Rooted in Reason: Nurturing the Seeds of Liberty


Rush Jobs by maliab
September 6, 2011, 7:26 pm
Filed under: Economy | Tags: , , , , , , ,

It’s the jobs, stupid.  At least, that’s what the new call of the politicians (and political advisers) seems to be of late.  Personally, I always find it a bit surreal watching politicians talk about their plans to increase jobs.  As though our economy was powered by hot air and political promises.  Granted, sometimes one of them will stumble upon an economic truth. (Like the fact that the best thing they can do for the job market is remove some of the federal barriers to economic growth–especially the banking regulations and monetary policy that prevent small to  mid-range businesses from growing in this struggling economy.)  But then, likely as not, they’ll just pick themselves up and hurry off as though nothing has happened.

And now, many of us are faced with a conundrum on Thursday night.  Do we tune in to see President Obama unveil his “Jobs Plan”?  Or do we make sure we are properly stocked up on buffalo wings and chips and watch the first game of the NFL season?  It’s true that we are facing a serious unemployment crisis in this country.  On the other hand, it seems unlikely that the President was visited in the night by the ghost of Milton Friedman and saw the error of his big government ways.  And the Saints are playing the Packers, which could not only be a glimpse of the NFC playoffs, but carries major implications for millions of fantasy football rosters.  And I’m not the only one feeling less than enthused about what I secretly fear is the unveiling of yet another giant spending program.   Consider what Dr. Merrill Matthews, Resident Scholar for the Institute for Policy Innovation has to say:

Perhaps the most underreported story last week was the announcement from the Office of Management and Budget that the unemployment rate would likely remain in the 9.0 percent range throughout 2012. And this a week before the president plans to deliver to Congress and the nation a jobs package that is supposed to help create jobs.

So what is OMB telling us? You would think that if the White House and its relevant advisors had been developing a drop-dead jobs-creation package, OMB would have waited until after the speech and then released an analysis saying that unemployment would likely remain in the 9 percent range, but that number could be significantly lower if Congress adopted the president’s jobs plan.

So did the White House not consult with OMB about its jobs proposals? Or, more likely, is it that everyone in the administration knows that there’s nothing new or innovative in the jobs package, and that it likely won’t pass anyway because it costs billions of federal dollars the government doesn’t have?

Either way, the “anticipation factor” for the president’s speech is very low, because no one expects that his proposals—mired as the White House is in Keynesian economics and big-spending notions—would do any good anyway. No one, including, apparently, the president’s own budget office.



Unstimulated by maliab
August 31, 2011, 9:07 pm
Filed under: Economy | Tags: , , , , , , , ,

The President will be unveiling his new jobs plan next week.  (Though when seems to be in doubt, as Rep. Boehner has indicated that Wednesday isn’t good for him and Congress, what with the GOP presidential debate and the last minute-ness of it all, and the White House has indicated that they’re not in love with Thursday as a day–with some commentators speculating that they don’t want to compete with the first NFL game of the season.)  If presidential conversation about jobs could create employment opportunities, we’d be at about 0% unemployment right now.

But, of course, it doesn’t.  And it turns out that buying jobs with huge chunks of federal dollars doesn’t do much better.

As the Weekly Standard points out, a study of the hiring practices of firms who received stimulus funds reveals that the stimulus package created as much job poaching as job creation.  Yet more proof (if we even needed it) that Keynesian economic theory so loved by this Administration seems to crumble in the face of the real world practice:

The Mercatus Center at George Mason University has just released an important new study on the hiring practices of firms that used stimulus funds. It’s fairly comprehensive, based on over 1,300 surveys of managers and employees. There’s been very little good empirical data on the stimulus thus far, so the study contains a lot of valuable insights. Among the findings by authors Dan Rothschild and Garrett Jones:

Hiring isn’t the same as net job creation. In our survey, just 42.1 percent of the workers hired at ARRA-receiving organizations after January 31, 2009, were unemployed at the time they were hired (Appendix C). More were hired directly from other organizations (47.3 percent of post-ARRA workers), while a handful came from school (6.5%) or from outside the labor force (4.1%)(Figure 2). Thus, there was an almost even split between “job creating” and “job switching.” This suggests just how hard it is for Keynesian job creation to work in a modern, expertise-based economy: even in a weak economy, organizations hired the employed about as often as the unemployed.

