I'm dreading the day that America's economic policy is dominated by institutionally short sighted hacks from the Paul Krugman school of economic self destruction. Watch this and you'll understand what I mean:
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Seems to me that day has already arrived. I'm reminded of a comment made by one of Scott Brown's supporters during the Mass special election in Jan - he said he was tired of the gov't focusing on health care "when they should be doing something about the economy."
The concept of central planning is now so ingrained people don't even debate it anymore - when was the last time you heard a mainstream economist advocate the gov't simply getting out of the way and letting markets work? Instead, they argue for and against different forms of interventions, eg, whether monetary policy is "more effective" than fiscal policy, or whether it's better to "stimulate" house prices by artificially suppressing interest rates or transferring taxpayer $ to underwater borrowers, or other such nonsense.
Many people, meanwhile, profess a faith in free markets even as they support a wide variety of destructive economic programs that are just the opposite - witness the scorn with which tea party candidates have been viewed for suggesting we eliminate the Depts. of Education or Energy, for example, or the horror evinced by the phrase "privatize Social Security."
Seems to me that no matter the results on Tues, the road to serfdom is alive and well...
That’s an excellent point Rick. I still hear people whose economic knowledge I highly value, say Friedman sounding things all the time (I say more than a few of them myself), but I’m not really an average person in that regard. And one thing is for sure, the people who say things like that are almost never economists in the strictest sense, and they are NEVER EVER on TV or other media. Although to be fair to the people who are (some of whom are also my friends) I think at least some of it is talking about the possible instead of the perfect.
Had there been no tarp or bank bailout I think we might have been OK. The banks would have all gone belly up of course, as would have AIG, GM and a few hundred other companies. But if they hadn’t gone mucking around with the rules the economy would have had a severe drop off and would have then come roaring back. By now we’d probably be past the whole thing.
Instead we decided to ‘change’ things, and now we have that new paradigm. It’s an economy of the government, by the government, and for the benefit of the government, and the rest is all just fallout. Do the people benefit? Sure… eventually…. No one has a problem with that. But the most important agenda point for our leaders these days is to save the institutions – both private and public. It’s about control and maintenance, not creative destruction.
At this point if we don’t have the Fed generating inflation, the only other option is the abyss. And if that were to happen now, the business community has been beaten down enough so that they lack the necessary confidence in the steadfastness of the rules. They would be unwilling to take the risks necessary to make things come back as quickly as they would have if the government had just let things happen. So if the government steps back now there is no one to pick up the slack.
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