Monday, July 25, 2011
- The Conflict Of Visions
I think it’s worth saying that this conflict over the debt ceiling really is a clash of political philosophies. Keynesians are institutionally short sighted and believe that you can bear any long term expense for a defined short term benefit. They will spend Thursday’s hamburger today in the hope that by the time Thursday comes there will be another way to solve the problem.
Meanwhile the Austrian school focuses on long term realities which are completely unavoidable. But while the Austrian thinkers can tell you what will happen, it’s terrible at letting you know precisely when. Things work until they don’t, and when they collapse it’s a surprise to everyone – even the Austrian school-ers.
So we have Team Obama and the congressional Democrats worried about the short term economic impact that will come from no more spending, and we have the house Republicans worried about the long term consequences of even more borrowing. Obama is the junkie who wants more crack, and Republicans are worried about letting him burn the furniture to keep the house warm.
As a professional investor, I think if there were any indication that the Democrats were capable of dealing with these issues, I’d come down on their side. I think the situation in Japan indicates that we have far more rope than anyone believes. I don’t think the US is nearing insolvency and that we can run our debt to GDP ration much higher before the markets decide to balk.
But I don’t think there has ever been a group of political actors less ‘serious’ than the current spate of Democrats. They are as delusional and detached from reality as many mental patients. I’m astounded they can dress themselves in the morning. One look at Nancy Pelosi will tell you all you need to know about these people. They see themselves as the heroes of a movie that is playing, only in their heads.
I don’t believe they are capable of managing the government of the United States or its finances in any rational way. I think if left to their own devices they will burn the furniture, the floorboards, the walls and ceiling, and anything else they can get their hands on. And winter is still a long way off. I think they are behaving like completely irresponsible children. And they are showing no sign of awareness that there are consequences to their actions.
Because that’s so… because I believe that if left to their own devices Democrats would make things much worse not better, I have to come down on the side of the House Republicans. This isn’t a question of political pragmatism, but of the long term solvency of the Republic. If we were to give the Democrats what they want, then the next time we ran out of money we would have the same problems with a higher multiple.