Longtime readers of Outside the Box know that I am a fan of Dr. Lacy Hunt of Hoisington Investment Management. Lacy and his partner, Van Hoisington, produce a quarterly letter that is a must-read for me, as it reliably informs my thinking in a world drowning in conventional economics – economics that seem to continually miss the mark.
It almost goes without saying that Lacy will be speaking at our Strategic Investment Conference again this year, and he’s just one of a long (and still-lengthening) list of top-flight speakers. Learn more and reserve your chair, right here.
Today’s OTB is one of the most important pieces Van and Lacy have written in a long time. They establish that the proposed tax reforms will face enormous headwinds that were not there during previous tax-reform eras, which means that the benefits that Republicans think will accrue are likely to take longer to appear and be less than expected, which will mean that it is going to take more than what is presently proposed to jump-start the economy.
A few readers have asked me whether I am still a deficit hawk. The answer is, “Yes, more than ever,” because total debt has now rendered both monetary and fiscal policy much less effective. Debt, as Lacy and Van clearly show, is an impediment to growth.
There are other issues impeding growth, such as the ten million men between ages 24-64 who are not in the work force, a condition that has been steadily worsening for 40 years. It’s not just a recent phenomenon, but it must be addressed. These are men who have chosen to not participate for one reason or another and are perforce a drain on overall GDP growth.
And let’s not forget that for the last nine years we have seen more businesses close than be created, which has certainly affected GDP.