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OP-ED: The US Economy Will Come Roaring Back, Despite The Plans of Politicians

☆ Washington DC Needs To Get Out Of The Way

Ron Farmer is a Houston-based serial entrepreneur of remarkable energy. Back in 2009, and when the U.S. economy was gasping for air after a 2008 political crack-up that subsequently led to financial and economic terror, I asked Farmer how he felt given the economy’s disastrous shape. Could we recover? His response was optimistic…

Paraphrasing Farmer only slightly, he quickly replied “Are you kidding me? I’m way too smart for Obama, and I was way too smart for Bush.” Farmer didn’t have time to be pessimistic. His belief in his ability to meet the needs of customers was powerful. Farmer was certain he would be able to work around existing and future governmental incompetence. 

Ken Fisher has long said the same, albeit in a different way. Though a billionaire several times over today, Fisher hasn’t forgotten when his eponymous firm was managing $250. Yes, that’s 250 dollars.

Fisher’s lived through uncertainty about the viability of his creation, he knows from the early days what it’s like to stare potential failure in the face, and this may explain what he’s long said about government: capitalists always outrun politicians. Entrepreneurs routinely overcome enormous obstacles to achievement including, but not limited to, near universal skepticism about what they’re trying to do. More important, they spend many nights worrying the next day will be the last for their business. All of this is very crucial in consideration of what’s ahead. 

To see why, let’s first step back and remember why we’re here. Let’s never forget that the new coronavirus was a known quantity going back to at least January, and it was a known quantity that the virus would eventually reach the freest, and easily one of the most open countries on the planet. Despite this, U.S. equity markets continued to rally to all-time highs.

Though the markets were actively pricing the coronavirus long before it was “news” in the U.S., surprise sometimes rears its ugly head. There’s arguably your market correction. Think about it. Big lurches in the equity space are never a consequence of the known, simply because equity markets are relentless price-processors of the known.

To understand the surprise, readers need only ask who among us was predicting in January and February that by mid-March, 20 to 25% of the world’s most dynamic economy would be on lockdown? Sorry, but no one predicted this, which has to help explain why stocks corrected so suddenly, and so brutally.

To be clear, the stock market and economy-crushing agony we’ve endured has been a surprise that could only have been created by politicians. Even though wealth creation has always been the greatest foe of viruses and diseases given the simple truth that those seeking health advances require copious resources to vaccinate away that which can kill, politicians quite literally responded to the coronavirus with forced unemployment and bankruptcy.

Politicians can asphyxiate production in lightning-quick fashion. Never forget that. That they can perhaps calls into question Fisher’s optimism about the ability of capitalists to outrun them? It’s a fair question, but Fisher will be proven right. Bank on it.

For one, capitalists routinely overcome obstacles erected by others, along with ones of their own making. While errors in government are generally never fixed as a consequence of government enjoying privileged access to the production of others, in the profit-motivated world entrepreneurs must realize their mistakes, and correct them quickly. Unlike government, entrepreneurs can only innovate as long as they have investors willing to let them. This relentless pressure forces constant improvement.

For two, entrepreneurs are battle-hardened. Most successful entrepreneurs can remember many days, years, and even decades of wondering whether their creation would last. Awful, incompetent and inexcusable as the actions of politicians have been, they won’t break the spirit of individuals for whom looming failure is the constant rule to the success exception. Consider Blackstone co-founder Stephen Schwarzman. In the early days of what is now a global financial behemoth, Schwarzman was turned down 17 times for every yes he received when the former M&A investment banker had the temerity to try and raise a billion dollar private equity fund, despite no background in private equity. In his spectacular memoir, Schwarzman recalls how he “began to feel dizzy” one night as he sat alone with his thoughts, worried that he was “failing on every count.”

In his similarly spectacular memoir, CAA co-founder Michael Ovitz recalls the “folding chairs and card tables for desks” that were the nascent talent agency’s office furniture when CAA opened its doors in 1975 in a “bargain bin” building on “the very edge of Beverly Hills.” And even when it became more apparent that CAA might survive the relentless attempts by global agency William Morris to vanquish the agenting upstart, the brilliant Ovitz writes that “there wasn’t a day when I didn’t walk in the door and get hit by a rush of anxiety. What idea can I come up with today to pay the overhead?”

Nike co-founder Phil Knight spent many, many years up late at night, wondering if the next day would be Nike’s last. He didn’t even pay himself a salary until Nike’s eighth year, but long after that he recalls reassuring his wife Penny nearly every night about Nike’s ongoing viability “with optimistic words that I didn’t wholly believe.”

These stories are a reminder that whatever needless barriers politicians can – and will – throw in the way of America’s entrepreneurs, they’ve seen and overcome much worse. Reprehensible as the latest economy-suffocating political crack-up has been, entrepreneurs will figure out a way. They always do, and when they do, the world’s most dynamic economy will attain levels of progress that will make the past look primitive by comparison.

Don’t worry politicians with “plans,” the actual creators of economic growth are way too smart for you. They’ll bail you out again. 

SOURCE:

https://www.realclearmarkets.com/articles/2020/04/13/the_us_economy_will_come_roaring_back_despite_plans_of_politicians_488906.html