Put simply, stimulus funds caused more job shifting than job creation. Another key finding? Union-friendly wage protections kill jobs:

Among organizations required to pay prevailing wages, 38.2 percent thought that they could have hired workers at wages below the Davis-Bacon prevailing wage (Figure 3) while another 17 percent were unsure. This meant higher costs for the federal government and fewer jobs created.

Of course, merely having your economic philosophy proved disastrously wrong doesn’t seem much of a hindrance to the Left.  Talk about the power of wishful thinking.



Fact Check: Criticizing the “Texas Economic Miracle” by maliab
August 24, 2011, 5:58 pm
Filed under: Economy | Tags: , , , ,

There is an interesting game that goes on when the political conversation turns to unemployment.  Despite the rather depressing unemployment numbers, there are still plenty of arguments to be found about the kinds of jobs available.  Some of these criticisms are well-founded, as when it is pointed out that creating temporary government jobs via state-funded spending sprees is not a path to long-term economic recovery.  Others, such as the spats over the relative “quality” of new jobs available are a bit more complex.  As Dr. Steve Pejovich, a Professor Emeritus from Texas A&M University writing for the Institute for Policy Innovation, explains, there’s a lot more to economic recovery than the wage rate:

Challenging the supposed “Texas economic miracle” under Governor Rick Perry, CBS recently reported, “Critics also note that many of the jobs created on Perry’s watch are low-paying and lack benefits.” This statement is wrong at best and stupid at worst. Here is an economist’s explanation for non-economists.

The demand for labor, like the demand for all scarce goods, is a function of price. The lower the wage the more people are hired.

What’s known as the “market-clearing wage” (i.e., price) is the wage at which all people who want to work at that wage have jobs. At any wage above the market-clearing wage not all people who want to work at that wage have jobs.

Government can’t determine the market-clearing level, only markets can. But government can distort it by imposing regulations on business, minimum wage laws, and unions (think of the Boeing case), which force wage rates above the market–clearing level.

Perry’s critics are confusing the wage rate with income. The higher the wage rate (above the market-clearing level) the more who are unemployed. That is, high wage rates mean zero income for many. The market-clearing wage rate means positive income for all.

Governments can choose to make labor markets less or more competitive. Perry has chosen the latter for Texas. Yes, the average wage rate in Dallas might be lower than in Detroit, but more people are earning money from work in Dallas than in Detroit. This raises an important question upon which a free society depends: the freedom of choice.

Any person in a right–to-work environment can choose between zero income and the wage he or she could get in the labor market. No person in a union-controlled or government-regulated environment can choose between zero income and the wage at which he or she is willing to work.

No one has to work for a lower wage, but at least in Texas more people can choose that option over being unemployed.



Paul Jacob & the Human Face of Corporations by maliab
August 23, 2011, 4:56 pm
Filed under: Economy, Limited Government | Tags: , ,

It’s a little tiring, listening to the tired trope that makes corporations the ultimate bad guy of modern culture.  Look at Hollywood.  Any time they can’t work a Nazi (or at least a neo-Nazi) into the plot of their latest action thriller, they turn to the same cliche . . . the evil corporate fat cat.  So is it any wonder that Mitt Romney earned heaps of undeserved scorn for commenting that “corporations are people”?  As Paul Jacob, President of Citizens in Charge, points out, Romney biggest offense was pointing out the ugliness of the Left’s anti-business prejudice:

On the video page featuring Mitt Romney’s notorious “corporations are people” comment — the one I clicked to, anyway — every comment was negative, with jokes like “Did you hear that S&P downgraded the Tea Party credit grade to KK+?” and economically illiterate whoppers like “Corporations do not help anyone except those who own them or do what they say.” It’s saddening to see ignorance and bigotry so self-righteously maintained by everyday Americans.

Yes, bigotry.

