‘Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence,” observed John Adams, the Founding Father who served as the second president of the United States. That was in 1770. We now live in a different time, one in which facts — evidence and data, most especially economic data — no longer have a prominent, if any, place in shaping policy.
Start with the situation at our southern border. Among the 94 executive actions that Joe Biden took in his first 100 days were a halt to the construction of Donald Trump’s wall and repeals of other measures that the former president set in place to reduce illegal border crossings. He rolled out the welcome mat to alter for ever the demographics of the US in favour of Democrats.
About ten million people accepted the invitation, which just about doubled the number of such illegal border crossers who were living in America when Biden took office. That doesn’t count “get-aways” who sneak past the agents, or the hundreds of thousands issued visas in their home countries and flown directly to their US city of choice, no border check required.
These stubborn facts are being supplemented by television images of the chaotic reality at the border and polling data showing Americans find that situation unsettling. No matter: President Biden’s secretary of homeland security announced, “The border is closed, the border is secure.” Which most Americans know is (kind version) a fantasy, or (congressional version) a lie.
Then there is the war on the so-called existential threat of climate change. The president has decided to fashion a teaspoon with which to bail out the ocean of emissions coming from the coal-fired plants that China and India are building.
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America has ample supplies of petrol but an impending shortage of electricity. Yet policymakers are forcing a switch from vehicles powered by the energy we have, to vehicles that rely on electricity we do not have. Americans prefer petrol vehicles that need infrequent refuelling to cars and trucks that must be recharged often, and at hard-to-find charging stations. Unsold electric vehicles stand on dealer lots twice as long as their petrol counterparts. After losing billions on EVs, manufacturers are scampering out of this market.
Facts are for the ungreen. None have had the slightest effect on administration policymakers. They have confected a set of policies that will make it impossible for auto makers to produce the mix of vehicles that consumers want. Here, as in other matters, consumers — once thought to be sovereign in a capitalist society — have been dethroned by a bureaucracy that marches to the tune of a different drummer:- the powerful green faction of the Democratic Party.
Add to this some new facts to which our politicians are averse. Last week they were treated to a spate of them. The economy remains strong, growing at an annual rate of about 2.5 per cent. The Institute for Supply Management reported a pick-up in activity in the manufacturing sector in March, the first in one and a half years. The economy added 303,000 jobs last month, up from 270,000 in February. The unemployment rate dropped from 3.9 per cent to 3.8 per cent, and both average hourly earnings and the length of the working week increased a bit. “Quite strong,” said Thomas Barkin, chief executive of the Federal Reserve Bank of Richmond, in Virginia. “Pretty hot,” added Jim Bullard, former president of the St Louis Fed.
Along with a “firming” of inflation, this strong economy would suggest an outbreak of fiscal responsibility by our politicians. But this is an election year, with all those voters to be bought — and the president and his team are preparing treats for them. Families will get increased child tax credits and businesses will be bribed with several tax breaks not to oppose this fiscal incontinence. Treasury secretary Janet Yellen and her team are oiling up the printing presses to turn out the dollars needed to cover the resulting deficits. Facts are for pedants.
Finally, analyses on the effect of sanctions strongly suggest that their costs exceed their benefits. Sanctions have not persuaded Vladimir Putin to abandon his war on Ukraine, North Korea to abandon its nuclear ambitions, or Iran to rein in its terrorist proxies. Meanwhile, the weaponised dollar, the tool on which sanctions rely, has lost some of its acceptance as a reserve currency.
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King Dollar’s share of global foreign reserves held by central banks has fallen from 73 per cent to 59 per cent since the era of sanctions dawned. Russia and several Gulf nations are settling some of their accounts in yuan rather than dollars, strengthening China’s leadership of the emerging New World Order. Nevertheless, sanctions are piled upon sanctions. Accepting the tale told by the facts would be more painful than facing the reality of a policy failure.
These are only some of the instances of the disconnect between facts and policy. Never mind unwelcome data: stay on course, full speed ahead, as did the captain of the Titanic, ignoring reports of the seasonal presence of icebergs in the North Atlantic to hold to his plan to break the transatlantic speed record.
Irwin Stelzer is a business adviser
