I’ve been writing lately about right tail risk, which refers to the possibility of the occurrence of unusual and unexpected events which might make the whole global economy better. With most of the risk management world squinting and scanning the horizon looking for systemic risk events, I’d like to take at least one contrarian moment to scan the horizon for system saving events (SSE). And I’d like for you to help me do it. After you read this article, please make some comments below or send me an email listing your SSEs.
First, the United States suddenly swerves back in the direction of its founding principles. Though I can’t rule out the possibility that our current president will see the error of his ways and return the nation to economic freedom, that does not seem very plausible. What is more plausible is that the people themselves see the error of his (and their) ways, chastened by the results of our ill-conceived experiment in cool socialism, and they elect a president who leads us back towards freedom.
We did it in 1980 and we could do it again. If we repealed Obamacare, Dodd-Frank and the other smaller monstrosities of the legislature and rescinded the unprecedented wave of mandates which has come out of the the rule-making apparatus of the federal government, this turnaround would do an enormous amount of good for the U.S. and the world.
The appointment of a Fed chairman who follows a consumer price rule or (dare we hope?) a gold price rule, would over the long run do even more. Allowing oil and gas entrepreneurs to punch thousands of slender holes into the earth and pump economic-life-giving fuel out of them would help to send industrial growth into overdrive.
As an added bonus, it would severely weaken the world’s commodity tyrants. Ahmadinejad would have to switch his economy to falafel exports. Vladimir Putin would have to give judo lessons to put food on the table. Hugo Chavez would have to apply to the Make-A-Wish Foundation to get the money for his chemo treatments. There is barely a tyrant in the world who would not be downgraded to struggling warlord or even ex-tyrant if we practiced genuine energy freedom in this country.
I know, Newt’s baggage, Mitt’s squishiness, Santorum’s sweater vest, Perry’s inability to complete a comprehensible English, Obama’s war chest…all true. But we’re brainstorming here, and remember there’s no judgment in brainstorming.