For Romney was right: Corporations are made of people. Those who roil with hatred for corporations, singling them out for more regulation or greater taxation, are attacking actual living, breathing people, who, as Milton Friedman pointed out, are made up of three classes of just plain folks: the owners, the, who are people; the corporation’s hired managers, who are people; and served  that is, people who have chosen,  duress, to buy stuff from the corporations.

Economist Steven Horwitz, writing in the , cited one study that estimated that “45 percent to 75 percent of the burden of a corporate tax increase is borne by workers,” and noted that, if profits fall, fewer dividends would go to stockholders.

And “stockholders” are often nothing other than workers’ retirement funds.

Yeah, soak the older people. That should make corporation-haters feel good.

Setting aside “some other people” to hate is exactly what anti-corporatists are doing. It’s bigotry. And it’s ugly . . . and de-humanizing.

This is Common Sense. I’m Paul Jacob.



Dale’s Energy, Transit, Taxes (and More) Update by grassroothawaii
August 12, 2011, 7:53 pm
Filed under: Economy, Hawaii Sunshine, World | Tags: , , , , , , , , , , ,

Today, we have another update for you from Dale of Charley’s Taxi on the latest headlines in transit, taxes, energy, zoning, and more.  Some highlights (or lowlights, depending on how you look at it) from this edition include the questionable relationship between the rail project and the unions, the probability of a “double-dip” recession, an analysis of what causes cities to grow or shrink, and the effort to empirically demonstrate the existence of media bias.  Enjoy:

QUOTES

The bulk of [budget cuts] will have to be found by cutting real military capability and as a result, accepting real additional risk to the country’s security. — Michael E. O’Hanlon, Brookings Institution

“I drank so much vodka I could barely stand up. But I had to get home somehow and decided to do something I had never done before. 

I took a bus.     And here’s the good news. I arrived home safe and sound, cozy and warm, and able to go to work the next morning.  

All of which is remarkable because I had never driven a bus before.” — Henry at AA meeting

The effect of the people’s agreeing that there must be central planning, without agreeing on the ends, will be rather as if a group of people were to commit themselves to take a journey together without agreeing where they want to go; with the result that they may all have to make a journey which most of them do not want at all. — F.A. Hayek

The al-Qaeda network is fully prepared to continue the jihad against the American infidels by launching deadly attacks, but your outdated and rusting transportation infrastructure needs to be completely overhauled for those strikes even to be noticed.— Ayman al-Zawahiri

TOP HEADLINES
The Debt-Limit Debate: Addressing Key Concerns, Veronique de Rugy, Jason J. Fichtner, Mercatus Center, George Mason University, 5/26/11

The Debt Ceiling: What is at Stake? Vernoique de Rugy, Jason J. Fichtner, MercatusCenter, GMU, 4/28/11

Glimpse into daily life in North KoreaJean H. Lee, David Guttenfelder, MSNBC, 7/23/11

Journey into North Korea, MSNBC PHOTOGRAPHS

The Official 1984 Reagan ScorecardJonathan Rowe, Paul Glastris,Washington Monthly,

How Government Regulation Affects the Price of a New Home, Paul Emrath, National Association of Home Builders, July 2011

Obama Undercuts Case for HSR and Rail Transit, The Antiplanner, 8/04/11

What the Budget Control Act Means for U.S. Defense, Michael E. O’Hanlon, Brookings Institute, 8/02/11

Why Did America Destroy Its Great Cities?, Frank Gruber, Huffington Post, 8/02/11

CBO: Federal Loan Guarantees for the Construction of Nuclear Power Plants, August 2011

Intoxicated on Independence: Is Domestically Produced Ethanol Worth the Cost?,Scientific American, 7/28/11

The U.S. May Need More Lawyers!, Clifford Winston, Robert W. Crandall, Huffington Post, 7/29/11

The Obama EPA’s Brave New Future, Heritage Foundry, 7/28/11

Higher fuel standards mean higher death toll, Washington Examiner EDITORIAL, 7/28/11


When it comes to population growth, Houston is No. 1, Rice University, 7/06/11 

News in Hawaii

CEO of troubled rail car company that won Honolulu bid steps down, Gene Park, Honolulu Star Advertiser, 8/05/11

Inouye, Akaka, Cantwell and Johnson Introduce Bipartisan Bill to Help Facilitate Business Travel, Trade with Asia-Pacific Region, Hawaii Reporter, 8/04/11

‘Sinkhole State:’ Hawaii is in the 47th Worst Financial Position of All 50 States,Hawaii Reporter, 8/03/11

Trains Helped Kill the Greek Economy – They’ll Kill Hawaii’s too, Panos Prevedouros, Fix Oahu, 8/01/11

The New Airline & Air Service Strategy Metrics, Boyd Group International, 8/01/11

American Airlines is dropping SFO-Honolulu this fall.

