Velocity of Bahnsen

After several years worth of appearances, David Bahnsen (managing partner and chief investment officer at ...

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After several years worth of appearances, David Bahnsen (managing partner and chief investment officer at the Bahnsen Group) finally comes on to talk about his main gig: how money works. It only took five whole shows for Jonah to stop asking him about the postmillenial view about how the world’s going to end. But what better time to start asking about the economy than now, as the national conversation turns to taxing the rich, reopening the economy after a year and a half, and whether or not we’re entering an inflationary spiral? Oh, and David’s in the Five-Timer’s Club now.

Show Notes:

– That time that David Bahnsen started COVID

– David sub-hosts for Jonah, talks to David (the other one)

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  1. DocHeartless

    Well, nuts, I am so behind on these podcasts, I would wager against Jonah or David ever seeing this, but I'll try anyway.

    I love economics discussions and I particularly love David Bahnsen as well as his dynamic with Jonah. I am in violent agreement with so much of this content (the importance of capital, the state interfering with the market, the lack of growth and fear of deflation/stagnation, problems with wealth taxes, and (especially) the punitive situation we are placing the young generation in -- more here please!). However, I have a few big, BIG smelly patties here that I see we conservatives stepping in over and over again.

    1. (44:50) Why must conservatives keep pushing this notion that just because money is taxed once the growth of it should never be taxed again (double taxation). Now I am the first to argue that I would rather live in a country that taxed less rather than more, and I am absolutely a fan of encouraging the healthy allocation of capital. My major argument here is that David is losing touch with political and social reality -- this type of argument is often infuriating to the bottom 3/4s of this country. I am not even 50 and I've worked my investments up to about 1.5 million through a combination of good choices and raw luck of picking my parents well. My mother is 75 and will likely leave me another 2 million when she dies. I can easily generate 6% per year indefinitely off that 3.5 million ($210,000) a year, just by parking it in mutual funds, but David believes I should pay few taxes on that revenue just because someone in my family once paid taxes on the original seed money?

    2. (44:50) Also, I can affirm that I am paying way less than the 26% overall taxes on all that revenue because capital gains taxes are 15% up to $440,000. So is the argument that Warren Buffet is paying less as a percentage than his secretary really all that ridiculous? I get the argument about transfer payments and someone collecting social security (that is an excellent data point, by the way, and one I wasn't aware of - so thank you for that). But that doesn't apply to the working secretary, right? I don't get how David doesn't understand how this plays to that secretary. When he actually says (sheesh) that if Buffett and others think it is immoral they can just cut a check to the IRS, does he not see how much this is fueling the JD Vance style populism in this country? I think he often falls into the trap of trying to win every battle that he's going to lose the war.

    3. (47:05) Please, please could you link to us the reputable studies that back up this claim that we have a more progressive total effective tax rate than Sweden. If this is true, I would really like to use it in my classes. However, Jonah, when you next float out the endless talking point that the 1% pay 90% of income taxes, it is difficult for me not to be instantly skeptical. You guys just spent time bashing (deservedly) the Pro Publica attack piece for bashing the lack of income tax paid by billionaires. Your defense was that they were paying different types of taxes (namely investment taxes). But then you have this misleading sentence without mentioning that the working classes pay 90+% of all payroll taxes? C'mon. I know that you know this is true and it isn't fair to the argument to leave it the way you did.

    4. The brief discussion about Mitt Romney is a great example of the problem inherent in point #3. Jonah raised an excellent point about the absurd points (53:45) by some among the left about seizing wealth or abolishing billionaires (I question rather it is mainstream and I suspect Jonah would be the first to argue that NYTimes editorials are not mainstream anymore). But listen to David's response and his use of Romney as an example. I loved Romney, but in hindsight he was even more important than I thought at the time. The country NEEDED him to win to forestall or avoid this Trump moment we are in. David was most annoyed with Romney that he didn't defend equity and his business success. Ok, I agree, but really? You guys don't think that Romney's statement at the donor dinner was incredibly obnoxious? "There are 47 percent of the people who will vote for the president (Obama) no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what…These are people who pay no income tax . . . [M]y job is is not to worry about those people. I’ll never convince them they should take personal responsibility and care for their lives.” I knew many people who were on the fence between Obama and Romney and this tore it for them. This was the candidate denigrating 1/2 the country because they only pay payroll taxes. This is the flip side of the "deplorables" coin, and the fact that David does not seem to understand the rage felt among the working class toward the rich says something about his world view.

