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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (43225)	5/14/2010 11:58:33 AM
From: TimF	Respond to of 71588

Piggy Banking and Unlimited Government Church Arnold Kling A reader asks what I mean by "piggy bank" in reference to a central bank. What I mean is that the central bank, instead of buying safe securities in order to expand the money supply, buys risky securities in order to improve the health of particular financial institutions. For the favored private-sector banks, the central bank is being used as a piggy bank. [UPDATE: John Taylor makes the piggy-bank accusation, but without using that term.] Another Kling-ism which I can explain more clearly is the Church of Unlimited Government. The central issue is what you do when you notice many other people doing something that bothers you. If you believe that government should address the issue, then you belong to the Church of Unlimited Government. An example of something that people do that bothers me for which I want government involvement would be murder. Pollution is another example, although I recognize that there are sometimes private-sector solutions. An example of something that people do that bothers me for which I do not want government involvement is driving on congested roads. I would rather that roads be privatized, with electronic toll collection. An example of something other people do that bothers me a lot is taking bulky carry-on luggage on planes. I think that a private-sector solution of charging for carry-ons is wonderful. The irony is that some people belonging to the Church of Unlimited Government are so disturbed by the private-sector solution that they want to outlaw it. Because there are many examples of things that people do that bother me for which I do not want government involvement, I am in the Church of Limited Government. My claim is that most people are not in that church. For most people, not wanting government involvement usually comes from not minding the behavior. Thus, if you do not want government jailing people for smoking marijuana because you do not mind other people smoking marijuana, that does not put you in the Church of Limited Government. You can be in the Church of Limited Government on principled grounds (the right of individuals to do what they want with their own bodies) or on pragmatic grounds (you don't necessarily respect the right of individuals to do what they want with their own bodies, but you think that the cost-benefit calculation of enforcing marijuana laws is adverse). But I think that very few people actually belong to the Church of Limited Government nowadays. We live in crowded communities, near lots of people who we can observe or imagine doing things that disturb us, and we derive a lot of comfort from our faith in government to control those behaviors. Suppose that every time the behavior of others really disturbs you, a government solution seems appropriate. Implicitly, you are fairly confident in the moral right of the state to "correct" individual choices and market outcomes and in the ability of the state to do so wisely. In that case, I would argue that there are no limits to the powers that you want government to exercise over others. You are in the Church of Unlimited Government. I think that most Americans are in that Church, and that it is the established Church in our schools and universities. econlog.econlib.org

To: TimF who wrote (43225)	5/15/2010 7:46:11 PM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 71588

(To borrow Taleb's formulation), is it a question of "Inflate or Die" that is facing the world? De-flation appears to be the biggest, baddest threat of all world-wide right now. Reducing Gross National Products and world economic output (and markets...), and revenues, the more that spending is cut, in a dangerous spiral down the drain into Depression. These comments and charts excerpted from John Mauldin's latest missive: Thoughts from the Frontline Weekly Newsletter Europe Throws a Hail Mary Pass by John Mauldin May 15, 2010 In this issue: Europe Throws a Hail Mary Pass It's More Than Just Government Debt The Grand Misallocation.... ...But it is not just the PIIGS countries that are out of compliance in Europe. Look at the following chart from Der Spiegel. Note that France has a budget deficit of over 8%. There are going to have to be austerity measures enacted all over Europe. Notice that Ireland has the largest deficit, at 14.7%. This is in spite of (or more aptly because of) the enactment of severe austerity measures, far beyond what Greece, Portugal, and Spain have contemplated. And what has that gotten them? An economy that has shrunk by almost 17% in the last two years, 14% unemployment, and a country in the grip of outright deflation. Property prices have fallen by 34% and are still falling. Their banks are in shambles. And their debt-to-GDP is rising, because even as they borrow their GDP is falling. It is hard to cut that ratio when GDP is falling. If GDP falls 20%, then the debt-to-GDP ratio rises by 25%. And that means your interest-rate costs are an ever bigger chunk of your tax revenues. Let's be clear. These austerity measures are not growth plans. They are not designed to help countries grow their way out of the problem. There is no reason to think that if Greece enacts the measures that have been proposed, that what happened to Ireland will not happen to them. It almost certainly will. Credible estimates I have seen suggest that the Club Med countries will see their GDP drop at least 4% this year. It is not just the PIIGS. All of Europe will be making cuts. And in the short term that is going to be a drag on growth and a headwind for the euro.... =========================================================== And: From: Friday Freak-Out, Global Edition 14 comments by: Philip Davis May 14, 2010 \| about: BP / DIA / ERX / QID seekingalpha.com And: 'The EU Could Be Facing a Double-Dip Recession' Der Spiegel 05/14/2010 spiegel.de