Honolulu Rail in Illegal Pact with Local Unions, Panos Prevedouros, FixOahu, 7/29/11

Ansaldo Honolulu’s parent firm rethinking rail car business, Gene Park, Honolulu Star Advertiser, 7/29/11

Rail Bid Judges Ignored Ansaldo’s Past Problems, Michael Levine, Honolulu Civil Beat, 7/28/11

New vehicle charging station powers up at Capitol garage, Honolulu Star Advertiser, 7/28/11

Solar Power Plant on Oahu Does not Pass Muster, Panos Prevedouros, Fix Oahu!, 7/27/11

Traffic Accident Investigation on Oahu: Stuck in the 1980s, Panos Prevedouros, FixOahu!, 7/28/11

TAXES & ECONOMIES

Brutal: Dow Plunges Amid ‘Double-Dip’ Recession Jitters, Guy Benson, Townhall, 8/04/11

Editorial: An Unwelcome Debt Milestone, Investors Business Daily, 8/04/11

US debt exceeds entire economy GDP, markets alarmed

Academic Panel Sees 50% Chance US to Plunge Into Recession, MoneyNews, 8/03/11

Political DerivativesNicole Gelinas, National Review, 8/03/11

Moody’s, Fitch: US Must Do More to Avoid Rating Downgrades, MoneyNews, 8/03/11

Where’s Your Budget, Mr. President?, Paul Ryan, Wall Street Journal, 8/03/11

Meredith Whitney: US Headed for Double-Dip Recession, Forrest Jones, MoneyNews, 8/02/11

What the Budget Control Act Means for U.S. Defense, Michael E. O’Hanlon, Brookings Institute, 8/02/11

Military Spending and the Budget Deal, Christopher Preble, Cato @ Liberty, 8/01/11

When a cut is not a cutRep. Ron Paul, The Hill, 8/01/11

Europe Declares War on American Ratings Agencies, Soeren Kern, Pajamas Media, 7/30/11

Finish the 710 Freeway, James E. Moore II, LA Times, 7/29/11

Crumbling transportation infrastructure could cost US $3.1 trillion, Metro Magazine, 7/28/11

African American Middle Class Eroding As Unemployment Rate Soars, John Roberts, FOX News, 7/28/11

Motorists’ Group Endorses “Trip Bonds” Legislation, American Highway UsersAlliance, 7/28/11

Solving the Long-Term Jobs Problem, Arnold King, Nick Schultz, The AmericanEnterprise Institute, 7/27/11

Greenspan: Fed Should Have Let Banks Fail, Greg Brown, MoneyNews, 7/27/11

Herman Cain Interview on Creating Jobs, Dick Morris, 7/27/11

Behind economic hard times, fear of the new, Robert J. Samuelson, Washington Post, 7/22/11

HIGHWAYS & BRIDGES, PPP & TOLLING, DRIVING ISSUES

DUI, Uninsured Motorists, Tolling, PPPs, Variable Pricing, RUCS and Sustainable Transportation

China falls in love with SUVs, Malcolm Moore, Telegraph UK, 8/04/11

Busting Congestion in Chicago (or Any other City), Reason TV, 8/03/11

Top 10 New-Car Deals for August, Jim Gorzelany, Forbes, 8/03/11

Taking transit – a testimonial at AA meeting, TollRoadsNews,  7/28/11

Golf cart drivers aim to be legal in small town, The Tennessean, 7/28/11

INRIX launches its Traffic app on Windows Phone 7 and BlackBerry cell phone platformsTraffic Technology Today, 7/25/11

