The Best Laid Plans: Understanding Elizabeth Warren’s Economics

Published on
January 20th, 2020
Duration
31 minutes

Distressed Sovereign Debt: The Final Frontier of Active Management


The Best Laid Plans: Understanding Elizabeth Warren’s Economics

The Expert View ·
Featuring David Bahnsen

Published on: January 20th, 2020 • Duration: 31 minutes

David Bahnsen, founder and CIO of The Bahnsen Group, takes a deep dive into the economic portfolio of Democratic presidential candidate Elizabeth Warren. Bahnsen unpacks the potential inconsistencies and contradictions of Warren's plan — with a particular focus on the consequences of a wealth tax. Filmed on January 13, 2020 in New York.

Comments

Transcript

  • KS
    Kathleen S.
    5 February 2020 @ 16:23
    This might be a news flash to most Real Vision subscribers -- but our taxes don't fund our Federal Govt. This is not how system works. Mass ignorance of system is major problem and bankers and others purposely put out more and more misinformation to keep people from learning truth. Just ask yourself one simple question -- why would the US govt have to borrow dollars from China or tax its citizens to raise USD's ---- When it creates the dollars?? Has anyones taxes gone up since trillions spent on war- exact opposite - Trump cut taxes?? Nope -- just constant fear that one day they will. WE are not GREECE --- US is Japan and how many fools keep making bet that any day now Japan is going to go broke (25 years and counting) OPEN your eyes and ask some questions - do some critical thinking, stop repeating same old narrative.
  • JC
    John C.
    25 January 2020 @ 17:39
    What's missing here is the root cause of the problem which is really government failures across the board: overspending, lack of accountability, poor regulation, increasingly stifling and costly bureaucracy, poor pension planning, etc. We have a huge spending and efficiency problem within public institutuons at all levels. They are generally unprofitable, way too expensive & wasteful and generally unaccountable. So 'taxing the rich' does not really solve anything and only might provide a brief respite after which they would carry on spending like drunken sailors. Also, I would add that the monopolistic tech billionaires are what amplified a lot of this inequality. They operated in a very open often untaxed free market on the internet and in tech paying little to no taxes, all the while establishing monopolies via surveillance capitalistic methods. Ironic that these same billionaires who fot wealthy in wide open capitalist markets now support many of these extremist socialist policies. Hypocritical and very disingenous.
    • KS
      Kathleen S.
      5 February 2020 @ 16:13
      Problem is system is rigged by billionaires and other elites -- pure and simple.
  • KS
    Kathleen S.
    5 February 2020 @ 16:12
    Rule of Law --- that is what this country is lacking. Over last 40 years financial class and international corporations have rigged system and robbed hard working people. These banking and corporate criminals need to be held accountable and put in jail for long long time. How about nobody steals from anybody. RULE OF LAW!! FYI -- we have a fiat system, not fixed exchange rate system. So, you are WRONG when you say how are we going to "pay for it" - when it comes to medicare for all or education. Hmm? How do we pay trillions for war, or trillons for bank bailouts? How is FED creating trillions in reserves for crazy REPO markets? Don't tell me we borrow from China? THINK!!! Why would USA borrow US dollars from China when the USA makes US dollars --- because we don't. Wake up and understand how our monetary policy works and stop talking like we are on a gold standard. WE can print as much fiat as underlying resources that we have --- it is that simple. US is world reserve and even if it wasn't it wouldn't matter - but Federal Govt can create money out of nothing and buy ANYTHING that is for sale in USD's. Our money gets its value from state imposing taxes to paid in USD on its citizens. Fiat does not get its value from being scarce. And if you get inflation --the solution is taking money out of the system by cutting Federal Spending or raising taxes. Go back and look at WW2 and how US paid for War, US was not gold standard. It is all there. YOU have all been mislead as to how our system really works. OPEN your eyes.
  • DK
    David K.
    1 February 2020 @ 23:50
    If this is the best that the defenders of the “genius” of the financial industry can come up with then the pitchforks will come out faster and more violently than the industry expects. Thank you Real Vision for sharing this opinion piece.
  • nd
