Lance Roberts visits with Daniel Lacalle to discuss economist Daniel’s new book, “Freedom or Equality” as he shares his thoughts on the difference between equality and equal opportunity and whitewashing interventionism.

Historically, meetings of the largest economies in the world have been essential to reach essential agreements that would incentivise prosperity and growth. This was not the case this time. The G7 meeting agreements were light on detailed economic decisions, except on the most damaging of them all. A minimum global corporate tax. Why not an agreement on a maximum global public spending?

The first thing any economist should do wen reading a budget proposal is to analyse the basic macro assumptions and the results presented by the administration. When both are poor, the budget should be criticised. This is the case of the Biden Budget Plan.

Same growth, a lot more debt and less employment.

According to the administration, the impact on growth of this budget will be negligible, as their own -and optimistic- estimates see no change in the slowdown of the U.S. economic growth trend.

“The constant refinancing of debt from companies of doubtful viability also leads to the perpetuation of overcapacity because a key process for economic progress, such as creative destruction, is eliminated or limited”.

One of the arguments most used by central banks regarding the increase in inflation is that it is because of bottlenecks and that the recovery in demand has created tensions in the supply chain. However, the evidence shows us that most commodities have risen in tandem in an environment of a wide level of spare capacity and even overcapacity.

If we analyse the utilization ratio of industrial and manufacturing productive capacity, we see that countries such as Russia (61%) or India (66%) are at a clear level of structural overcapacity and a utilization of productive capacity that remains still several points lower than that of February 2020. In China it is 77%, still far from the 78% pre-pandemic level. In fact, if we analyse the main G20 countries and the largest industrial and commodity suppliers in the world, we see that none of them have levels of utilization of productive capacity higher than 85%. There is ample available capacity all over the world.