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UPDATE FROM CHRISINA
I got a lot of commentary on my “Good is Bad, Bad is Good” article that I republished on Zero Hedge. There was an interesting conversation by “Chrisina” who claimed to have read Mises’s Human Action and Rothbard’s Power and Market, both pretty heavy tomes. Chrisina is rather typical of commentators who claim they have read Austrian theory, but are either lying or didn’t understand it. Her criticisms are rather common ones I see. I thought you would find this interesting. She is a follower of Herman Minsky and Steve Keen. Minsky believed that capitalism was inherently unstable and debt was the cause of the instability. He would be considered to be rather unique in modern economic theory, but not uncommon in the history of economics.
Here are excerpts of the conversation. Lots of rants. Enjoy.
Chrisina:
The only thing Austrians can say is “let it crash” which comforts libertarians and other laissez-faire ideologues. They seem to have no idea how this will end and prefer to ignore the kind of social disruption that will result, that’s why they get no respect.
Austrians and their laissez-faire ideology will only bring complete misery and economic ruin.
The kind of social disruption this bankrupt Ausrian ideology will bring will be million times worse than what we endure today: complete chaos that will result from the kind of revolutions endured by the French and the Russians centuries ago.
Zirb:
Then why are the biggest depressions when the government interferes the most? The depression of 1920-1921 was worse than the great depression in terms of the decline of wholesale prices. The government not only did nothing, it cut its size, and America was back on its feet in 1 year. Previous recessions (often caused by war) also healed themselves.
Chrisina:
Just explain what kind of roadmap Austrians propose?
I’ll explain it for you: let the economy collapse, let unemployed people and the hundred million new poor people starve, then let’s have a civil war between tea baggers and progressives or better a revolution that will kill half the population… That’s what they call “creative destruction”. Then the economy will grow again.
Yeah, great roadmap. Oh, and what “track record” do Austrians have? You must be joking. They have absolutely ZERO track record as politicians have thankfully never ever followed their advice. … Continue reading Battle Between My Disagreeable Readers
In George Orwell’s brilliant novel Nineteen Eighty-Four, one of the characters, Syme, in discussing the nature of Newspeak, says “It’s a beautiful thing, the destruction of words.” Newspeak was a systematic attempt by the dictators of Oceania, a totalitarian society eerily similar to North Korea, to control thought by eliminating words that gave rise to ideas they disapproved. What Syme and Orwell are talking about is that the destruction of words is the destruction of ideas.
There is a parallel to this in contemporary economic thought. Mainstream economists, Keynesians, Neo-Keynesians, and Neoclassists, would have you believe that what common sense would call “good” is now “bad.” Conversely, “bad” is the new “good.” I don’t mean to suggest that we are heading toward becoming a North Korea. My point is that that the experts seem to abandon common sense and yet most people instinctively understand that good is good.
Common sense is the crux of Austrian theory economics. Austrians look at how individuals act, not how “economies” or “nations” act or behave. Ludwig von Mises, the greatest Austrian thinker, and in my opinion the greatest economist, entitled his great work, Human Action not National Action. The Austrian School was referred to by the Germans as the Psychological School because its analysis started with individual action and how those actions would either attain or fail to attain the goals sought by individuals. In other words, it involves a lot of the “common sense” that guides human behavior most of the time. It is comforting to know there is a philosophy of economics that conforms to what human being actually do rather than how some economist thinks we ought to behave.
Examples of economic Newspeak flourish, especially if you listen to President Obama’s economic team. My favorite example is the present conflict between consumer spending and consumer saving. Since the crash, consumers have cut back on spending and are increasing their savings. Most economists are saying this is bad for the economy; they urge us to spend, spend, spend to save the economy.
Actually, it is just the opposite: saving is the road to recovery. … Continue reading Good is Bad, Bad is Good
Some very big hitters are talking about deflation and are buying bonds and dumping equities. Foremost among them are Pimco’s Bill Gross and Mohamed El Erian, David Tepper of Appaloosa Management, a $15 billion hedge fund, and “… the $42 billion Fortress Investment Group LLC, the $1.2 billion New York hedge fund Argonaut Capital [...]
This Wall Street Journal article by Gerry O’Driscoll at Cato reveals a fascinating bit of history where Keynes and Hayek actually duked it out through the page of the Times of London in 1932. I think you will enjoy this. I, of course, stand with Hayek.
Newly discovered letters from two great economists shed light on today’s discussion of economic ‘stimulus.’
By GERALD P. O’DRISCOLL JR.
The debates raging over what policies will pull the U.S. economy out of its Great Recession replicate one that occurred during the Great Depression. Thanks to the efforts of Richard Ebeling, a professor of economics at Northwood University, we have compelling and concise documentary evidence. He has unearthed letters to the Times of London from the two sides that mirror today’s debates.
