Needful Correctives

http://www.ft.com/cms/s/0/be2dbf2c-d113-11dd-8cc3-000077b07658.html?nclick_check=1 I think this piece is a good corrective to both sides of the political divide. The three lessons rescued from Keynes' huge output of ideas are, I think, thoroughly correct and, also, necessary to a successful escape from the mounting gravitational pull of this black hole we have created. Instead, being the faithful children of gerrymandered districts and conformist party organizations, the infantile, irresponsible mob that has the run of Congress learns nothing and perpetuates the same ideologies that failed to end the Great Depression. Republican free market rhetoric bears little relation to Republican policies which do not dare to touch entitlements, or to the reality that the free market's excess of freedom was a major cause (possibly the major cause) of the crisis, or to the fact that intensive government intervention in the markets (and not only in the markets) is the only way to limit the damage of the crisis. Democrats are wrong to use the crisis as an excuse for haphazard spending (including earmarks) and for claiming to believe in the importance of the free market while executing multiple strategies to undermine its long term viability (socialization, unionization, over-regulation). And, as to Obama, the perception that he has created among the people that he is not confident about our economic future calls to my mind the political developments in Europe during the Great Depression--it seems as though he wishes to manipulate people into a heightened state of fear so that they will the more readily support a radical socialist agenda. In 1930's Europe precisely this strategy was used by the radicals of the time (fascists and socialists) not only to achieve power, but to consolidate and secure it. On the other hand, I think an intelligent observer (as opposed to "the people") will not develop this impression of Presidential pessimism--but intelligent observers do not decide elections.

Prejudicial Debts

Here's a depressing analysis:

http://www.economist.com/finance/displaystory.cfm?story_id=13110352

The threat is deflation, as experienced in the Great Depression and by Japan in the last 20 years. It has a major depressive influence on economic activity and it is far more difficult to shake than high inflation. Japan has yet to beat it. America only succeeded in overcoming it after 12 years when it entered WWII and enormous government spending primed the economy to achieve its full potential. Our rulers are too stupid and too cowardly to take decisive measures against this threat--we are dependent upon time and luck to prevail. To be sure, before the welfare state was erected, we could afford to let deflation take its course. Having undertaken this burden, which grows ineluctably regardless of the resources available to fund it, we cannot afford to allow deflation and the economic contraction likely to follow in its wake.

Hey, a Good WSJ Editorial!

http://online.wsj.com/article/SB123396742337359087.html If this reform were combined with a rationalization of the asset management business, American business would become much more competitive and investors' return would increase significantly. As things stand, we have a grotesque misalignment of incentives that benefits the management of public corporations and of asset management firms--at the expense of shareholders large and small. This was something that surprised me in law school--and the court cases that ensure management's advantage over shareholders are some of the most convoluted and unconvincing I've ever encountered.   This type of reform would have been more natural for a republican administration, but since we haven't had a real republican in there since when? Eisenhower? Hoover?

Socialist Power Grab

I hope the Senate republicans understand that their reason for being is to prevent this unionization encouraging bill from passing. It would be one of the worst pieces of legislation in American history. It would be a giant leap into the socialist morass: diminished individual freedom, distorted incentives, reduced productivity and competitiveness. Republicans ought to fight this as tenaciously as they fought Hillary's health care program in 93'. The very title of the legislation ("Employee Free Choice Act") is formulated on the principles of Newspeak as propounded by the Ministry of Truth.