A RISING TIDE LIFTS ALL BOATS

Like pretty much everything these days, views on the economy are polarized. Are we living in an unprecedented economic boom, or a long and painful stagnation? You can cherry pick evidence to support both. But which is more right?

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The top line evidence points to a boom. The US unemployment rate is about 3.6%, close to the lowest ever recorded. Asset prices are at all time highs across the board. From stocks and bonds to homes and art, there is clearly a lot of wealth building up in the US economy. The boom has been very clear in the commercial real estate market.

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The pessimists’ main argument is that wages are lagging behind asset prices. That may be true, but very low unemployment means a tight job market. Companies increasingly must compete with each other for talent. That’s why (no surprise), wages are actually rising.

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While you can find evidence of problems in the economy, the overall picture looks pretty good at the moment. New technologies, companies, and business models are changing everything fast. A generation ago, data science was barely a thing. Now, companies can’t hire enough data-scientists. Our market system is still working is creative-destruction magic.

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Some regulation and reform might help people who are trapped in the lower end of the job market, but we should be wary of changing things too much. Our system still works, and for many generations, the US has led the world because of our strong and resilient economy. Inequality is a byproduct of rewarding innovation and investment.

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The simple fact is, we’ve never had it better. Americans are richer, healthier, safer, and have more options than ever before. The growth of high-skill jobs creates a strong incentive to invest in education, and I like that. There’s no better way to improve the lot of the American people than to let them find their own way forward in a strong economy. In the end, a rising tide really does lift all boats.

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