Tag: economics

The Curse of The Strongman

He had thick eyebrows and a thicker mustache.

He dressed in the fashion of the day. A suit. A hat. An overcoat. A pistol.

His name was Seth Bullock, and he was a prominent western sheriff.

Bullock might not have held the notoriety of Wyatt Earp or Pat Garrett. But he was just as effective a lawman as those two – if not more. Operating with steely resolve, Bullock cleaned up a county in Montana. Then he repeated the trick in the Dakota Territory.

Bullock’s exploits helped tame the northern frontier. They also drew the acclaim of future President Theodore Roosevelt, who would go on to appoint Bullock as a United States Marshal.

And yet, despite Bullock’s strong and steady hand, there’s little recognition of him in the region today. It’s Roosevelt — not Bullock — whose face is chiseled into a mountain in South Dakota, and whose name is on a national park in North Dakota.

Bullock had the pedigree of a strongman. But it turns out that title only goes so far.

Back when I was in middle school, I leaned about a particular term in history class.

Tariffs.

I hadn’t seen this word in my day-to-day life. And for good reason.

Tariffs, I discovered, were taxes on goods shipped across national borders in the 18th century. American colonists took exception to the practice back then, and this backlash helped pave to the road to America’s independence.

I internalized this information, used it to ace my class exam, and promptly filed it away in the furthest recesses of my mind.

Tariffs hadn’t been relevant in 225 years. I wouldn’t need to worry about them anymore.

Boy, was I wrong.

You see, a generation after I turned in my history exam, a new president took the helm in America. Well, more accurately, a returning president — one who had occupied the Oval Office four years prior.

This president railed against weak leadership while campaigning for his old job. He all but pledged to be a strongman if elected back to the role. And voters accepted the pledge, paving his road back to the White House.

Once back in power, the president took every opportunity to rule with an iron fist. He started deporting migrants, slashing the government workforce, and systematically removing his opponents from positions of influence.

It was all a bit jarring, but hardly unpredictable. This is what a strongman does.

But his next move would prove the most disruptive. The president brought back tariffs, imposing them on nearly every other country on the planet.

The reasoning for this move was straightforward —to the president, at least. America had been roiled by skyrocketing inflation in recent years. American industry had been on the decline, and trade deficits with other countries had widened.

Why not solve all these problems with one fell swoop? Make global trade too expensive to be practical. And bring supply chains — and their associated jobs — back within American borders.

Unemployment would plummet as industrial jobs returned within our borders. And with those goods being made closer to home, prices would drop as well.

The stock market would rally, businesses would remain profitable, and families would bask in the prosperity of a rejuvenated economy. The strongman leader would be the hero, the savior, the genius behind it all.

This was the theory the president had as he announced the tariffs. But things played out much differently.

Markets tanked within hours of the announcement, wiping out billions of dollars in value. Businesses raised alarm about rapid onshoring of operations — a process that normally takes years to complete. Financial analysts warned of rising prices, and even the risk of a recession.

The president may have embodied the strongman persona with aplomb before. But now, he appeared to have overplayed his hand.

It was a sordid outcome. But hardly an unprecedented one.

The annals of history are filled with strongman leaders.

The legacies of these leaders vary widely. Some built empires through military might, for instance. Others committed mass genocide and related atrocities.

But even with these varying outcomes, two threads seem to tie this archetype together. Strongman leaders are effective at consolidating power and ineffective at managing an economy.

That second part of the equation might not seem intuitive. But it should be.

Economics, you see, represents the systematic allocation of scarce resources. The entire practice is built on the premise that there’s not enough to go around, and participants must consider trade-offs.

Just about every economic concept — from Invisible Hand to specialization to supply chains — stems from the entrenched reality of these trade-offs. Capitalism is essentially built on it.

But cooperative systems like these crumble in the face of the strongman ethos. There is no room for the strongman to share control or delegate influence. Giving an inch means the gig is up.

So, strongmen often choose power over prosperity. Or they silence the voices of reason in favor of chasing economic fantasies.

The latter appears to be happening in America. Tariffs are just the vehicle to get the nation to that outcome.

This is the curse of the strongman. And we’re mired in it.

Guilt by association.

Such a concept is prevalent in America.

If we give a friend a ride to the bank, and the friend robs that bank, there’s a good chance we’ll be viewed as complicit in the crime.

