Somebody's Mad

Gee... this sure gets my attention!


This may be fake advertising, but it is genuine unhappiness about picking our pockets!

White is Black, Left is Right

I enjoyws Aayan Hirisi Ali's autobiographical book Infidel. It was a fascinating story. She is a very intelligent woman with a very interesting personal story. I recommend that you read her book.

The following is her offering snapshots of her thought...



What I don't like is that she has moved from one world view to another, as she herself says, from radical Islamic funadamentalist, to social democrat, to right wing libertarian fundamentalist (apparantly). Maybe she isn't finished "finding herself" in her political philosophy. It disturbs me that she seems able to drift and have no anchor. She is obviously intelligent, but she seems to have no core. It bothers me that she works for a right wing think tank AEI (American Enterprise Institute) and is funded by a rich man's foundation that throws its money around on religion and right wing politics, the Templeton Foundation which sponsored these "Big Think" videos.

Tyler Cowen Speaks Up

I've enjoyed Tyler Cowen's Marginal Revolution blog for years. He is an interesting guy. Right wing libertarian, but a reasonable sort of guy. Quirky. An aesthete. A gourmand. A quirky intellectual. And an economist. Here are some of his thoughts, fairly reasonable thoughts...



Here is an example of his writing. This is from a Nov 23, 2008 piece in the New York Times. He takes a slightly skewed, but interesting, view of the Great Depression. I'm not keen on his "monetarism is the solution" claim, but the rest of the piece is quite reasonable:

The New Deal Didn’t Always Work, Either
By TYLER COWEN

MANY people are looking back to the Great Depression and the New Deal for answers to our problems. But while we can learn important lessons from this period, they’re not always the ones taught in school.

The traditional story is that President Franklin D. Roosevelt rescued capitalism by resorting to extensive government intervention; the truth is that Roosevelt changed course from year to year, trying a mix of policies, some good and some bad. It’s worth sorting through this grab bag now, to evaluate whether any of these policies might be helpful.

If I were preparing a “New Deal crib sheet,” I would start with the following lessons:

MONETARY POLICY IS KEY As Milton Friedman and Anna Jacobson Schwartz argued in a classic book, “A Monetary History of the United States,” the single biggest cause of the Great Depression was that the Federal Reserve let the money supply fall by one-third, causing deflation. Furthermore, banks were allowed to fail, causing a credit crisis. Roosevelt’s best policies were those designed to increase the money supply, get the banking system back on its feet and restore trust in financial institutions.

A study of the 1930s by Christina D. Romer, a professor at the University of California, Berkeley (“What Ended the Great Depression?,” Journal of Economic History, 1992), confirmed that expansionary monetary policy was the key to the partial recovery of the 1930s. The worst years of the New Deal were 1937 and 1938, right after the Fed increased reserve requirements for banks, thereby curbing lending and moving the economy back to dangerous deflationary pressures.

Today, expansionary monetary policy isn’t so easy to put into effect, as we are seeing a shrinkage of credit and a contraction of the “shadow banking sector,” as represented by forms of derivatives trading, hedge funds and other investments. So don’t expect the benefits of monetary expansion to kick in right now, or even six months from now.

Still, the Fed needs to stand ready to prevent a downward spiral and to stimulate the economy once it’s possible.

GET THE SMALL THINGS RIGHT It’s not just monetary and fiscal policies that are important. Roosevelt instituted a disastrous legacy of agricultural subsidies and sought to cartelize industry, backed by force of law. Neither policy helped the economy recover.

He also took steps to strengthen unions and to keep real wages high. This helped workers who had jobs, but made it much harder for the unemployed to get back to work. One result was unemployment rates that remained high throughout the New Deal period.

Today, President-elect Barack Obama faces pressures to make unionization easier, but such policies are likely to worsen the recession for many Americans.

DON’T RAISE TAXES IN A SLUMP The New Deal’s legacy of public works programs has given many people the impression that it was a time of expansionary fiscal policy, but that isn’t quite right. Government spending went up considerably, but taxes rose, too. Under President Herbert Hoover and continuing with Roosevelt, the federal government increased income taxes, excise taxes, inheritance taxes, corporate income taxes, holding company taxes and “excess profits” taxes.

When all of these tax increases are taken into account, New Deal fiscal policy didn’t do much to promote recovery. Today, a tax cut for the middle class is a good idea — and the case for repealing the Bush tax cuts for higher-income earners is weaker than it may have seemed a year or two ago.

WAR ISN’T THE WEAPON World War II did help the American economy, but the gains came in the early stages, when America was still just selling war-related goods to Europe and was not yet a combatant. The economic historian Robert Higgs, a senior fellow at the Independent Institute, has shown in his 2006 book, “Depression, War, and Cold War,” just how much the war brought shortages and rationing of consumer goods.

While overall economic output was rising, and the military draft lowered unemployment, the war years were generally not prosperous ones. As for today, we shouldn’t think that fighting a war is the way to restore economic health.

YOU CAN’T TURN BAD TO GOOD The good New Deal policies, like constructing a basic social safety net, made sense on their own terms and would have been desirable in the boom years of the 1920s as well. The bad policies made things worse. Today, that means we should restrict extraordinary measures to the financial sector as much as possible and resist the temptation to “do something” for its own sake.

•

In short, expansionary monetary policy and wartime orders from Europe, not the well-known policies of the New Deal, did the most to make the American economy climb out of the Depression. Our current downturn will end as well someday, and, as in the ’30s, the recovery will probably come for reasons that have little to do with most policy initiatives.

Tyler Cowen is a professor of economics at George Mason University.

Funny

This is just too funny...



Some poor script writer is letting his personal fantasies run away on him. This "plot line" is about as likely as Robin Hood robbing from the rich to give to the poor. Funny! Unintended humour, but for me, this is good slapstick!

Inflation as Salvation

Here's a 1933 documentary that "explains inflation" and shows how you get out of a Depression by inflating the currency...



This is done with a lot of hokum, but the instructional content is solid. This will be the game plan under Obama. Inject some inflation into the economy to kick start it and get it back to humming.

Jonathan Fenby's "The Penguin History of Modern China"

Let's see... how to write a book report... well, this is a big book, lots of pages, oh something like 800+ pages...

The writing style is leaden. There was no sense of history as drama, as meaning pulled out of confusing facts, and no sense that this was more than a recital of dates, names, places, and facts. Sorry. This book just wasn't that rewarding.

Thank goodness for the maps and the short index of key figures. I kept flipping to these to locate places and figure out who this character was. I had hoped that I would walk away with a little geography and key personages engraved in my mind, but nope, just too many and they were presented in a way that let me hang onto them. This is the dull history that I remember from my schoolboy days.

The Flogging of Krugman

Authors have to go out and flog their books. Here's Paul Krugman with his latest book. The interview is interesting because they cover things more generally and don't spend time talking about the book...