    nicolas d.
    27 January 2020 @ 05:45
    Far too politically oriented. The arguments are losing force due to the political agenda behind the speech.
  • EG
    Ed G.
    21 January 2020 @ 02:54
    Since the founding of RV I have found it a refuge from the daily political junk in our faces on every media venue. I personally don't want to pay to see it on RV and strongly object to this type of content being included.
    • CO
      Connor O.
      24 January 2020 @ 13:49
      The piece is very slanted and the author does have explicit bias but I welcome a little bit of these conversations coming to RV. IF enacted, Warren's policies would shake up the status quo of the economic and financial systems that we have today. Sometimes, RV provides interviews back to back with different financial opinions. It would be interesting to see RV find a far left economist to interview that supports Warren's wealth tax. The comment section alone would be entertainment.
    • JC
      John C.
      25 January 2020 @ 17:25
      The reason this piece is needed is because 90% of the mainstream media believe in Warren's economic agenda. This IS the alternative slant, not the mainstream.
  • WB
    Wes B.
    21 January 2020 @ 15:27
    Yesterday's news. Polls are already showing that people don't want the policies of Elizabeth Warren.
    • JC
      John C.
      25 January 2020 @ 17:23
      Sure but much of Bernie's economic platform is just as bad and he is near the lead now for the Democratic nomination
  • ar
    andrew r.
    24 January 2020 @ 22:58
    This analysis applies to an entire wave of politicians who have -- and will keep having -- similar plans. It's not just about Warren, even though, yes, she's toast this cycle. Nice job, David.
  • NI
    Nate I.
    24 January 2020 @ 18:34
    When I worked in State government, part of my job was to analyze the commerce and consumer bills introduced in the legislature each year so that the agency could testify either for or against them in committee (not on the merit, but about enforcement issues, conflicting laws, conflicting judicial rulings, etc). For the seven years that I did this, not one bill advanced out of committee without industry sponsorship. Read that again and let it sink-in. Another way of saying this is that it didn't matter who the citizens elected, big business owned the legislative process and actively pushed to enact anti-consumer legislation (they typically wanted to enact regulations that created additional barriers to entry to stifle competitors). This is understandably frustrating voters and Warren is pandering to that. Warren's "cure" will actually make the problem worse and it will inflict economic damage as David said, but if this situation isn't fixed, it's only a matter of time until voters elect someone like Warren. If we want to preserve the US republic and some semblance of free markets, business better recognize the damage they're causing and reform their ways.
  • CB
    C B.
    23 January 2020 @ 02:35
    What if someone took out the top 100 insanely rich tech billionaires, and then re-ran the wealth inequality metrics? People like Bezos, Zuckerberg, Gates, etc have skewed the numbers so far to an extreme that any analysis that includes them does not present a true account of inequality. There are a very few with insane wealth levels, many more are simply rich. Does it make sense to turn capitalism upside down with a wealth tax on this basis?
  • RC
    Ronald C.
    22 January 2020 @ 00:49
    The only reason he is being interviewed is because he wrote a book. Its not that hard to find Elizabeth Warren critiques in the financial community. His responses are just 1 opinion "according to my math" after another Real Vision needs to upgrade their interviews
    • SS
      Stephen S.
      22 January 2020 @ 22:35
      It's a 30min interview. What did you expect...
  • WG
    Wade G.
    22 January 2020 @ 18:42
    1000 felony convictions related to the S&L crisis. Exactly ZERO convictions for the profoundly abundant and varied crimes (control fraud; fraudulent conveyance; violations of agency; etc.; etc) that led to the GFC that might be what, 65 times larger? The establishment--both political parties--chose to abandon capitalism when they let the GFC develop and unfold, and then responded to it with bailouts of those most responsible for the crisis. Worse, their tactics enshrined fraud (suspension of FASB 187) and perpetuated the ponzi nature of required ever-expanding debt. Too big to fail => too big to jail => and soon enough, we'll see, too big to bail. This country has had a long history of at least tolerance, if not reverence, for the pursuit and acquisition of