This might seem unfair. We didn’t necessarily know what our friend would do once inside those bank doors.

But we should have.

The bank robber was our friend, after all. We’ve conversed with them, immersed ourselves in their personality, and come to recognize what they were capable of.

The same principle holds true when it comes to our leaders — particularly those of the strongman variety. We might not be directly culpable for their actions. But we still carry the stain of association.

We do so because we lean into one illusion, in particular. That an iron fist can yield widespread economic prosperity.

This is simply not possible, for the reasons already discussed. And there are plenty of real-world examples of the illusion failing. Examples we’ve seen in the news, or learned about in school, or just heard about through our social circles.

We know better. And yet, we chase after misguided fantasies anyway.

It’s time to wake up.

There is an explanation as to why Seth Bullock’s name no longer graces much of the northern tier.

It centers on a couple of elections that took place in the 1870s in what is now Lawrence County, South Dakota.

Bullock had served as sheriff in the county. But he was an appointed sheriff who had been named to his position by the Dakota territory’s governor.

As the county legitimized, elections were held for the sheriff’s position. Bullock ran for his post, but he did not win it. He was forced to cede his duties.

Bullock tried again in the following year’s election. But once again, the voters cast his aspirations aside.

Even at the apex of his exploits, Bullock’s legacy was getting sidelined.

It’s hard to know exactly what led to these election losses. But it’s possible that the citizens of Lawrence County saw the limits of strongman rule.

Sure, Bullock could cut down on the saloon fights and the shootouts in the street. But the frontier region was on the precipice of a boom. Could Bullock really help deliver the prosperity residents were seeking?

It appeared not.

Indeed, Bullock’s exploits had pitted him against some local business owners — who prospered in trade and social connections across the county, but who also engaged in some illicit activities. Voters seemed to favor the future promised by these leaders to the strongman keeping them safe.

Perhaps we can take something from our ancestors’ example. Perhaps we can get less swept up in the fantasy of rhetoric. And perhaps we can apply more logic when a strongman makes their pitch of prosperity to us.

This might not sooth the acid reflux of our current tariffed economy. But it could keep some future heartburn at bay.

And that matters.

Finite Resources

It was a restless night.

I tossed and turned repeatedly, failing to summon slumber.

I was away from home, lying atop a mattress that was too thin and too firm. And I was struggling to get comfortable.

Still, that only explained half of the issue.

For it was a sultry summer night. The air conditioner was going at full blast to combat the muggy conditions outside. But it had turned the guest bedroom into an icebox.

I’d covered myself with a blanket. But it was only so wide. And with each toss and turn, the blanket folded in on itself like a piece of origami.

As the night went on, I felt more and more of me freeze. First, my foot was exposed to the chilled air, then my lower leg, my arm, and my shoulder.

When it became unbearable, I’d shake the blanket free and toss it over my body. But a few tosses and turns later, it would be back to where it was. And I’d be cold again.

It was sometime around 2 AM when I realized the futility of my situation. The blanket was simply not built for my sleep patterns.

I wouldn’t be able to feel fully comfortable in this bed. Each movement I made would come with visceral tradeoffs.

These were the facts. I’d just have to live with them.

Not too long ago, I was watching a hockey game on television.

At a break in the action, a QR code appeared on the screen, promising a chance at a $10,000 grocery giveaway. The winner would get the reward in monthly sums over the course of the year.

I scanned the code and entered the contest. But my name was not picked.

Disappointment washed over me when I learned this news. But it quickly faded.

For I realized that I typically spend far less a month on groceries than the contest promised. And I could still pay for my smaller grocery haul with the plastic card in my pocket.

That card was tied to my bank account, whose balance swelled each time I got a paycheck from my employer.

So, even though this streaming service wasn’t subsidizing my food, I was covered. My employer was footing the bill.

Or not.

My employer, you see, wasn’t simply doling out money from a bottomless vault to keep me fed. It acquired those funds by selling its goods and services to others. Those others were businesses in the insurance industry, who used those goods and services to help provide coverage to consumers.

Many of those consumers were individuals, who covered the value of their homes and vehicles with monthly insurance premiums. The money paid toward these monthly premiums came from their own paychecks – which their employers provided after selling their own set of goods and services.

