Guest Post by Scott Adams
One of the magical things about economics is that you can create an economic asset out of nothing but persuasion. For example, if you persuade people to be more optimistic about the economy, people invest more money, buy more products, create more jobs, and generally manifest the better economy from their own expectations. This magic of creating wealth from nothing but persuasion is one of the reasons President-elect Trump will be different from other presidents. He knows how to do this particular brand of economic magic. He has been doing it for years with his own company. The more common names for this phenomenon are branding and licensing. Companies license the Trump name for their buildings and other products because they recognize the name as a psychological asset that Trump created by persuasion.
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Remember the loan that Trump got from his dad for his first major project? Trump persuaded his dad to give him a loan, then he persuaded people to work for him, and then he persuaded people to move into the building. You can see in that story that persuasion was used as a tool to create a physical economic asset in the form of a building. But a building is not a brand. Trump had to add more psychology to turn it into a brand that others would license. it’s the branding and licensing part that involves creating an invisible economic asset from persuasion alone.
Now President-elect Trump is doing the same thing for America. That’s what his negotiations with Carrier and Ford and Boeing are all about. It is the start of rebranding America as a new and better version of itself, and one in which Americans take care of their own before taking care of the rest of the world. And apparently that brand and the optimism that comes with it is working. The stock market is up since the election, creating billions in new wealth from nothing but persuasion.
I find it easy to imagine a President Trump turbo-charging America’s economy with a ripple effect that benefits the rest of the world in lots of different ways. I don’t know how big this economic effect can get, but “billions” probably doesn’t cover it. I think we’re looking at a trillion-dollar wealth creation from persuasion alone.
Money (dollars) can be created out of nothing but persuasion maybe, but wealth cannot.
Creating wealth means people going to work and producing enduring things of value to others from the natural resources of the earth.
The difference between wealth and money is that one can just go poof and disappear and the other remains in spite of what happens in the monetary world.
It’s the difference between monopoly money and your home, one is wealth and the other is not.
I want to hear how Trump is ‘just going to make a better deal, see’ with the millions of Americans who are going to get horse fucked when their SS/Medi-this-or-that, pensions, life insurance, etc. go poof. He’s doing great – and that God for that – but he’s had the wind to his back thus far. When it gets ugly and one of his own…you and me, have to bite down on a shit sandwich….for his better deal…..I’m talking to you X’ers and millenials, but mainly you X’ers…..you talk about a generation that’s going to get asked-no expected, to willingly accept ‘the short straw’ for the good of others only to get a passing ‘hurumph’ from those others muttering shit like ‘well that’s just the way it goes’ and I wonder how THAT blowback will be characterized by those who get cut but not scalped. History makes one thing most clear to me, somebody….some group,etc., has to take it up the ass without so much as a mention for the game to continue.
Greetings,
I’ve come to terms with the fact there there will be no social safety net by the time I am ready to retire. I know that I will have to work until the day I die. Since I’ve accepted that, I’m very willing to accept that the end of these programs should come now as I see no reason for throwing good money after bad. It is going to happen sooner or later so we’d better do it while we still have some resources to handle the transition.
Government does about as good of a job managing retirement as they do healthcare.
My cousin is a third part owner in a multi million dollar corporation in Massachusetts, they are so confidant in the Trump administration that they are re-investing millions in their three plants.
They own two in Mass and one in Texas, while they deal with Mexico they have refused to build and move jobs across the border, Bill admits they lost a few customers because of pricing, but I think they stand to gain more in the future.
Scott: Love your comments. Today in Zero Hedge there was an article on Sears and Kmart cutting non performing assets ( http://www.zerohedge.com/news/2017-01-05/your-sears-or-kmart-store-about-close ). How would you recommend that any level of government approach problems of this magnitude if at all………Bottom line: How do you lead or influence individuals, groups and organizations in the 21st century to do what you want them to do?
You can’t cure stupid, and that’s what Sears / Kmart are right now – whatever led them to glory, they’ve lost it, and can’t seem to get it back. The cure for this is called BANKRUPTCY. Then someone who can make better / more productive use of the assets can try, or fail themselves.
Lots of things that should have been allowed to fail and be replaced have been artificially kept going (zombies) and will still fail and be replaced, it just will take longer. Several banks come to mind, I suspect we’ll lose Wells Fargo this year (if the government doesn’t decide to bail out Uncle Warren and his huge investments therein). Lots of GOVERNMENT AGENCIES should have been allowed to die WITHOUT REPLACEMENT; DOEs (both of them), DHHS, DHS, CIA, FBI, maybe NSA as well, BATF – none serve the interests of the PUBLIC and all serve the interests of SELECTED ELITES.
That’s what the Crunch will be for – to allow all those failed businesses, government agencies and so forth to break down and go away, with or without replacement. Bush II could have shut down the DOEd, but didn’t; the Congress kept it funded. Obama could have shut down the DOEn, but he didn’t; same as before. Only our kids are getting a worse education than I did, forty short years ago; and our energy independence (if it ever comes) will not be because the DOEn said or did anything useful in any real sense.
Reality will win, eventually, and all these failures will be swept away. It will just be harder and more painful than it would have been were they never started in the first place.
James…we see eye to eye on this subject……..