“GDP is the X-ray of the economy, GO is the CAT-Scan.” — Steve Forbes
In the face of a bear market on Wall Street and rising interest rates, I have some good news.
Yesterday, the federal government (specifically the Bureau of Economic Research) released first-quarter 2022 Gross Output (GO) — which measures total U.S. economic activity — with a surprisingly upbeat report.
Real Adjusted GO, which includes spending in the entire supply chain, grew by 3.9% (annualized).
Business (B2B) spending grew by 11.6%! See this chart:
In the first quarter of 2022, both real gross domestic product (GDP) and consumer spending fell by 1-2%, indicating a recession.
However, in my model, GO and B2B spending are leading indicators, suggesting that the current recession might not be as severe as economists are predicting. Whenever GO grows faster than GDP, it’s a positive sign for the economy.
Also note from the chart above, business spending is almost twice as large as consumer spending and has been moving up much faster recently. This is good news.
Consumer spending doesn’t drive the economy. Business does!
For a full report, see my new press release here: www.grossoutput.com.
A Cause Worth
Fighting Living For
“It is incredible the quantity of good that may be done in a country by a single man who will make a business out of it.” — Benjamin Franklin
“Is there not a cause?” — 1 Samuel 17:29
The quote directly above is from David in the Bible, right before he fights and defeats the giant Philistine Goliath.
David’s victory over a much bigger opponent serves as an important lesson: The size of a person is not what matters.
What matters is heart, courage and commitment in a cause that is greater than ourselves — a cause to live for and, in some cases, to die for.
On Memorial Day and Veterans’ Day, we honor those who made the ultimate sacrifice of dying for their country.
But sometimes it is more of a challenge to LIVE for a cause, which takes a great deal of patience, years of hard work, a lot of money and the ability to convince of thousands if not millions of the goodness of your enterprise.
Benjamin Franklin is a perfect example in pursuing a “lost cause,” to win independence from the British, the most powerful military force in the world. It was a classic David versus Goliath encounter.
As Franklin said, “If it had not been for the justice of our cause, and the consequent interposition of Providence in which we had faith, we must have been ruined. May we never forget his goodness to us, and may our future conduct manifest our gratitude.”
After the Revolutionary War, Franklin declared, “Our cause is the cause of all mankind. God grant that not only the love of liberty but a thorough knowledge of the rights of man may pervade all nations of the earth so that a philosopher may set his foot anywhere on its surface and say, this is my country!”
What is Your Cause? My Cause?
Do you have a cause that transcends your career and retirement?
In my own case, one of my goals in life is to convince the public of the virtues of “free markets and free minds,” which is Reason magazine’s slogan.
In my investment newsletter, as well as my books and teaching career, my goal has been to preach the gospel of free enterprise and Adam Smith’s “system of natural liberty.”
Three Principles of Prosperity
There are three essentials to Adam Smith’s system of natural liberty. They are identified in this paragraph from “The Wealth of Nations”:
“Every man, as long as he does not violate the laws of justice, is let perfectly free to pursue his own interest his own way, and to bring both the industry and capital into competition with those of any other man, or order of me.”
If a nation adopts Adam Smith’s model, which maximizes freedom, open competition and enforces the rule of a just legal system, the result will be “universal opulence which extends itself to the lowest ranks of the people.”
On another occasion, Adam Smith declared, “Little else is required to carry a state to the highest degree of opulence but peace, easy taxes, and a tolerable administration of justice.”
I’d also add “sound money.”
Countries that have maximized this laissez-faire philosophy have seen a higher standard of living beyond their wildest dreams. We’ve witnessed a 100-fold increase in our economic well-being since Adam Smith wrote the “Wealth of Nations” in 1776.
Yet, we are constantly challenged by politicians who oppose the Adam Smith model and favor big government, the welfare state and even a socialist central planning model.
As Ronald Reagan warned, “The light of liberty is always just one generation away from extinction.”
For the past 40 years, I’ve been teaching free-market economics at several major colleges and universities around the country, including Columbia University Business School and now Chapman University.
I’m amazed at how much impact a professor can have on student attitudes when it comes to money, politics and culture.
In addition to teaching, I have also written several influential textbooks, including “Economic Logic,” a no-nonsense textbook on free-market economics, now in its fifth edition, and “The Making of Modern Economics,” now in its fourth edition, which offers devastating arguments against Keynesianism, Marxism and socialism.
How to Counter the Anti-Capitalist Bias in Education
Recent surveys have concluded that a majority of students prefer socialism over capitalism. That’s largely because campus professors have brainwashed them. They are critical of capitalism and complain about inequality, environmental damage, materialism, business fraud and even racism. They ignore all the good that businesses have done to create well-paying jobs, reduce poverty and enhance the community.
My New Position: The Doti-Spogli Endowed Chair of Free Enterprise
To further pursue my work in promoting free-market economics, or what Marty Cummins calls” Opportunity Economics,” I have some good news:
I was officially appointed the first holder of the Doti-Spogli Endowed Chair of Free Enterprise at Chapman University. It’s named after former Chapman president Jim Doti and Ambassador Ron Spogli. Jim is a Ph.D. economist from University of Chicago under Milton Friedman and put Chapman University on the map as president. Ron Spogli is the former ambassador to Italy and a partner in Freeman Spogli & Co. in Los Angeles, a private equity firm that specializes in leveraged buyouts. The same company also established the Freeman Spogli Institute for International Affairs at Stanford University.
