For most politicians the US economy is a fable, like the magic coffee grinder in the story about “How the Sea Got Salty”. According to legend the owner of the coffee grinder was a poor farmer who first used the magic grinder to provide food and shelter for his family, then all of his neighbors and then all their neighbors. All he had to say was “Presto Change-O Domino Allloto” and a wish could be granted. The poor farmer was careful to use the grinder for just the basic necessities of life for himself and his community.
Every four years the US electorate determines who holds the magic grinder and who knows the magic phrase. For at least the last two decades the electorate has been so polarized it has been reluctant to share the magic phrase with any politicians. Instead, voters have chosen deadlock and little substantive legislation has been passed. It has become so tribal even the surrogate kings like Obama and Trump have resorted to Executive Orders, not the magic grinder, to shape their legacies.
The tragedy of the fable about “How the Sea Got Salty” is news of the grinder’s magic properties reaches a greedy king who steals the coffee grinder from the farmer. In his ship on the way back to his homeland the king tries every imaginable phrase. Finally, in frustration he says “Presto, Change-O, Domino, Alllotto if you can’t grind anything else Mill Grind Salt!”
The gears of the mill began to creak and the ship was soon so full of salt it was near sinking, but the king would not throw the magic grinder overboard. The salt accumulated quicker than the crew could shovel it overboard and soon the ship sank. The mill is still at the bottom of the ocean grinding out salt.
The election in 2020 may be one of the few times in my life where the mill and the magic phrase may be reunited, and the king will have the opportunity to use the magic phrase to grind out endless “stimulus” supported by massive tax increases. Without stimulus being tied to policies for restoring jobs and promoting growth, the magic mill may as well just be grinding salt, and the taxes to support the mill might just sink the ship.
We have received reports, including in some cases from certain of our portfolio companies, that businesses are experiencing difficulties in getting workers and they believe this shortage has been caused, at least in part, by unemployment insurance keeping workers at home. This has the potential to encourage businesses to consider production automation which may permanently remove jobs. Unemployment insurance is not the answer. It does not incent job training, return to the job force or relocation. It does not encourage productivity and innovation. It is like the king’s salt – great for preserving votes, but worthless when it comes to keeping the economy afloat.