Category Archives: political-economy

The Bubble and government policy in one lesson

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Retailers – Reality Check Time by Jim Quinn.

Reading this article made me think that I might be able to explain the basic dynamic of the economic meltdown without having to mess with too many details. The details are important, but they can hide the structure.

Start with this basic premise: the government wants to promote industry.

And then add a second premise: the government finds out that people are more likely to buy things if they have easy credit.

So if the government supports and promotes easy credit, then it can get people to buy more stuff.  When people buy more stuff, more industry is supported.

So, they find a way to do this. Unsecured credit is given to many people who in turn buy stuff. Whether it is houses or flat-screen TVs doesn’t matter.

But what happens when people have too much debt? They have to cut back. Not only do they have to cut back because they don’t have enough money to buy; they have to cut back even more because getting out of debt becomes a priority. People want to be free of the debt burden.

But since everyone was given the incentive to use credit everyone is cutting back at roughly the same time. Furthermore, the sudden drop in spending by a small group endangers the viability of industries that are dependent on consumer purchases. So the people whose jobs are endangered suddenly realize their debt load is too high and add to the growing number of people trying to get out of debt rather than purchasing gadgets.

Third premise, once those in government see that this is happening, they do all they can to hide the problem and extend the credit.

So the problem grows as the collapse is delayed.

The only solution to the problem is to end the artificial political debt encourager and enabler, suffer through a massive readjustment to the economy, and then grow at a normal rate from there.

Fourth premise, the government never admits that it is responsible for a problem or that it cannot fix a problem.

And so we go from disaster to disaster.

Going, going, gone?

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• 61 percent of Americans “always or usually” live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.

• 66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans.

• 36 percent of Americans say that they don’t contribute anything to retirement savings.

• A staggering 43 percent of Americans have less than $10,000 saved up for retirement.

• 24 percent of American workers say that they have postponed their planned retirement age in the past year.

• Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.

• Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.

• For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.

• In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.

• As of 2007, the bottom 80 percent of American households held about 7% of the liquid financial assets.

• The bottom 50 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.

• Average Wall Street bonuses for 2009 were up 17 percent when compared with 2008.

• In the United States, the average federal worker now earns 60% MORE than the average worker in the private sector.

• The top 1 percent of U.S. households own nearly twice as much of America’s corporate wealth as they did just 15 years ago.

• In America today, the average time needed to find a job has risen to a record 35.2 weeks.

• More than 40 percent of Americans who actually are employed are now working in service jobs, which are often very low paying.

• For the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.

• Approximately 21 percent of all children in the United States are living below the poverty line in 2010 – the highest rate in 20 years.

• Despite the financial crisis, the number of millionaires in the United States rose a whopping 16 percent to 7.8 million in 2009.

• The top 10 percent of Americans now earn around 50 percent of our national income.

EconomicPolicyJournal.com: The Middle Class in America Is Radically Shrinking..

Not an old conservative idea

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While free market economics is regarded by many today as an old conservative idea, it was in fact one of the most revolutionary concepts to emerge in the long history of ideas. For centuries landmark intellectual figures from Plato to Machiavelli had discussed which principles wise thinkers might propose to guide personal, social, and political actions or which policies wise leaders might impose for the benefit of society in various ways. Now, for the first time, it was argued that–in the economy at least–all of this was giving “a most unnecessary attention,” in Adam’s Smith’s words, to things that could be sorted out better by vast numbers of individuals interacting with one another, and making their own mutual accommodations, than by those who presumed to guide them from above.

–Thomas Sowell, On Classical Economics, p. 189.

Capitalism in one lesson

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Capitalism is the system where big businesses grant themselves rights and privileges individuals cannot claim. This is for the welfare of society. Capitalists always seek the welfare of society because self-interest of the part is the same as the self-interest of the whole. This is called the hidden hand. The hidden hand is not be confused with the iron fist. Which also hides. Hidden hands never use the levers of governments on their behalf. This follows because capitalists are often libertarians. When they are not socialists. Libertarians by definition believe in liberty. Hence they cannot be statists. QED. Note: Alan Greenspan and Matt Ridley are not statists because they called themselves libertarian. That makes them libertarians. QED.

via Anti-Activist Confessions… | LILA RAJIVA: The Mind-Body Politic.

The educational background of the other Genome scientist

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Practicing medicine at the orphanage was one of the highlights of my time in Vietnam. I found that basic hygiene and soap could often do as much to improve the quality of life for many as advanced drugs… Using my knowledge to do a little good in the midst of much death and misery, I became convinced of the direction my life should take. If I made it back home and could get into a university and then into a medical school, I would practice medicine in the developing world. But sitting outside of Da Nang in 1968, after barely graduationg from high school four years earlier, the very acts of surviving the war and going home seemed distant, let alone attending a university. (p. 41)

My grades were so dismal that they threatened to sabotage not only my eligibility for the swim team but my graduation. Fortunately, I wrote a glowing paper about the presidential bid of the extreme Republican Barry Goldwater, whose slogan was “In your heart, you know he’s right.” The teacher who marked my paper seemed to be a Goldwater conservative and was sufficiently impressed to give me a D minus instead of an F, which would have ended my chance of graduating. (p. 17)

I think that one reason I was able to become a successful scientist was that my natural curiosity was not driven out of me by the educational system. (p. 7)

SEE ALSO: Mark Horne » Blog Archive » The education background of one person of note.

