Worst financial crisis since Great Depression - Right now I understand we have 0% inflation and 8% unemployment. The entire 70's and 80's were worse than that so I think that assertion is out off the bat.
Stimulus packages work - I have never heard of a stimulus package that has. FDR's was debunked by Friedman and Japan's is a walking cautionary tale
Government action helps - I don't see how this could be. How can a bureaucracy allocate capital more efficiently that a market system? And it takes at least a year for fiscal policy to enter the system, much too late to help. It is more likely to overcorrect like what happens when pilots get caught in a resonance wave in a thunder storm.
Reduced regulation caused this - Glass Seagal was repealed during Clinton years and as far as I understand that was the only major regulation reduction in recent history. The federal register has ballooned instead. The bank crises of the late 1800's usually were corrected by individual banks with months when there was a complete lack of regulation too.
Deflation is bad - Who says? It was the way of the world for the past couple thousand years before fiat monetary systems right? The only positives about inflation are that it reduces the national debt and allows companies to cut wages without anyone knowing.
Falling house prices are bad - They rise and fall all the time in Hong Kong according to a friend of mine and thats a pretty healthy economy. Ta boot homes are a terrible investment return wise anyways I would think (i'm guessing 5% annually). Better to put extra capital in a higher returning company (S&P averaged 12% before this debacle)
More government education is needed. We're spending over 11k a student on average for k-12 kids in public education according to stossel. I know kids who went to preppy private schools for 3k a year. Sounds like we're over paying for public school.
Gov can help right businesses too big to fail - They want GM and Chrysler to lead the world in fuel economy in order to become solvent again. Uh that makes no sense. As oil prices (except for 2007-2008) are the lowest they've been this century, that would be a stupid business decision. The House as I write this also just voted to impose punitive taxes on AIG bonuses. If the company hadn't been nationalized it wouldn't matter and furthermore if they don't pay top level people they'll quit and then where is the company? Better to just stay out of it.
I know I've probably been rambling here, but I'm seriously wondering what I'm missing. Either all the knowledge and modes of thinking I have are flawed or we're being bamboozled by someone or something.
So please let me know where I'm wrong here
I don't have enough time during this study break to actually comment on this, but I wanted to say that I don't think you are missing too much. I may be excessively liberal when it comes to social values, but when it comes to economic and big verses small government I am undemonitated, not that that is a word. I like the libertarian ideals, I just don't know how well they would in a country so large in distance and diversity.
ReplyDeleteI love reading all of your posts Board. I think we see these things pretty much exactly the same, which is really just taking an academic look at everything and disregarding the political stuff.
ReplyDeleteBoard i think you have the common sense and too smart view of this. All of what you have is pretty much totally right and i agree with you in almost every respect but it seems to me like the economy is like sports trades. There's so many times where i think of a perfect trade that would benefit both teams and be awesome and work out money wise but of course it won't happen. I find this with the economy and government in general too. What makes sense and should be implemented is usually not what happens.
ReplyDeleteInteresting points, Boardman. Most I agree with, but some don't make complete sense to me.
ReplyDeleteHouses (for the vast majority of people) are not purchased for a return as it is. It's like buying a vehicle of any kind that isn't collector: you need one. Sure, from an economic and accounting standpoint they make no sense, but to not have one... well, that makes even less sense. I think for the moment falling house prices is good but not for the long-term.
Your schooling argument also doesn't make sense either. Sure, there are misappropriations, as with any government agency, but a large difference is volume and where the money comes from. Plus, averages don't tell the whole story anyway. While some students are getting buttloads of money (Smoky Hill high school in CO has HD flat screens in EVERY hallway and classroom as well as the latest computers), others are barely making it because of lack of funding (Denver public schools are some of the worst in the nation-- I went to one that had almost 15 year old history books. How is that gonna help anyone?!). Averages don't work. You have to look locally at each school district. Tax payer distribution plays a much, much larger part in what a school gets than what the government pays.
The government doesn't need to spend anymore or less for schooling. The allocation of tax payer dollars should shift from local school districts to county or tri-county or state. A lot of people don't like that idea because it sounds like "socialism" or whatever, but schools need to get a better footing. Some people do undervalue education or are so bias to their school they are unwilling to shift some funds to help a struggling school (like Smoy Hill's refusal to give some funds to Denver inner-city schools). Boardman, would you be able to write this article without the knowledge you gained? I don't think so. The more intelligent people there are the better. Reallocate tax payer dollars for schooling. People don't have a problem setting up a new highway to help the whole. Why not schools?
And I agree with you on bailouts. If a business neglects its investors and customers, let them fail. Some other company that is doing its job correctly will pick up the slack. There are plenty of banks, car manufacturers, and financial institutions that haven't fucked over the last 10-15 years. Let them reap the benefits of their good business practices.
Alright J! Glad to hear another view, especially about the education point (which I must admit I didn't back up very well). Lets see if I can get some data either way and we'll figure this issue out.
ReplyDeleteI'm excited now!