On Oct. 17, 1932, the Times published a lengthy letter from John Maynard Keynes and five other academic economists. Keynes, et al. (Keynes for short), made the case for spending—of any kind, private or public, whether on consumption or investment.
“Private economy” was the culprit that impeded a return to prosperity. If a person decides to save, there is no assurance that the funds “will find their way into investment in new capital construction by public or private concerns.” They cite a “lack of confidence” as the reason that savings is not intermediated into investment. Accordingly, “the public interest in present conditions does not point towards private economy; to spend less money than we should like to do is not patriotic.” They conclude by endorsing public spending to offset unwise private thrift.
The views in this letter came to be known as Keynesian economics. Depressions are caused by a spending deficit, which can be made up by government spending. Keynesian economics (which predates Keynes) is easily identifiable in speeches given by President Obama and his economic team.
Two days later, on Oct. 19, 1932, four professors at the University of London responded to the Keynes letter, and one of the signers was Friedrich A. Hayek who more than 50 years later would win the Nobel Prize in Economics. … Continue reading Keynes vs. Hayek: The Great Debate Continues
Richmond Fed economist Kartik Athreya recently penned a criticism of economics bloggers that has exploded over the blogosphere. Basically he says that professional, PhD-educated economists can be trusted because of their rigorous methodology. Bloggers (most), he says, aren’t to be trusted. I have responded to his critique:
Dear Dr. Athreya:
I am an economics blogger and I very much enjoyed your think piece on economics and blogging (“Economics is Hard. Don’t Let Bloggers Tell You Otherwise”). I was prepared to hate it because I believe you are talking about me. But on cooler reflection I think you make some good points. They just aren’t the ones you intended to make.
The premise of your article is that PhD trained economists have a system of thinking, analysis, and critique that assures readers that their pronouncements aren’t plainly wrong within the framework of contemporary economics, that they have some merit, and are subject to rigorous review by their peers. This methodology yields greater economic truths.
You argue that statements made by many bloggers, right and left, are uninformed and incorrect, and do not go through the same rigorous vetting process as do the statements of professional economists. Thus, blog reader, you say, “Caveat emptor.”
In the spirit of full disclosure, I am not an academically trained PhD economist. Mea culpa. I studied Paul Samuelson’s book in my college econ coursework and I have been trying to unlearn it ever since.
It’s important for anyone to evaluate the statements you made about bloggers to first understand your economic philosophy. Everyone has a certain perspective on the study of economics through which we base our opinions.
While I don’t know exactly what your economics philosophy is, you told me it was “Garden variety economics as taught in most schools, ‘neoclassical’ I suppose.” I think I can make certain assumptions based on your education (University of Iowa) and by the fact that the Fed hired you to toil in its vineyard.
Would it be fair to say that you are an empirically based neoclassical econometrician?
I don’t mean to sound disrespectful when I say that such statements, especially to the consumers of economic opinions, sound arrogant. While your respect of the fallibility of economics reveals a more humility than arrogance, it is your conclusion that this professional methodology is the key to economic truth. And that is subject to discussion. … Continue reading Fed Economist Slams Econ Bloggers
This link will allow you to download a PDF version of the complete article, “Will We Have Inflation, Deflation, or Hyperinflation?” This may be more convenient for readers who which to take in the article as a whole. If you have problems with the download, please let me know. You are free to distribute [...]
This is is the final part of my four part article that deals with what I feel is the primary question investors must now answer: is our future to be inflation or deflation? The answer has vast implications to our investment planning and decisions for the near term, and possibly for our long term. It is a very complex question with a lot of moving parts involving economics and politics.
Like it or not, it is economic theory that is driving macroeconomic policies and political decisions that determine whether we will have inflation or deflation. Since not all of my readers are sophisticated traders I have tried to present the issues in a direct and hopefully understandable way. To those sophisticated readers, please bear with me.
Part 4 of 4
What is Money Supply Doing Now?
Money supply will tell you if we are headed for inflation or deflation. If we look at the rates of change of M1 or Austrian True Money Supply (TMS), they are declining. In fact, M1 and TMS appears to have peaked in 2009 and have been declining on a year-over-year basis ever since. On an absolute basis, as shown previously, M1 growth is flattening. These two charts below show the year-over-year percentage change in money supply.
 Courtesy Michael Pollaro Michael Pollaro at TrueSlant.com
What Will the Fed’s Options be in a Double-Dip Economic Decline?
This is the main point. If, as I have been saying, the economy declines in the second half of 2010, what will the Fed do?
Let me paint a scenario. In any scenario with declining economic growth, unemployment will rise. If unemployment at the narrowest measure is now 9.7% and at the broadest measures (U-6) is 16.9%, rising unemployment will become politically unacceptable to the Obama Administration.
