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In the mid-1970’s, the song “School’s Out” by Alice Cooper quickly became the anthem to my third-grade fantasy. With the promise of “no more pencils, no more books,” and school being “out forever” it is easy to understand the song’s appeal. With the outbreak of the coronavirus pandemic earlier this year, what was once a forgotten childhood memory quickly turned into a parent’s worst nightmare! If there is one lesson to be learned from the coronavirus pandemic, it is how quickly the world can change.

In his popular book, The Tipping Point: How Little Things Can Make A Big Difference, Malcolm Gladwell explores how quickly things can change. We tend to think that history is changed by a dramatic and unexpected singular event. Contrary to this opinion, Gladwell contends that these events are instead “tipping points” or “the moment of critical mass, the threshold, the boiling point.” Gladwell colorfully recounts how a spark can either die out, or could ignite a revolution. The assassination of Archduke Franz Ferdinand could have been just a minor event, but instead, conditions were such that it became the tipping point that ushered in the start of World War I. With the outbreak of the coronavirus pandemic and the changes that quickly followed, one might wonder if the coronavirus pandemic is another tipping point. …


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Each December, the Greater Reading Chamber Alliance hosts its Annual Economic Forecast Breakfast. For as long as anyone can remember, Jay Bryson, an economist at Wells Fargo, has been the featured speaker. Bryson is known for offering a carefully crafted presentation. This year, Bryson offered his standard economic review. However, at the end, he broke from routine and gave a criticism that was telling of just how much things have changed during the Trump administration.

At the end of Bryson’s monologue, an audience member asked him when he thought President Trump would resolve the ongoing trade issues with China. Bryson gave a non-committal answer, but instead of ending his response at that point, he added one closing line. He said that for the past 20 years, while many people in the U.S. …


(Authors note: I wrote this piece in 2016. In the article, I made a bold prediction . . that interest rates would not rise for the foreseeable future. The reason . . .dis-inflation. As the Fed has (once again) lowered rates, it is apparent that this article is still relevant and that we need another solution to economic growth.)

Several years ago, I acquired a dilapidated Marshall catboat, which seemed fitting for a middle-aged man with four children. Of all the boats in existence, the catboat may be the least nimble. Heavy and fat, they were made for fishermen who valued their stability. Since the boat has both a sail and an engine, one can venture miles from home and still plan the return trip down to the minute, confident that the boat will be moored with the final rays of sunlight. It is a simple affair: drop the sail, furl it, fire up the engine and soon enough, moor the boat to the dock. What could go wrong? As the sun was setting two years ago, I did just that. With the sail furled and the engine started, I set my course to port, but soon an uncomfortable feeling overtook me. It was taking much, much longer to get home. At first, I was oblivious as to why the trip was taking longer, but I soon realized that the engine was slowing down — eventually descending into an agonizing putter. It was only then that fear struck and my return trip turned into a two-hour ordeal. As odd as it may sound, my lesson at sea is reminiscent of the U.S. economy. …


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New England Summer — Craig Hafer

In the Caribbean sits the tiny island of Nevis. With a dormant volcano and black sand beaches, Nevis played a role in the growing of sugar cane and production of rum that was part of the British Empire’s Triangle Trade. However, one of the island’s most famous “exports” was Alexander Hamilton. While Hamilton is often considered the father of American capitalism, few men of his time could have foreseen how the capitalism he endorsed would end up facilitating many of the freedoms that we enjoy today.

The life of Hamilton was captured in Ron Chernow’s superb biography, Hamilton, and his fame was later cemented by Lin-Manuel Miranda’s Broadway musical. Hamilton was brilliant and often ahead of his time. His life on Nevis made him an early abolitionist and a strong advocate for a Constitution that would limit government authority. “Give all the power to the many, they will oppress the few. …


It is easy to understand why most Americans do not view trade with China favorably. For over 30 years, it has been a lopsided affair. Since 1986, the U.S. trade deficit with China has grown an astounding 25,079%, leading many Americans to question the U.S. policy of supporting “free-trade” agreements. For investors, the outcome of this debate is critical. Will the U.S. become protectionist and reverse three decades of political support for free-trade agreements? Will the Chinese economy collapse as a result of decades of government manipulation of its currency to encourage exports?

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In the 1950’s, most Americans favored free trade as a way to thaw cold war relations, but as trade deficits grew in the 1990’s, Americans began to view international trade as a threat to their jobs. According to a 2016 Bloomberg poll, 65% of Americans favor greater restrictions on imported goods. The changing view coincides with the growth in Chinese imports. A closer look reveals how China has played an integral role in the growing U.S. trade deficit and why it is a unique problem. …


How an unknown economist may provide insight into today’s world economy.

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Image: Craig D. Hafer. All rights reserved.

Imagine a country with no laws to regulate business. No environmental laws. No labor laws. No consumer protection laws and little-to no taxes on income and property. The only “law” was that a market would regulate itself (laissez-faire capitalism.) You do not need to imagine such a world, however. Simply read about Victorian England, or the United States during the early Industrial Revolution. During these times, both nations experienced robust economic growth with little regulation and government involvement.

It is during this time in Victorian England that one of the most loathed economists lived — his name was John A. Hobson. (If you think “loathed” is too strong of a word, think again: the title of his autobiography is Confessions of an Economic Heretic.) Hobson looked out on Victorian England and saw the disparity of wealth that existed. He saw pollution, poor working conditions (especially for child laborers) and the vast amount of wealth that was being created by the industrialists. While many economists of his time lauded England’s “free market” capitalist economy, Hobson saw a major flaw. He wrote that while capitalism can be highly efficient and create vast amounts of wealth, it provided no way to deal with the lopsided distribution of wealth that it created, and that this can have unforeseen effects on a nation’s long-term economic health. …

About

Craig Hafer

Craig D. Hafer is president of Walsky Investment Management, Inc., Wyomissing, PA. He is also co-host of “The Quarterly Report with Craig Hafer” (830AM WEEU)

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