New traffic camera website aiming to drive down congestion across the UK, Trarffic Technology Today, 7/25/11

6 Reasons Driving Has Peaked in U.S. CitiesEric Jaffe, Infrastructurist, 7/14/11

Replacing the Tappan Zee BridgeManhattan Institute, 6/22/11

INRIX TRAFFIC! App Now Available on App Store

TRANSIT
Frustrating, dangerous Metro problems for the disabled, Dana Hedgpeth, Washington Post, 8/06/11

Driving services help senior mobility without spending public money, Pamela M. Prah, Stateline, 8/04/11

Antonio Villaraigosa pushes bus-only lanes as MTA chairman, Ari Bloomekatz, Cornelius Pollmer, Los Angeles Times, 8/04/11

Low-Fare, Curbside Bus Operators Picking Up Amtrak Market Share, Don Stacom,Hartford Courant, 8/01/11

Chinese rail crash scandal: ‘official steals $2.8 billion’, Malcolm Moore, Telegraph UK, 8/01/11

China Imposes Blackout on Train Wreck Coverage, Sharon LaFraniere, NY Times,  8/01/11

With 210 injured, 35 fatalities, more concerns that government sacrifices people’s lives and safety for world’s largest public works project and cloaks failures in secrecy or propaganda.

A new third rail, The Economist, 7/30/11

Japan has operated bullet trains for 47 years without a fatal accident.

Report casts doubt on forecasts for California high speed rail, Dan Weikel, LA Times, 7/29/11

Cambridge used a now-obsolete survey method, made unrealistic assumptions, failed to properly analyze what would happen to ridership for varying levels of train service, and did not consider the impact of airline competition…But the bigger take away from all this is that there are now two independent reviews that show things are lacking here.

Al-Qaeda Claims U.S. Mass Transportation Infrastructure Must Drastically Improve Before Any Terrorist Attacks, The Onion,  7/28/11

Significant repairs and upgrades are needed for the militant group to consider destroying any roads, bridges or railways with terrorist attacks.

Using Market Processes to Reform Government Transportation Programs, Report No. 2: Improving Transit with Competitive Contracting, Wendell Cox and Ronald Utt, Heritage Webmemo #3312, 7/07/11

Public transportation has to change to remain viable, according to a new Heritage Foundation analysis. For decades, transit’s principal problem has been insufficient cost control rather than insufficient revenues. Over the past 25 years, transit’s operating cosdts have been approximately $15 billion (on a passenger mile basis). Had transit agencies kept costs within inflation – as most businesses do – transit would have been able to provide 40 percent more service in 2009. Without government unable to provide more subsidies, a much better solution is for transit systems to use competitive contracting to reduce costs and improve quality of service.  — Wendell Cox and Ron Utt

John Charles responds to Portland Mayor Sam Adams, John Charles, Cascade Policy Institute, 7/25/11

Los Angeles Metro Bus System Compares Favorably With Its Peer Group, Tom Rubin, New Geography, 7/28/11

KRM dead, Racine County to get back $300,000 in past rental car fees, Stephanie Jones, TheJournalTimes, 7/25/11

MetroAccess Knowingly Places Hundreds of Disabled Paratransit Passengers at Risk, Bus riders Union of Austin, TX, 4/02/11

ZONING, HOUSING & LAND USE

TODs, Eminent Domain, Property Rights

Plant a Garden, Go to Jail for 93-Days?! Nanny of the Month, Korchula Productions, July 2011

Growth controls = Housing Collapse, Sterling Burnett, National Review Online, 8/05/11

How Government Regulation Affects the Price of a New Home, Paul Emrath,k National Association of Home Builders, July 2011

Rural US disappearing? Population share hits low, Hope Yen, Associated Press, 7/28/11

Moving From The Coast, Wendell Cox, New Geography, 7/28/11

Program Offers Cash Incentives To Live Downtown, CBS Detroit, 7/25/11

In the five-year, $4 million “Live Downtown” program, first-time home buyers will get a $20,000 forgivable loan. Renters will get a $2,500 first year allowance, and $1,000 the following year. Employees who already own a home in the city will be given up to a $5,000 grant for exterior improvements.

