode
- The importance of first principals.
- Political incentives, promises, taxes, and voters.
- Unintended consequences of government actions, subsidies, and tariffs.
- The CDC, Federal government overreach and states powers.
Antony Davies is the Milton Friedman Distinguished Fellow at the Foundation for Economic Education, and professor of economics at Duquesne University. He is the author of Understanding Statistics (Cato Institute), and co-author of Principles of Microeconomics (Cognella), and Cooperation & Coercion (ISI Books). He is also the co-host of the weekly podcast Words & Numbers. Davies has authored hundreds of op-eds appearing in, among others, the Wall Street Journal, Los Angeles Times, USA Today, New York Post, and Washington Post.
In addition to his academic work, Dr. Davies was Associate Producer at the Moving Pictures Institute, Chief Financial Officer at Parabon Computation, and founded several technology companies. Davies earned his B.S. in Economics from Saint Vincent College and Ph.D. in Economics from the State University of New York at Albany.