The education background of one person of note

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Dr. Collins suggested that it was his unusual upbringing that imparted such a thirst for knowledge. His father has a Ph.D. in English, but has wide-ranging interests, including collecting folk music and staging medieval plays. His mother is a playwright. When Dr. Collins was growing up, his parents raised sheep on a farm in rural Virginia. “It was a hard life,” he said, and his mother, distrusting the education provided in the rural schools and “not about to relegate the early learning of her sons” to them, decided to teach her children at home.

Dr. Collins is the youngest of four boys. The two oldest brothers, 18 and 16 years older than Dr. Collins, were taught at home until they went to college. Dr. Collins and a brother who was a year older than he were taught at home through sixth grade.

“It was a bit disorganized,” Dr. Collins said. “I’m sure it would not have been deemed appropriate by today’s standards.” The Collins boys and their mother would explore a topic, like the origins of words, for a week or two, doing nothing else, then move on to another subject, like mathematics. As a result, Dr. Collins said, he grew up with an unquenchable curiosity and love of learning.

When Dr. Collins entered high school, in Staunton, Va., he discovered chemistry. He recalls that his teacher made the subject come alive and that he was drawn to its intellectual rigor. He ended up majoring in chemistry at the University of Virginia and then earning a Ph.D. in physical chemistry at Yale University, using theory and mathematics to discover the behavior of atoms and molecules. Discovery of Cystic Fibrosis Gene

via SCIENTIST AT WORK – Francis S. Collins – Unlocking the Secrets of the Genome – Biography – NYTimes.com.

PS. Here is the educational background of another genome scientist.

An example of why Stephen King is brilliant

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Their faces were different in all ways but similar in one: They looked oddly incomplete, like pictures with holes for eyes or a jigsaw puzzle with a minor piece missing. it was the lack of desperation, Richards thought. No wolves howled in these bellies. These minds were not filled with rotted, crazed dreams or mad hopes.

These people were on the right side of the road, the side that faced the combination marina and country club they were just passing.

On the other side, the left, were the poor people. Red noses with burst veins. Flattened, sagging breasts. Stringy hair. White socks. Cold sores. Pimples. The blank and hanging mouths of idiocy…

Here on the right, folks, we have the summer people, Richards thought. Fat and sloppy but heavy with armor [i.e. police protection]. On the left, weighing in at only a hundred and thirty–but a scrappy contender with a mean and rolling eyeball–we have the Hungry Honkies. Theirs are the politics of starvation; they’d roll Christ himself for a pound of salami. Polarization comes to West Sticksville. Watch out for these two contenders, though. They don’t stay in the ring; they have a tendency to fight in the ten-dollar seats. Can we find a goat to hang up for both of them?

Slowly, rolling at thirty, Ben Richards passed between them.

Stephen King, originally writing as Richard Bachman, The Running Man, pages 223 & 224 (bold added).

Rene Girard is all over that book.

For more see:

Mark Horne » Blog Archive » Run, Freeman, Run.

It is not greed to want freedom from slavery

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This reminds me of an interesting point on “greed” that cuts across the usual “Left-Right” continuum. I remember when Russell Kirk first launched the contemporary conservative movement in this country, in the mid-l950s. One of the leading young conservatives of that era addressed a rally, and opined that the whole trouble with the world, and the reason for the growth of the Left, is that everyone is “greedy,” the masses of Asia are “greedy,” and so on. Here was a person who owned half of Montana, attacking the mass of the world population, who were trying to rise above the subsistence level, to better their lot a bit. And yet they were “greedy.”

via A Future of Peace and Capitalism – Murray N. Rothbard – Mises Daily.

The Sense (or lack thereof) of Education Law

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You aren’t compelled to loan your car to anyone who wants it, but you are compelled to surrender your school-age child to strangers who process children for a livelihood, even though one in every nine schoolchildren is terrified of physical harm happening to them in school, terrified with good cause; about thirty-three are murdered there every year. Your great-great-grandmother didn’t have to surrender her children. What happened?

If I demanded you give up your television to an anonymous, itinerant repairman who needed work you’d think I was crazy; if I came with a policeman who forced you to pay that repairman even after he broke your set, you would be outraged. Why are you so docile when you give up your child to a government agent called a schoolteacher?

via Bianca, You Animal, Shut Up!, by John Taylor Gatto.

Meanwhile, in California: Bill That Could Jail Parents of Truants Passes State Senate

WWJD? Not this:

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And immediately he left the synagogue and entered the house of Simon and Andrew, with James and John. Now Simon’s mother-in-law lay ill with a fever, and immediately they told him about her. And he came and took her by the hand and raised her up, and the fever left her, and they began to serve her because Christians always help and never expect anyone to support themselves or others.

And when he returned to Capernaum after some days, it was reported that he was at home. And many were gathered together, so that there was no more room, not even at the door. And he was preaching the word to them. And they came, bringing to him a paralytic carried by four men. And when they could not get near him because of the crowd, they removed the roof above him, and when they had made an opening, they let down the bed on which the paralytic lay. And when Jesus saw their faith, he said to the paralytic, “Son, your sins are forgiven.” Now some of the scribes were sitting there, questioning in their hearts, “Why does this man speak like that? He is blaspheming! Who can forgive sins but God alone?” And immediately Jesus, perceiving in his spirit that they thus questioned within themselves, said to them, “Why do you question these things in your hearts? Which is easier, to say to the paralytic, ‘Your sins are forgiven,’ or to say, ‘Rise, then lie back down on your bed and have your four friends carry you home’? But that you may know that the Son of Man has authority on earth to forgive sins”—he said to the paralytic— “I say to you, rise, then lie back down on your bed and have your four friends carry you home.” And he rose and immediately lay back down again, and ordered his friends to pick up his bed and was carried out before them all, so that they were all amazed and glorified God, saying, “We never saw anything like this!”