This story gives some background of my new position.
My wife and I have been treated generously at Chapman. We teach a couple of classes a year, me in economics, business and finance, and Jo Ann in English lit and poetry. We love teaching and our new home in California.
The position allows me to continue to teach a couple times a year and to give lectures around the country in support of free enterprise.
In addition, I’m in charge of giving an annual award to a faculty member and a student who do the best job of promoting free enterprise.
Catch the Vision!
My second mission is to bring together everyone in the freedom movement to gather once a year at FreedomFest to learn, network and celebrate liberty.
This year, over 2,000 authors, professors, economists, business leaders, and concerned citizens will meet at the Mirage Hotel & Casino, July 13-16. Will you be one of them? Go to www.freedomfest.com to sign up. Be sure to the code EAGLE to get $50 off the registration fee.
Many of our speakers have caught the vision of FreedomFest and have changed their schedule to attend all three days.
For example, Kelley Paul, Senator Rand Paul’s wife, is coming in early on Wednesday, July 13, to go to all the sessions she can attend at FreedomFest. She will be there the entire time through the Saturday night banquet. She and Senator Rand Paul will be speaking and autographing their new book, “The Case Against Socialism.” Senator Paul will also be coming in our keynote speaker at the Saturday banquet (come dance to the Beach Boys cover band!).
A lot of speakers like to come to a conference, give a speech and then leave. Not at FreedomFest!
Eric Metaxas, an author and TV personality, will be coming to FreedomFest for the first time and said, “I’m excited to attend the entire conference.”
Steve Forbes is a big fan of FreedomFest. After seeing the entire schedule for the first time, he changed his flights. He said, “FreedomFest was so good I changed my schedule to attend all three days.” He’s now the ambassador of FreedomFest and attends the entire conference every year.
If you would like to see how incredible FreedomFest is, check out the full agenda, with over 350 speakers and 300 sessions here.
Registration FEE Goes Up Tomorrow, July 1
There’s still time to join us. To register for our big show, go to www.freedomfest.com and use the code EAGLE to get $50 off the registration fee. Do it TODAY because the registration fee goes up on July 1! If you have any questions about FreedomFest, email Hayley at email@example.com.
Fly there, drive there, bike there, be there!
Good investing, AEIOU,
You Blew It!
Should Abortion be Legal?
“Few rights are more central to individual freedom than the right to control one’s own body.” — Merrick Garland, Attorney General
I had to laugh at President Biden’s Attorney General when he referred to “the right to control one’s own body.” Apparently, that right doesn’t extend to the taking of certain drugs like marijuana.
He was talking about the Supreme Court’s six-to-three decision to overturn Roe v. Wade. Back in 1973, the Supreme Court ruled, seven-to-two, that the U.S. Constitution guaranteed a fundamental “right to privacy” that protects a pregnant woman’s right to an abortion.
The landmark decision has been debated ever since, and states have passed various limitations on the “right to an abortion.”
It is interesting that ever since 1973, abortions have been in a long-term decline in the United States and around the world.
There are a number of reasons as to why abortion has declined.
Christian evangelical groups in particular have been very good as discouraging sexual promiscuity and getting limits on abortions at the state level passed, while groups like Planned Parenthood have stressed the use of condoms and other birth control measures.
After Roe v. Wade, anti-abortion advocates have largely had to persuade pregnant women to keep their unborn child or give it up for adoption when they are born.
In many ways, educating people about the evils and costs of abortion — the killing of an innocent unborn child — has been more effective than simply prohibiting abortion.
Abortion has been in decline because of films like “Unplanned,” the story about a Planned Parenthood employee who, after seeing an actual abortion take place, decided to quit and engage in a campaign to talk pregnant women out of getting an abortion. I recommend it. You can read more about it here.
Culturally, abortion is losing its appeal. Many women who got abortions in the 1980s have regretted their decision twenty years later. Even Norma McCorvey, the “Jane Roe” in the 1973 Supreme Court decision, came out against abortion years later.
All of these factors have played a role in this controversial area.
Persuasion is always more powerful and effective than force. See my pamphlet “Persuasion vs. Force” here.
The new Supreme Court decision made it more difficult for many women to get an abortion, but it didn’t outlaw it. It simply said that the states decide. Some women who want an abortion will now have to cross a state border to get one, and that delay and expense may cause some women to think twice about a surgical procedure that should not be taken lightly.
It’s not just about “reproductive freedom” or “reproductive care” or “Planned Parenthood.” It’s about the life or death of a child in embryo.
On the other hand, an absolute prohibition of abortion would be extremely difficult to enforce, especially given the surgical technology that is now available and the presence of abortion pills, such as Mifepristone, that can terminate pregnancies that are up to 10 weeks. A black market would soon develop in this area.
Many women believe that there are legitimate reasons to get an abortion, such as when the life of the mother is threatened, the pregnancy is due to rape or incest or the fetus may be defective in some way. These kinds of decisions need to be made by the mother and father in consultation with the doctor — not the government. Abortion is not a black and white issue.