    In the end, what most concerns me about all this is the political instability of it. Yes, I do think the substantial income inequality we have is a problem because of the political and social rage it can engender. Yes, I think these arguments about double taxation and efficient use of capital may be true but they make the political fury worse. We are in a war -- we're in a war to defend the free market, international trade, democracy, and America itself. The enemy is populism, which does have some root in this sense of unfairness (whether true or not). Do these arguments make winning that war more or less likely?

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  2. K-man

    Great episode. Two things struck me, one major, one minor.

    The major: Bahnsen makes the argument that inflation is NOT coming because high levels of government spending are deflationary, offering Japan as an example. This makes sense to me. But my understanding of the “great inflation” in the United States in the 1970s was a result of high levels of government spending (Vietnam and the Great Society), the indexing of Social Security, and the spike in oil prices. Two of those conditions exist today. Are energy prices the decisive factor? What am I missing?

    The minor: Referencing I.F. Stone! I.F. Stone?? Izzy Stone?? So Bahnsen is going to hand-xerox Soviet propaganda and then learn ancient Greek at the age of eighty? That name took me back…

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    The Bell Tower

    Man, I love the Bahnsen episode. I’m only through the COVID piece but it’s eerie how much I agree with you gents on this - and scary how many people seem to think such thinking is so radical. I wrote this in October, which feels further away than 1987:

    https://thebelltower.org/blog/f/fake-news

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    Ben Connelly

    This was great! I’ll have to go back and listen to some of those older episodes with David, on post-millenarianism etc.

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    Jason Gibson

    So Milton Friedman was wrong?

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    David Sneath

    Good pod—one point I thought: I believe Trump was never going to release his tax returns because they would show that he is not as rich as he indicates. Best guess is that he is not a billionaire currently, and his ego makes him fight for that to not be known. This was not discussed on the podcast as a possible reason for him to withhold them. Seems like the best explanation to me.

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    Kevin Johnson

    Really good. I wonder if Jonah and TD might look back at how much TD followed “the narrative” since covid emerged compared to Bahnsen’s articulate presentation of how media dismissed credentialed dissenters. Did TD give sufficient coverage to Bahnsen, Bhaticharya, and others who dissented from Fauci/CNN narrative, or did it mostly follow along? Some dissenters were wrong, some were cranks, but some were serious, credentialed experts who, in some important respects, have been correct (such as the plausibility of the lab leak theory.). The legacy media sought to make dissent itself a sin to be condemned and dropped from social media. I love and respect The Dispatch, but think it erred in mostly following the pack on covid. An examination of how you missed, or disregarded. Bahnsen’s points will make you stronger, I think.

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  8. GregS

    Jonah and Steve for the last 2 months: "Look, inflation is happening, its real, OK. Look at all these prices - they're going up. Inflation becomes real if enough people think it's real! I'm beginning to think it's real and I'm going to keep saying it!"
    Bahnsen: "Inflation isn't real. The problem is deflation. Everyone saying inflation is the problem is either dishonest or a moron."
    Jonah: "Of course, I agree with you completely. I always thought the inflation thing was overblown."

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      Narwhal

      Don’t forget Chris and Jonah talking about the return of stagflation being a real possibility and cause for concern.

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      1. GregS

        Right, that too.
        I don't blame Jonah, Steve, Chris et al for being wrong. I blame them for being wrong and simultaneously not realizing that they routinely fall prey to the types of bias they are always decrying in "the left-wing media."
        They are not experts on everything, but they want to discuss everything, which is to be expected given their profession. So they accept and repeat the talking points sold to them by partisans on the right, as long as those talking points are not obviously wrong/false, and are generally in line with their political goals. So anything that paints the Democrats in a bad light, if it passes their personal plausibility test, is repeated as true - the Democrats are causing inflation, Biden meeting with Putin was a terrible idea and he clearly nodded when he was asked if he trusted Putin, etc etc. And similarly, Mike Gallagher or Chip Roy are not terrible, untrustworthy, people who should be kept far from power - they're friends that we are "disappointed" in, and must not speak ill of.

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    Mark davis

    Excellent remnant today. I especially liked the interest rate discussion. What is the name of his podcast? Capital ??

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  10. Very Old Grumpy Guy

    I am sort of over analyzing our response to Covid. The bottom line is that as of now, our deaths per 100,000 people is on the high side of developed nations. I get that some may think this is disappointing. However, this is a direct outcome of our liberty first based society/government. We can all be totally safe if we are locked in a prison. While everyone in America might not prefer this trade off, that is what the Constitution signed us up for. Continue to kvetch about it if you need to, but the question is settled for me.

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