America's Economic Pundits Don't Deserve the U.S. Economy
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To read Ashlee Vance, Jimmy Soni and Walter Isaacson, the three individuals who’ve written extensively about Elon Musk in the last ten years, is to happen on a theme that relentlessly reveals itself: Musk’s brilliant career has been defined by endless trips to the proverbial ledge whereby he’s about to lose all that’s he worked for due to a lack of money. Would it that the op-ed class were more in touch with the brutal reality so skillfully written about by Vance, Soni, and Isaacson.

Instead, the entrepreneurs in our midst have to suffer people like Financial Times columnist Rana Foroohar. In a recent piece for the Washington Post, Foroohar superciliously and rather cluelessly observed that we’ve reached “the end to an economy that was based on cheap everything: cheap money, cheap energy, and cheap labor.” It seems Musk who, unlike Foroohar, has built actual businesses while meeting actual payrolls, never got the memo about “cheap money.” In the real world of actual commerce that he inhabits, money is never cheap.

This truth should be obvious even to pundits like Foroohar. Even those who know very little are aware of the most powerful force in all of finance: compound returns. The latter is what had Warren Buffett confident from an early age that he would someday be very rich. Just stay invested in well regarded securities over time and watch returns build on each other. Of course, the truth about compounding exposes as laughable the notion of “cheap money,” simply because it imagines that those with title to resources (money is money because it can be exchanged for real things) would blithely hand it over for next to nothing, thus forfeiting the immense wealth that can be had by matching savings with good ideas.

Back to Musk, what he would have given for the “cheap money” that Foroohar invented on a computer keyboard that would not exist today absent feverish pursuit of change pursued by the entrepreneurs from past decades, and who created a world of individually-owned supercomputers that those in the know said was an impossibility. Missed by Foroohar is that if you’re a true entrepreneur, you’re doing what nearly everyone thinks will fail, thus making wildly expensive the money that is otherwise very expensive due to the previously discussed compounding truth.

Sadly for Foroohar, she doesn’t stop with her “cheap money” insults. She writes with a straight face that “President Biden’s much-needed post-pandemic fiscal stimulus” is “exactly what kept the U.S. economy resilient,” presumably after the lockdowns? Ok, if we ignore the absurdity of Foroohar’s economic analysis for a quick second, might she explain where “President Biden” got his “much-needed post-pandemic fiscal stimulus” from? Did he extract it from outer space? Actually, government only has resources to redistribute insofar as it has taxable access to the present and future wealth created by those in proverbial arena, thus far, far from Foroohar.  

It’s just a reminder that when governments spend they don’t stimulate growth as much as they consume the fruits of it. Frequently the productive fruits of people like Musk. At which point we ask a simple question: if reasonably free individuals are what enable all this government spending, wouldn’t the economy be exponentially larger if, instead of the fruits of production being handed out by Washington in politicized fashion, that they just stay in the private sector sans touching the hands of people with names like McCarthy, Pelosi, Trump and Biden?

Foroohar then tacks to jobs and pay to make her odd and baseless case that “CEOs are looking to use” artificial intelligence (AI) “to bring down labor costs.” Really? Which ones? In the U.S., there’s a constant flow of investor dollars and company funds to the most expensive workers. That there is should be a statement of the obvious: low-paid workers are very expensive. Something about a lack of productivity relative to high-priced workers. Oh well, in this case Foroohar contends that AI “could throw a spanner” in the rise of worker pay. Foroohar gets it backwards. Really, can she name one technologically-advancing locale in the history of mankind defined by falling wages?

The simple truth is that AI will be the greatest friend of workers of all stripes yet, and it will be precisely because so much of what was formerly done by humans will be automated. Translated for Foroohar, worker productivity is a magnet for the very investment that pushes wages upward. All of this is and so much more is lost on Foroohar. America’s economy deserves better.  

John Tamny is editor of RealClearMarkets, President of the Parkview Institute, a senior fellow at the Market Institute, and a senior economic adviser to Applied Finance Advisors ( His latest book is The Money Confusion: How Illiteracy About Currencies and Inflation Sets the Stage For the Crypto Revolution.

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