Essays, Jazz, Musings
Published writer, jazz musician, investor and bon vivant, David combines a broad education in the classics, and experience in business and the arts to bring you in-depth essays that focus on political economy.
January 2011
Economist
October 10, 2015
Financial Times
Reverse the downturn by letting the cycle run its course
Sir, Kenneth Rogoff’s rational analysis of the current economic forces at play (“ This slowdown is a hangover not a coma”, October 10) is not what it appears. Rather, it’s a plea for what everyone wants, Keynesian government intervention. “President Barack Obama once proposed creating an infrastructure bank which would employ technocrats to provide objective analysis. It was a very good idea.” But that’s been done: it’s called the New Deal, which turned a recession into a 12-year depression.
There is an alternative: Austrian economics, in which economic cycles are allowed to run their course — the only way to reverse a downturn. In the 1980s Federal Reserve chairman Paul Volcker knocked out inflation by imposing high interest rates; today, knocking out the hangover from the financial crisis requires imposing low economic growth — the only way.
David Parker,
San Francisco, CA, US
May 30, 2016
Financial Times
Demagogues the answer to what’s on our minds
Sir, Martin Wolf, in “How to defeat right wing populism” (May 25), makes the statement that demagogues do not give answers. They don’t have to. They are the answer to what is on the public’s mind: unpunished crime, failing public schools, unemployment—and no political party is doing anything about it.
Mr. Wolf then makes a comment that a first glance sounds very intelligent—that populist candidates are unaware of the institutions upon which society is based, and the extension to which those institutions are responsible for today’s prosperity. That intelligent statement is not what it seems. It’s really fear of democracy, of letting the masses vote for whomever they choose.
David Parker,
San Francisco, CA, US
November 6, 2016
Financial Times
Chinese have a single end in view with investment
Sir, In “Chinese investors take a tumble on the global stage” (October 31), James Kynge observes that Chinese investors make as many mistakes, enter into as many stupid ventures as do westerners—and then gives several very good examples. With his foxlike thinking Mr Kynge is insinuating that we in the west can take comfort: “See, they’re no smarter than us.”
Wrong! The Chinese are hedgehogs. They know one big thing: pursue relentlessly western assets in order to one day own enough to control the world’s economy. No other nation has such a goal.
David Parker,
San Francisco, CA, US
December 23, 2017
Financial Times
Teach by the Socratic method—keep asking
Sir, Lucy Kellaway, in “End of Term Diary” (December 23), absolutely said the right thing: that teaching is not taking children on a “journey”, teaching is showing children the beauty of a theorem.
It’s the teacher’s job to facilitate and motivate. Show students the beauty of things. And, teach by the Socratic method. Ask a question. If the student doesn’t understand, ask another question. Keep asking. When they understand, they’ve learned.
David Parker,
San Francisco, CA, US
March 25, 2018
Financial Times
Business cycles must run their course
Sir, From the perspective of someone in business, nothing that Martin Wolf says in “Economics failed us before the global crisis” (March 21) rings true—even when it is true.
Mr Wolf advises us not to believe in the efficient market hypothesis and in rational expectations—except that anyone in business knows that rates of return are timeless: 1-2 percent on savings, 2-3 percent on mortgage lending, 3-5 percent on venture capital, and that in a competitive market, that is an efficient market, investors expect profit to be pushed to 0.
He advises that economies would be more resilient if they were less leveraged. No. Companies not leveraged will be eliminated by those that are. A 5 percent return on 100 percent cash cannot compete with a 5 percent return on 100 per cent debt. A 5 percent return on $1m cash, $50,000, does not compare to a 5 percent return on $10m financed, $500,000. The return on leveraged investment is so high that owners of leveraged companies will lower the price of their products until their competitors are driven out of business.
Mr Wolf believes in a strong fiscal and monetary response to a recession. No. Business cycles must run their course. Except to prevent a financial crisis, intervention in an economy only prolongs a recession. You don’t offer a seven-course meal to someone who just threw up from overeating.
David Parker,
San Francisco, CA, US
June 26,2018
Financial Times
Trump’s policies embody citizen rage
David Parker,
San Francisco, CA, US
May 4, 2022
Financial Times
In the clash of civilisations, all claim to have a theory
Janan Ganesh writes that “no grand theory can explain the Ukraine crisis” (Opinion, April 13). Oh yes it can! Bashar al-Assad in Syria, leaders in the Middle East, the great Singaporean statesman Lee Kuan Yew, Lenin, Stalin, Che Guevara. All claim that “the end justifies the means”.
In a clash of civilisations all sides will claim the theory — although the world would do better to forget teleology and remember Adam Smith, who said society, without planning, without government, with individuals simply pursuing their self-interest to survive (by producing goods and services), as if led by an invisible hand, will organise itself better than anything that can be done by design. That, too, is elegant theory. To paraphrase Immanuel Kant: man is the goal of betterment, not the means.
David Parker,
San Francisco, CA, US
December 29th, 2022
Financial Times
Three ways Big Tech got it wrong
Brooke Masters’ “Three ways Big Tech got it wrong” (Dec. 29) is the Financial Times’ article-of-the-year. Missing only is a direct (rather than implied) statement that the laws of business, money and economics are timeless, back to Babylon, and that because they broke those laws, of the top 100 corporations listed on the DJIA in 1961 only three are there today.
Big Tech’s strategic model of “innovate rapidly and splash out to woo customers” (short-term growth versus long-term profit from having produced an excellent product) has no historic basis. No surprise the price of Google, Amazon and Facebook stock is down 40 to 60 percent.
Then, turn the page. Readers will find that LEX., “China property: structurally unsound,” is another example. China’s government should not have loaned so much for real estate development simply because units were pre-sold. Those loans did not factor in a rise in interest rates or a rise in construction costs. Gambling in defiance of timeless rates of return: 1-2 percent savings; 2-3 percent mortgage lending; 3-5 percent venture capital, those loans are in default. Competition guarantees those timeless rates.
Savvy investors, of course, have been waiting for this day—for the value of mortgages to be more than the value of the properties that secure them. They purchase those mortgages 50 cents on the dollar (or assume them as a leveraged buyout).
David Parker,
Political Economist
San Francisco, CA