The dizzying chain I just described is work of the economy. It’s an illustration of the patterns of supply and demand that keep our capitalist society running.

The economy is what keeps us fed, housed, clothed, employed. It’s the engine that keeps us going.

That engine is fueled by two things – finite resources and market participation.

Finite resources mean there’s not enough of everything to go around. There are only so many loaves of bread, pairs of pants, or shiny new vehicles we can produce, for instance. And there’s only so much money we have to offer in exchange for them.

It’s as if we all have a blanket that’s too narrow. We can’t have it all, but we can make tradeoffs to improve our situation. We can participate in the marketplace – as buyers and sellers – to better fulfill our needs.

But if we get too close to the edge of the blanket, market participation breaks down. It becomes too difficult for companies to offer up enough goods, or too expensive for individuals to procure them.

Everything shuts down. And everyone suffers.

It’s an uncomfortable prospect. But one that’s all too real.

Follow the money.

Those three words are perhaps the most memorable of the 1976 film All The President’s Men.

Washington Post journalists Bob Woodward and Carl Bernstein have seen their investigation run aground. What started as a story about a burglary has unfurled a broader government conspiracy. But Woodward and Bernstein can’t seem to connect the dots in a manner that is safe for print.

Eventually, Woodward and Bernstein contact a shadowy informant, who urges them to follow the money. This turns out to be the missing link in the investigation.

A trail of payments would ultimately tie the break-in to the administration of United States President Richard Nixon – who seemingly authorized the heist to get intel on his political rivals.

The Washington Post would soon publish its report on what came to be known as The Watergate Scandal. And it would ultimately cost Nixon the presidency.

Following the money is now a central tenet of investigative journalism. It has a way of exposing even the most covert activities.

But following the money can be illustrative outside the newsroom as well.

Indeed, in a world of finite resources and market participation, money speaks loudly. It telegraphs how everything is meant to play out. It provides a map through the chaos.

That is, if we’re willing to pay attention.

That hockey game I was watching – the one with the $10,000 grocery giveaway –was being aired on a new streaming service.

This new service promised to air nearly every game for my local team. All for free.

I was flabbergasted to see this claim.

You see, I’d hardly watched any of my local teams for free before. I’d either paid for a ticket to go to the game or paid for a subscription to watch game telecasts on a cable or streaming channel.

Football offered an exception to this rule. Networks like CBS, FOX, and NBC carried free game telecasts year after year, thanks to decades-old broadcast agreements.

But that was an anomaly.

Indeed, pro hockey seasons included nearly five times as many games as pro football seasons. And to remain solvent, hockey clubs have traditionally relied heavily on fans to pony up for viewing access.

I couldn’t imagine that financial model changing overnight. So, what would be filling that revenue hole for my local team now? If I wasn’t paying for my viewing access, who was?

As I write this, I’ve yet to figure those details out. Just as I’ve yet to determine who’s subsidizing the restrooms at shopping center I recently visited.

Those facilities were too clean and well-furnished for public access. Someone was paying to keep them pristine.

Yet, I continue to dig. On both counts.

Why? Because I know the score.

There are no free rides in the realm of finite resources. Even if someone else is footing the bill, I’m still paying for those game telecasts and fancy public restrooms somehow.

The more I understand this arrangement, the more sustainably I can avail myself of it. Without being abruptly left out in the cold when the blanket folds in on itself.

I’m not alone in this regard. We can all enjoy these benefits. That is, if we Author Dylan BrooksCategories ReflectionsPosted on

The Fixed Pie

I wish I had more.

These five words are at the start of so many statements of regret.

Some share those words while pining for a loved one who left their life. Others use them as they share dismay about their financial situation. Others utter them to rue missed opportunities.

Such laments can seem trite. After all, we live in the land of abundance. Why curse the past when the future is still to be written?

And yet, I think these five words can stand for something substantial. In fact, I believe they’re the key to setting our lives on a more sustainable course.

America is a land of entrepreneurs.

From coast to coast, there are plenty of people who’ve created new ventures or taken nascent businesses into household names. Often devoid of supporting resources, these entrepreneurs rely on instincts and guile.

This idea of pulling oneself up by one’s bootstraps is ingrained in American heritage. Ever since the frontier era, we’ve had to be scrappy to survive.

This has provided great risk. But with it has come great opportunity.