wealth, including fairly extreme levels of wealth. It's the "in your face", impossible to ignore, complete absence of equal justice, that makes the growing wealth disparity repulsive to increasing numbers of the public. Whether fully informed and articulate, or simply relying upon a vague suspicion or awareness, much of the electorate senses something is profoundly wrong and they've had enough. The attraction of Warren to a modest slice of Democratic primary voters is a symptom; the election of Trump is another. The establishment has failed spectacularly, and worse, most people can sense that rather than reforming, the establishment is content to simply dig in. I don't think there's any white knight coming to make reform easy. I tell my partisan friends, both flavors, that I think this will get worse, likely much worse, before it gets better. If you think Warren is dangerous, or if you think Trump is dangerous, just brace yourself for what comes next.
  • FG
    Flavio G.
    20 January 2020 @ 19:14
    What if wealth inequality is an Ok thing? The start of any discussion about inequality almost invariably starts with an assumed consensus that wealth inequality is a bad thing. I would argue it is not. If there is someone serving you a Gin Tonic, that someone is probably poorer than you are. Do you have a problem with that relationship? I don't. And I don't whether I am the served or the server. Actually, when I was younger, I used to serve Port to horse riders before fox hunting events. I didn't mind, I was happy with the income.
    • TR
      Travis R.
      20 January 2020 @ 19:28
      Not many who are still sane argue against wealth inequality. It is the extreme degree of wealth inequality created by central banking and crony capitalism that is the issue.
    • JS
      Johannes S.
      20 January 2020 @ 20:51
      Of course there will always be inequality, which provides the incentive for entrepreneurship. Its rising inequality that is the issue, because the end point of that trajectory historically has always been political chaos and societal collapse. Which is bad for us investors too btw.
    • FG
      Flavio G.
      20 January 2020 @ 22:28
      Let me put this another way: What if the Internet (among other technologies) has naturally exacerbated the emergence of greater wealth concentration? What is wrong with that? Why should it be neutralized? Hasn't the technology benefited almost everyone on Earth? Who dictates what is "extreme" inequality? Did you know Venezuela has a lower (more equal) Gini coefficient now as compared to 20 years ago? If I were a politician, I would be an inequality cheerleader. Quite probably an unsuccessful one though.
    • TM
      TIMOTHY M.
      21 January 2020 @ 13:43
      That your job as a young person was to "serve Port to horse riders before fox hunting events" tells me all I need to know about your comment. My job was loading trucks.
    • NC
      Nika C.
      22 January 2020 @ 12:05
      A rather insensitive comment and not a well-thought-out one at that. The problem of wealth inequality is not some summer job serving Port at “elite” social functions. BTW, your experience is ridiculously reminiscent of pageboys from less noble background serving the “Hochadel” families. For a while. Before moving on to greener pastures. Which is something that apparently happened to you as well. So, all is good, right? Not quite. The problem is that persistent and growing inequality hinders a great many very talented people to fully participate in society. To even have a fair fighting chance to create something of their own! And that, Flavio, is a great loss for all. Long term it means a much less vibrant and proactive environment and less innovation. Finally, sclerotic and nepotistic societies sooner or later disintegrate in total chaos, as Johannes already mentioned. Not everybody can serve Gin Tonics for a season or two. Some have to load trucks or perform some other low-level jobs. Perhaps for many, many seasons. Not just because they didn’t want to invest the required toil to acquire a better lifestyle. Many had few decent options to begin with. The lack of options and opportunities should be addressed in the interest of everyone. But Mr. Bahnsen does nothing in that direction. He does, however, poignantly bemoan the corrosive issue of rich people having to divorce. To pinch a few precious millions. Poor dears. Well, how smug! How useless!
  • SH
    Stephen H.
    21 January 2020 @ 04:37
    Weak arguments, lacks data that aligns with the perspectives.
    • WB
      Wes B.
      21 January 2020 @ 15:23
      9 of 12 countries that have adopted a wealth tax have abandoned it already. Pretty compelling evidence IMO.
