Highlight: David Bahnsen on The Current Economic State

Apologia Studios

Subscribe

Download

Share

00

00:00

I wanted to have a conversation about the economy and I wanted to ask for your expertise. So let me start the conversation,

00:07

David, by just asking the question of the basics. Are we in trouble right now? Real trouble.

00:13

What do you think? Well, it depends what people mean by that. Is there a systemic issue that is going to be secular or structural in the economy?

00:24

I do not believe so, but I think in trouble, meaning goods and services being late and getting delivered and pricing, upward pricing pressure because of the supply chain disruptions for people who are trying to find work to satisfy the needs of their business.

00:43

Even if it goes away in six months, that's still a lot of trouble for them in the next six month period or three month period or whatever it may be.

00:52

So the answer is sort of a yes and no. I do not believe that what we are facing is secular monetary inflation.

01:00

And the reason for that is not good news. I'm not saying everything is fine.

01:06

I'm just simply saying what you're looking at as a hurricane is actually an earthquake, which is the disinflationary pressures of losing economic growth because of excessive government spending.

01:20

And so that's what I believe is the primary multi -year, multi -decade economic concern we have.

01:29

But in the here and now, there is absolutely pricing, inflationary pricing pressures.

01:35

And a lot of this is more cultural than economic. It is you do not have people leaving the workforce.

01:42

You do not have unfilled jobs. We have a record level of job openings.

01:48

The reason we have those things is because of people choosing to leave the workforce, choosing to be dormant, choosing to be unproductive in society, and because people lack the skills necessary to meet the job needs.

02:03

So we have a tremendous mismatch culturally, socially, and economically of where the job market is in this country.

02:14

And that's not a good thing. I don't like where the unemployment pressures lie. By the way,

02:19

I know your guys' ages. You know mine. It's not our generation. 25 to 54 is pretty much fine.

02:27

It's very low unemployment. It's people over the age of 55 choosing to leave the workforce, and it's people under the age of 25 unable to find entry -level work, largely because of high minimum wage prices.

02:42

I like young people working, the character development, the entry into the economy, the job skill, human skill, human interaction development that that represents.

02:54

And I like older people bringing their wisdom experience into the job market, and people choosing to leave or give up or not be retrained or get left behind, give in to some of the desperation, cut themselves out of a couple decades of productivity in the senior years of their life.

03:13

These are really big problems. So okay. Obviously, there's a lot broken, but how do we rebuild that?

03:20

Because I'm going to go beyond the descriptions. This is what's happening to an explanation.

03:25

Well, this is why it's happening, and this is how we're actually going to pull ourselves out of this. What do you think when you hear that?

03:31

We go beyond the description. This is what's wrong to an explanation of how we got here. Some of the main things that are broken and how we actually can move forward in a way that's glorifying to God and blesses our neighbors.

03:43

Well, let me, if you don't mind, start with how we got here and then end up to what the path forward may be.

03:49

Because I think that how we got here and one's view of how we got here informs what one has to think about the solutions going forward, particularly if they're to be

03:58

God glorifying solutions. And so it sounds like you're allowing me to actually answer what

04:05

I believe ought to happen as opposed to what I believe will happen. And those are sometimes very different things.

04:11

But how we got to this position on the debt level economically, and then on the labor market standpoint culturally are two different dynamics that are incredibly identifiable.

04:26

They're both more or less a byproduct of the godforsaken decade of the 1960s and the sexual revolution and the humanism and secularization of American society that had been building for a number of decades throughout the 20th century.

04:43

But I don't want to be overly simplistic, but I think as a general rule, we have largely adopted a view of American life that allows for a larger place of the federal government than we were intended to have in our nation's founding and one that we mostly had throughout most of the republic.

05:04

But when people say like, oh, no, you had a very big federal government even in the 80s, you can't blame all this on the last couple of years.

05:11

Well, that's most certainly true. But debt to GDP, the total amount of debt divided by the actual size of our economy, federal debt divided by GDP, gross domestic product was about 30%.

05:26

It's now about 130%. In Japan, it's 250%.

05:32

In most Western European countries, it's 170, 180%. And we're rapidly getting up there.

05:39

But the problem is that we were at 65, 70 % yesterday, 2009, coming out of the financial crisis.

05:49

So the most rapid acceleration of the percentage of debt has been just in the last 13 years.

05:57

So if a family goes out and puts 100 grand on the credit card, but then stops, all of a sudden, they're kind of running even, and they're treading water, they're not getting ahead, but they're at least not adding more to the debt.

06:13

That's not a good situation for that family, but it's better than if they're continuing to build up the credit card balance.

06:20

That's what the deficit is. That's why the deficit is different than the national debt. And we're running, right now, the highest deficits in history.

06:30

We'll run $3 trillion last year, $2 trillion this year. And you can say, OK, well, the $3 trillion in the

06:36

COVID moment, the economy dipped significantly. They shut down the country. Regardless of the unforced policy errors that caused that, there was at least a connection between them spending all this money and what they thought was a solution to economic difficulty.

06:52

I don't happen to believe in that either, but let's put that aside. But right now, you're having big economic recovery.

06:58

Unemployment's back down in the 3%, 4 % range. If anything, you have too many jobs you can't find workers for.

07:05

GDP growth on the year will come in somewhere around 6 % net of inflation.

07:11

Now, it's not going to be there next year, because a lot of that's just the recovery coming back out of COVID. But my point is, we don't care anymore whether the economy's good or bad, whether we're in war or peace.

07:25

Now, we've just said $2 trillion here, $1 trillion there, $900 billion there, $1 .5 trillion there.

07:32

And so this is largely a byproduct of the American culture accepting a much lower role for the citizen, a much lower priority on self -government, on subsidiarity, on families, communities, on local government, on the church, and then a much higher role for Washington, DC.

07:51

So just mathematically, that's how we got here. We have $29 trillion of debt now.

07:56

And the vast majority of people say, oh, I think the military is too big.

08:02

Well, I don't think it is. But people can disagree on that. The last thing I'm concerned about and what our government spends money on is national defense.

08:10

But it's just peanuts in the grand scheme of things. And by the way, even the interest on the debt is not that much, because interest rates are so artificially low that even that expense they've controlled, it's roughly 60%.

08:24

$0 .60 of every dollar is a transfer payment. The cost of health care,

08:31

Medicare, Medicaid, and Social Security. Those are the major transfer payment mechanisms.

08:38

And that accounts for the vast majority, over $2 trillion a year of federal outlays.

08:45

So that's the state of affairs economically. How do we get to a point where people want to play video games till they're 34 years old on their mom's couch?

08:52

How do we get to a point where 58 -year -old men give up all hope and start turning to painkillers and alcohol?

09:00

How do we get to a point where the labor participation force is the lowest in a generation?

09:07

How do we get to a point where we have seven times more disability claims than we did 10 years ago?

09:15

All of those things are cultural. All of those things are spiritual. None of those things are economic.

09:20

Now they become economic, guys, because there's a negative feedback loop. So bad cultural conditions lead to bad economic ones, which create worse culture, which creates worse economy.

09:33

But no, those things, as I wrote in a book that you guys talked to me about on your show a couple of years ago,

09:38

Crisis of Responsibility, these things have cultural and spiritual roots, and they're going to have to have cultural and spiritual solutions.