Prosperity is not limited to those who score the best on an entrance exam, who train with the right mentors, or who have the best connections. College dropouts can create billion-dollar companies. Single parents can turn side hustles into empires.

Although I took a rather conventional path in my career — completing my undergraduate degree and later getting a Master’s in Business Administration— I have great respect for entrepreneurs. What they’ve achieved is admirable, and worthy of praise.

However, there’s one element that concerns me about the Do-It-Yourself playbook. Namely, that it often leaves budding business minds without an understanding of economics.

Now, economics is hardly the most prized corner of business education. Theoretical by nature and dominated by pessimistic academics, it’s a discipline that’s often mocked.

Economics doesn’t help balance the books, ward off competitors, or sell more items. It simply explains the shifting playing field that business is conducted on.

And yet, that’s precisely why it’s so important.

You see, economics forces us to reckon with reality. To master it, we must learn to properly allocate scarce resources. This often means taking the least bad option, recognizing that such choices will expose vulnerabilities.

There is no way to have all the upside without any of the downside. For a central tenet of economics is The Fixed Pie — the idea that there’s only so much to go around.

It’s a basic principle. An inevitable one.

But it’s a principle that has all too often been ignored — by both the entrepreneurial community and broader society.

To infinity and beyond.

So goes Buzz Lightyear’s catchphrase in the movie Toy Story.

I was only a child when this film hit theaters. I had no idea how ridiculous this phrase was at the time. I didn’t understand that there was nothing beyond infinity to shoot for.

And yet, all these years later, there are some adults who fail to see the irony of Buzz’s words.

As the world has gone digital, the desire to go beyond infinity has grown. Companies have exploded in size and valuation, unencumbered by the constraints of the analog world. People have been able to save artifacts to the cloud without inviting that musty attic smell. The ultra-rich have seen extra zeros added to their name as they eat breakfast.

The eternal hunger for more is being fed at warp speed, without much to slow it down. And yet, we are fraying at the seams.

For try as we might, one dimension resists the vacuum of acceleration and leaves us flailing in its headwinds.

That dimension is time.

Time. It’s inevitable.

There might be trillion-dollar companies these days, but there are still only 24 hours in a day. And while we might live longer than our ancestors, we’re only young for so long.

I’ve written before about our efforts to defang time. I’ve spoken out against our ill-conceived efforts to defray it into oblivion.

Such warnings seem prescient, particularly in the wake of a pandemic that spawned widespread burnout. And yet, I feel no desire to take a victory lap.

For I have failed to heed my own advice. I too have tried to bend time to my will.

Indeed, as the world slowed down during the pandemic, I sped up. I accelerated my efforts to stay fit, stay fed, and stay fulfilled.

I’ve largely achieved these goals. But they’ve come at a cost.

I’ve been getting far less sleep than I did just a few years ago. Not because of insomnia or restlessness. But because I’m doing so much in my day-to-day.

I know that this dearth of sleep will catch up with me sooner rather than later. Yet, I still find myself clinging to the false belief that I can take my productivity to the max.

Why? Because I’m human.

I don’t want to choose. I want all the pleasure and none of the pain.

Even if it’s all a grand illusion.

There’s an old tale of a couple living in paradise. Blind to their surroundings, they lived in uninterrupted bliss.

Then, a serpent brought temptation into their midst. The two of them ate from the forbidden fruit and encountered knowledge for the first time. Shame and hardship quickly followed, as they were banished into the cold.

The tale of Adam and Eve is our origin story. God might have created them, but their saga created humanity.

And yet, it’s often viewed as a cautionary tale.

We openly wonder what would have happened if they hadn’t bitten into the fruit. How idyllic would life be?

Our recent exploits seem like attempts to answer that question. Our pursuits of perfection and abundance seek to send us back to the Garden of Eden.

But despite our efforts to avoid it, reality is out there. The fixed pie is omnipresent, and with it comes tradeoffs. Getting what we desire often means giving up something else we covet.

Those who pine after what they’ve lost might sound pitiful. But at least they’re clear-eyed.

They’ve played the game. They understand its rules. And they know better than to hide from the inevitability of tradeoffs.

Perhaps we can learn from them. Perhaps we can drop the charade and accept our circumstances. And perhaps we can use this awareness to find more equilibrium.

This might not lead to a better life. But it will allow us to live life better.

And that just might be enough.