    • CM
      C M.
      21 January 2020 @ 19:38
      To Wesley B., I happen to think E Warren is as mad as a box of frogs and a walking economic disaster, but if we are being intellectually honest the "9/12 countries that have adopted a wealth tax have abandoned it..." argument has one fatal flaw: these countries do not have a worldwide tax domain system as does the US.
  • TM
    TIMOTHY M.
    21 January 2020 @ 13:54
    That the top x% pay 40% of the taxes isn't a justification, but a symptom of the problem. Shouldn't we then repeal tax cut packages that fail to deliver the promised revenue, drive deficits that result in money printing, thereby enriching bankers and creating investment bubbles while laying the debt on the citizens?...hypothetically, of course.
  • ml
    m l.
    20 January 2020 @ 21:12
    This “content shift” real vision has video counts going from 2 a day to 1 a day... may not sub going forward if content continues this shift
    • M.
      Milton .. | Founder
      21 January 2020 @ 07:18
      We've gone from 3-4 pieces a week to over 12 sometimes and 5-6 now. We are testing, gathering feedback and improving based on it.
  • TT
    Tungsheng T.
    21 January 2020 @ 02:36
    I dont get it why we film someone about Eliz Warren, She is not winning at all
    • CW
      CC W.
      21 January 2020 @ 06:55
      I second this question. We all know her "policy" is simply a joke. Not sure why there is a piece dedicated to this.
  • SS
    Stuart S.
    21 January 2020 @ 02:39
    Wow that was a nicely balanced piece
    • FP
      Ford P.
      21 January 2020 @ 02:59
      I like your sarcastic tone
  • FP
    Ford P.
    21 January 2020 @ 02:58
    the worst possible argument again wealth taxes: you know, the rich will always find loopholes. Look at the poor rich french people, they are forced to divorce to avoid paying it.
  • JB
    John B.
    21 January 2020 @ 00:07
    What I don't understand is why those opposed to socialism/hard left don't push for an alternative minimum redistribution assessment. Those who would normally be taxed for redistribution policies can elect to redistribute that money through charity instead. Ex: instead of paying 1 million in taxes that will go to public housing, you pay for 1 million worth of rent for other people. It takes some time to think about how you would work out the details but you could create a system whereby instead of the government taxing and spending people are encouraged to shield themselves from the tax liability through charitable efforts. Probably the largest obstacle is that so much of the charitable giving in the US is sent overseas. Id much rather see people giving direct transfers in goods, services or cash to fellow Americans (or whatever other country you are in) rather than creating a layer of bureaucratic incentives to waste this money.
  • RM
    Robert M.
    20 January 2020 @ 23:06
    Worthy topic, highly biased interviewee since he is promoting a book on the topic.
  • AM
    Alonso M.
    20 January 2020 @ 20:02
    I think monetary policy over the last couple of decades has been the main cause of rising wealth inequality. Janet, Alan, and Ben (the JAB threesome). Seems to me the rising popularity of extreme left and extreme right leaning politicians are just an effect of this monetary policy.
    • JM
      John M.
      20 January 2020 @ 21:38
      I think there are several causes of wealth disparity including monetary policy. -Globalization may have lowered the cost of many products but may have also suppressed wages of some middle class/lower class workers? -Then there's executive compensation....
  • JS
    Johannes S.
    20 January 2020 @ 20:30
    I am not a fan of a wealth tax either, but the truth is that rising wealth inequality is one of the biggest economic challenges of our time. Bahnsen makes good points why a wealth tax by itself wouldn't be very effective. Yet he is completely oblivious to the fact that his smug and self-assured sitting there in his $2000 suit, that makes his dencouncing of every possible measure addressing wealth inequality makes him completely non-credible, and that it is people like him that give Warren support & ammunition in the first place. Half of his points are straw man arguments just defending the status quo. So what if the 10% richest housholds pay 40% of the taxes? That's exactly how it should be if you understand the corrosive effects of wealth inequality. I wouldn't vote for Warren either, but we have to do a much better job explaining what would be BETTER mechanisms to address wealth inequality. Bahnsen clearly doesn't have any answers to that, and has no interest in finding them, because he is a beneficiary of the status quo. Yet, no society has survived that followed the trajectory the US is currently on until the end.