Why Amnerica’s Young and Restless Will Abandon Cities for Suburbs, Joel Kotkin, Forbes, 7/20/11

When it comes to population growth, Houston is No. 1, Rice University, 7/06/11

Why Some Cities Are Growing And Others Shrinking, Dean Stansel, Cato Journal, Summer 2011

ENERGY & ENVIRONMENT

Beaver Fever Fanaticism: EPA Eco-Radicals Are Hurting Families at the Tap, Christopher Coffey, Pajamas Media, 8/07/11

Blame the Washington Bureaucracy for High Gas Prices, Rob Bluey, Heritage Foundry, 8/04/11

New Process Could Make Canadian Oil Cheaper, Cleaner, Kevin Bullis, MIT Technology Review, 8/03/11

GM Confirms Slow Chevy Volt Sales, Mark Modica, National Legal and Policy Center, 8/02/11

CBO: Federal Loan Guarantees for the Construction of Nuclear Power Plants, August 2011

Higher fuel standards mean higher death toll, Washington Examiner EDITORIAL, 7/28/11

Issa launches investigation into Obama’s new fuel economy standards, Andrew REstuccia, The Hill, 7/29/11

Grow Our Way Out, IBD, 7/29/11

President Obama Announces Historic 54.5 mpg Fuel Efficiency Standard, US DOT, 7/29/11

New NASA Data Blow Gaping Hole in Global Warming Alarmism, James Taylor, Forbes, 7/27/11

America’s power grid too vulnerable to cyberattack, US report warns, Mark Clayton, Jewish World Review, 7/28/11

The Obama EPA’s Brave New Future, Heritage Foundry, 7/28/11

Intoxicated on Independence: Is Domestically Produced Ethanol Worth the Cost?,Scientific American, 7/28/11

MISCELLANEOUS

Obama’s War on the Welf-Made Man, Lurita Doan, Townhall, 8/08/11

2011 Hall of Fame Shannon Shane speech, 8/07/11

Parents: Hone Your Kid’s BS Detector!, Doug Giles, Townhall, 8/07/11

DEA Letting Cartels Bring Drugs Over the Border, Helen Whalen Cohen, Townhall, 8/06/11

USPS Bailout on the Horizon, Trey Kovacs, Open Market, 8/04/11

Anti-terror plan allies White House with Muslim groups, Neil Munro, Daily Caller, 8/04/11

Documents: Feds allegedly allowed Sinaloa cartel to move cocaine into U.S. for information, Diana Washington Valdez, El Paso Times, 8/04/11

Communist Party USA Officially Endorses Barack Obama, Vision to America, 8/04/11

Policing Beltway Lobbyists, Jonathan H. Adler, National Review Online, 8/02/11

UCLA professor’s new book empirically demonstrates liberal media bias {VIDEO],Jamie Weinstein, 8/01/11

Plug-and-Play Batteries: Trying Out a Quick-Swap Station for E.V.’s, Bradley Berman, NYTimes, 7/31/11

The U.S. May Need More Lawyers!, Clifford Winston, Robert W. Crandall, Huffington Post, 7/29/11

Gunwalker: William Newell Circles the Wagons, Patrick Richardson, PM, 7/28/11

NHS delays operations ‘as it waits for patients to die or go private’, Martin Beckford, Telegraph UK, 7/28/11

3D printing: the technology that could re-shape the world, Shane Richmond, TelegraphUK, 7/28/11

Obama to Banks: We’re Not Defaulting, Charlie Gasparino, Fox Business, 7/25/11

Germany’s Choice – Part 2, Stratfor Global Intelligence, 7/26/11



Who Understands Your Money Better Than You? by maliab
August 11, 2011, 6:36 pm
Filed under: Economy | Tags: , , , ,

Surprise!  You may not know it, but you’re an economic genius.  Or above-average at least.  Assuming, that is, that you base your spending decisions on long-term appraisal of your income, government policy, and its probable effects.  Of course, if you do these things, than you’re probably more than a little frustrated and concerned about our current state of affairs.  But your worries and predictions about higher taxes and the inevitable problems that come with large-scale government spending are the bane of Keynesian economists (including the Obama Administration).  As Paul Gregory explains in his recent Forbes article, Obama and other Keynesians are prepared to laugh at the Tea Party members (and, it must be pointed out, followers of Milton Friedman’s free market principles) who actually understand the real state of things better than they, as they cling to their increasingly discredited belief that greater government spending grows the economy:

The appeal of Keynesian economics is its simple logic. If government spending for goods and services is part of GDP, then any increase in government spending must raise GDP.

