FEBRUARY 19, 2009

 A Child Shall lead Us.

(picture from Instapundit )

(posted at 10:39 am by Mike Rulle)

 

Surprisingly, Greg Mankiw spends a good deal of time discussing Obama's concept of "creating or saving" 4 million jobs. He points out the sophistry in this assertion. I am surprised because the sophistry is so obvious, one would think it speaks for itself. But maybe it does not. Since my mission is to summarize "second hand news" in easy to swallow bites let me explain the sophistry. Once one says "create or save" we enter the land of the unmeasurable. When Obama asks "how should the American people gauge if these programs are successful" he states that "if it creates or saves 4 million jobs it will be successful". This, of course, is an operationally meaningless statement. If 2 years from now the number of people employed increases from 134 million to 138 million, he can say 4 million jobs were created. If 130 million people are employed he can say 126 million people would have been employed had it not been for the stimulus. In other words, regardless of the outcome the answer is the same. The way it is stated, it is impossible for Obama to be proven wrong. Mankiw calls this political genius. I call it evil.

(posted at 10:13 am by Mike Rulle)

  

For what possible reason could you support this policy proposal by Obama $275 Billion Plan Seeks to Address Housing Crisis? Imagine, please, if someone in your town approached you and asked you to give (not lend) him money because he cannot pay his mortgage. What would you do? Would you give him money? Would you organize a campaign around town to have everyone give just a little? Under what conditions would you even consider such a request? What if one of the person's arguments was "this will help keep your house price from declining", would that change your mind? What if he then said "if you do not give me this money, I will have the police come and take it from you"? I do not see any difference between this scenario and what the government is doing. Only sophisticates who can write cover stories like We Are All Socialists Now somehow find the "nuanced" counter argument to this perspective.

(posted at 9:40 am by Mike Rulle)

  

I like Nick Gillespie of Reason Magazine's solution to the current problems Digging yourself into a hole. What is clean about it, is this requires no intellectual ability to "explain Hayek" (see my post from February 15). One might call it "Economics in One Minute". Yet, don't we really "get" what he is saying? Only when the sophists, like Newsweek's Meacham and Thomas, come in and create illusions, confoundings, and conflations, do we begin to get confused. I highly recommend Henry Hazlitt's Economics in One Lesson --free on the internet or you can buy at Amazon--as the antidote for confusion. For what its worth, this book still generates serious discussion among economists even though it was first written by the journalist Hazlitt in 1946 (updated in 1978). An example of such a discussion can be found here DeLong on Hazlitt.

(posted at 9:14 am by Mike Rulle)
 

Speaking of Newsweek, remember the Fall? You know, when our amiable duncess, Sara Palin, started calling Obama a Socialist? As I recall, there were howls in the press about her exaggerative, ignorant, even fascist, accusations. Just 4 months later, Newsweek, perhaps the most "evil" of magazines because guys like Meacham and Thomas actually know what time it is, makes the same claim in We Are All Socialists Now.  Meacham and Thomas write

"If we fail to acknowledge the reality of the growing role of government in the economy, insisting instead on fighting 21st-century wars with 20th-century terms and tactics, then we are doomed to a fractious and unedifying debate. The sooner we understand where we truly stand, the sooner we can think more clearly about how to use government in today's world,"

In other words, "sit back and enjoy it". These guys are absurd. Every 30-40 years or so the Socialist fantasy rears its ugly head. We keep rediscovering "new ideas" that thinkers like Adam Smith debunked 250 years ago. 

(posted at 8:37 am by Mike Rulle)

 

What policies would I wish to see imposed? Singapore is not a bad place to start. 20% top tax rate, 2% unemployment, higher per capita income than the United States, it takes 4 days to open a business (38 days world average), etc. Check out the website for Index of Economic Freedom which is a joint production of the Wall Street Journal and the Heritage Foundation. It summarizes the policies of different countries from an economic freedom perspective and then ranks them. It really helps to see correlations between policies and economic outcomes. The US is ranked 8th (North Korea, Cuba, and Zimbabwe bring up the rear at around 168-170). Given that Newsweek tells us We Are All Socialists Now. I imagine our score, if not our ranking, will go down soon.

(posted at 8:24 am by Mike Rulle)

 

In Misplaced Priorities, Arnold Kling argues, among other things, that Ben Bernanke is fighting the last war. He calls him the wrong man at the wrong time. His vision of the current banking crisis is a 1930s liquidity problem, caused by factors that can be corrected through monetary policy. Kling, on the other hand, believes banks have an insolvency problem. That is, they have over leveraged themselves through bad business decisions--like buying first loss securities when selling CDOs. As such, Kling believes bad banks should be permitted to fail. Instead, the administration is doing everything in its power, when it is not supporting public worker unions, to prop up these institutions through price supports of mortgages and houses.

(posted at 8:09 am by Mike Rulle)

 

The NY Times discovers that lower income is not necessarily a good thing, even if it is called "Wall Street Bonuses" Bonus Cuts Hurt More Than Wall Streeters

(posted at 7:51 am by Mike Rulle)