    • ES
      Elizabeth S.
      20 January 2020 @ 21:35
      I completely agree with this. The completely lack of answers or solutions to problems that things like a wealth tax are trying to address is the reason plana like that are getting traction. They are the only people offering a solution (even if it is flawed) which, to a lot of people, is better than nothing.
  • JA
    John A.
    20 January 2020 @ 14:57
    If Warren manages to win, it will be because of the results of the policies that fail to see wealth increases for the majority of Americans in real terms over the past 30+ years. It is those same conditions that led to a Trump win in 2016. If we don't take the problems seriously, then the people will take the first solution offered. I don't disagree with the speaker, but at this stage of the game we need more than a critique of the policy. We need real alternatives. There are a not so insignificant growing group of people in this country who are becoming frustrated enough that they wouldn't care as much about the damage done by Warren's policy so long as it hurts the rich. That is a very dangerous attitude and one which needs to be addressed. Problems left unattended have a way of finding their own solutions. But those solutions are always worse outcomes than if we addressed the problem when we saw it.
    • JB
      John B.
      20 January 2020 @ 19:02
      Warren annoys me because she knows better, read her book "The Two Income Trap". Warren circa 2003 knows that Warren 2020 is wrong. These problems don't result from "extreme capitalism" they result from the corporate socialism via bailouts and low interest rates. The biggest factor in the skew of income distribution since the Crash is low interest rates leading to asset inflation. Asset owners see their ownership stakes skyrocket in value and the cost of capital decreases allows for huge investments in automation/IT. Asset owners get richer and those without special labor skills lose their jobs to robots and information systems. BUT raising interest rates to normal levels could cause major economic disruptions, just like Warren's plans would. Raising interest rates would cause a budgetary crisis as the interest payments on outstanding debt from mandatory spending (which are mostly programs designed to help poor and elderly people) would skyrocket. If we stop asset inflation we would be forced to roll back spending on the poor/elderly, if we continue that spending we are forced to continue with the low interest rates that make inequality worse. There are multiple other factors in here but this is the basic outline and there isn't a pain free way to get ourselves through this economic rock and hard place. Not to mention how her policies would wreck the very pension plans and social security she wants to expand. She's just the worst.
  • GF
    George F.
    20 January 2020 @ 16:49
    Economist Mark Blyth Explains "Ok Boomer" https://www.youtube.com/watch?v=jjbWLK3_vXc 8:00 to 15:00 or so Blyth explains wealth vs income taxes. At 10:00 a discussion of taxes including wealth tax https://www.youtube.com/watch?v=uS6FvvyZsrU&t=317s The problem with this discussion is the last 20 years of wars need to be paid for or defaulted on. What is the plan for paying it? I recommend Mark Blyth as a RV guest.
  • LO
    Luke O.
    20 January 2020 @ 11:41
    Conservative politics (both left and right) have led to massive wealth inequality, its a problem that needs to be solved. I absolutely agree Warren's policies aren't workable, but is the result of a complete failure of economic policies for decades, from both left and right. The only way to prevent policies like Warren's by gaining traction, is to actually create good economic outcomes for ALL Americans. I strongly recommend you get started in trying to do this.
    • AH
      Andrew H.
      20 January 2020 @ 14:55
      I generally agree with the way you phrase this. This presentation seems correct, only in that Warren's policies would suck. Beyond that it seems to avoid most of history regarding the policies that have gotten us to this point of wealth concentration and corporatacracy. I see most of our issues as corruption within capitalism vs. the move towards "socialism" and that we should address the corruption vs swing the pendulum too far towards socialism as a solution.
    • LO
      Luke O.
      20 January 2020 @ 15:14
      I certainly agree. While I do think its probably too late to address the corruption, I would recommend it, before someone like Warren does get elected.