As President Obama explained in a town hall meeting on Feb. 8, 2009:

“Republicans say this is not a stimulus bill but a spending bill. What do you think a stimulus is? That’s the whole point.” (Laughter from the crowd).

 

Keynesian economics is easy, even for stupid people. More thought and analysis are required to understand why it has not worked as it is supposed to. Keynesian skeptics must show that increases in government spending cause other components of GDP, such as consumption, investment, or exports, to fall. Such countervailing forces require more nuanced and sophisticated thought. They are not for the mentally lazy or those seeking simple answers.

Gregory goes on to list five principles from Nobel-Laureate Keynesian skeptics that demonstrate that our current course of government spending is disastrous.  Consider number two:

2) Crowding Out (Milton Friedman)

This proposition says that increases in government spending crowd out investment and even consumer spending. In its simplest form, it says that when the government borrows for spending, less capital is left for private investment and for consumers.

Gregory rightly takes offense at the fact that the Tea Party has been a subject of ridicule from those who accept the Keynesian theory without question.  Perhaps the Obama Administration and other adherents of this philosophy of government intervention and expansion simply resent the Tea Party crowd for not being stupid enough to accept their policies without question.



Sam Slom on our Economic Crisis by grassroothawaii
August 10, 2011, 5:07 pm
Filed under: Economy | Tags: , , , ,

So Senator Slom is right.  Again.  It’s getting to be a habit with him.  In Hawaii Reporter you can read his take on the debt ceiling crisis and fallout.  (My favorite part–where he mentions that Senator Inouye is Hawaii’s second biggest industry, right after tourism.  And that building your economic hopes on pork from Congress is building on shifting sand.)  Here’s a sample:

 A month ago, I wrote an editorial in Hawaii Reporter in opposition to raising the debt ceiling and conducting government business as usual.

Several professional people, including some friends, argued that I was wrong.  if we didn’t take action, we would face a lowered credit rating, a plunging stock market and higher interest rates, they said.

It was the same argument that was used to force passage of the failed TARP bailout in the last days of the Bush Administration and TARP 2 and stimulus subsidies and grants subsequently.

So, at the last minute, a bi-partisan political agreement on our debt was cobbled together. It pleased neither the right nor the left. In my humble opinion, it was a phony agreement with more promises and no meaningful reform. A “super” Congressional Committee? Really?

The ink wasn’t even dry on the new law when the President, true to his beliefs, authorized billions in new spending and more debt. I said publicly that our credit rating would decrease and there would be huge losses in the markets because we did not address the causeof our fiscal problems: excessive government taxation, spending and debt.

In spite of that “grand” debt agreement, or because of it, Standard & Poor’s downgraded the U.S. credit rating last Friday, from AAA to AA+, the stock market plummeted (again), and interest rates will increase.

Billionaire Warren Buffet responded to S&P’s action, saying  the US credit rating should be UPgraded to “AAAA.”

Over the weekend, the President’s men were quick to blame S&P, the Tea Party, Republicans in Congress and yes, President Bush. Today, President Obama added to the criticism of the messenger, S&P, quoted Buffet, and again called for raising taxes.

The gist of the attacks was that S&P didn’t know what they were doing, their accounting procedures are wrong, and besides, neither Moody’s nor Fitch downgraded the US credit.

I agree that ratings services are just that: ratings services. They don’t know everything.  They do make mistakes. Why didn’t all of them downgrade Fannie Mae and Freddie Mac years ago? Their comments are subject to debate. Kind of like consumer magazine ratings and movie reviews.

But S&P happens to be right at this time. They see no willingness to change government fiscal policies or to improve the investment climate.

(Now go here to read the rest.)




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