I believe the politicians will first take Paul Krugman’s advice and extend existing stimulus programs and create new ones to spur spending. All the talk about fiscal sanity and deficit warnings will be forgotten as politicians on both sides of the aisle panic. Look for further extensions of the home buyer tax credit program, and other programs that politicians believe will help businesses in their districts. Cash for [Your Industry Here] will be the byword. It will add to an already huge federal debt and will result in more wasteful spending and non-viable short-term results.
On top of all this, the politicians will hammer Bernanke to create jobs, which is one of the Fed’s mandates. But how can he do that? He will try to inflate.
The Fed has limited options in such a case. They can’t reduce the Fed Funds rate any further and they can’t force banks to lend. It is likely that banks will further restrict credit as the economy declines.
I think their only viable option is to use Open Market Operations (OMO) to inject new money into the economy. The next question is: what will they buy? … Continue reading Will We Have Inflation, Deflation, or Hyperinflation? Part 4 (Final)
This is Part 3 of a four part article that deals with what I feel is the primary question investors must now answer: is our future to be inflation or deflation? The answer has vast implications to our investment planning and decisions for the near term, and possibly for our long term. It is a very complex question with a lot of moving parts involving economics and politics.
Like it or not, it is economic theory that is driving macroeconomic policies and political decisions that determine whether we will have inflation or deflation. Since not all of my readers are sophisticated traders I have tried to present the issues in a direct and hopefully understandable way. To those sophisticated readers, please bear with me.
Part 3
What Factors Will Drive the Economy?
This is the point where we need to look at some long-term trends in the economy to see how they will impact a recovery.
If our economy is based on consumer spending (70% of GDP) then GDP will see a decline in the second half of 2010.
In my article, Economic Megatrends That Will Drive Our Future, I point our seven megatrends that will impact our economy for the long term:
- The culture of consumption is broken and won’t return to former levels. This is the key to everything.
- Consumers will continue to increase savings to prepare for retirement.
- Declining U.S. consumer demand will continue to negatively impact the world economy.
- Deflation (deleveraging) will continue for some time.
- Home ownership rates will decline to more historical levels of, say, around 66%, down from the high of 69% during the boom, which will keep a lid on home prices.
- Government stimulus and recovery programs only delay recovery and deepen the pain for workers.
- Massive federal deficits will double the national debt, result in higher taxes, and will act as a permanent drag on the economy.
I wrote this article in September, 2009, and it still stands. The significant things to note are No. 1 and No.2. Consumers are over-indebted and are doing their best to pay down debt. This article from the Wall Street Journal defines the issue:
After years of bingeing on debt, U.S. households are paring back. Those not doing so by choice are often being forced, because lending standards remain tight.
[T]he household sector’s debt level, which includes both consumer credit and mortgage loans, remained at about 20% of total assets in the first quarter.
In the mid-1990s that ratio was around 15%, compared with a peak in the first quarter of 2009 of about 22.5%.
Just getting debt down to 18% would require households to shed an additional $1.4 trillion of debt. … Continue reading Will We Have Inflation, Deflation, or Hyperinflation? Part 3
This is Part 2 of a four part article that deals with what I feel is the primary question investors must now answer: is our future to be inflation or deflation? The answer has vast implications to our investment planning and decisions for the near term, and possibly for our long term. It is a very complex question with a lot of moving parts involving economics and politics.
Like it or not, it is economic theory that is driving macroeconomic policies and political decisions that determine whether we will have inflation or deflation. Since not all of my readers are sophisticated traders I have tried to present the issues in a direct and hopefully understandable way. To those sophisticated readers, please bear with me.
Part 2
The Inflation Argument
The argument for inflation rests on the money supply charts. The inflationists show various measures of money supply increasing, including the version used by Austrian theory economists, called True Money Supply (TMS)[1]:
Note: The M1 chart shown in Part 1 more clearly shows the trend in the M1 money supply increase.
Again, the YoY percentage change is more revealing:
The inflationists also point to the Consumer Price Index (CPI) which shows price increases:
The YoY rate of change of the CPI clearer:
As the chart reveals, prices have been rising since mid-2009. Even the measure of Core CPI (CPI less energy and food, CPILFENS) appears to be rising:
The inflationists would say that this effect of inflation, rising prices, is a classic measure that proves new money is hitting the economy and that has caused, among other things, prices to rise. … Continue reading Will We Have Inflation, Deflation, or Hyperinflation? Part 2
This article is presented in four parts. It deals with what I feel is the primary question investors must now answer: is our future to be inflation or deflation? The answer has vast implications to our investment planning and decisions for the near term, and possibly for our long term. It is a very complex question with a lot of moving parts involving economics and politics.
Like it or not, it is economic theory that is driving macroeconomic policies and political decisions that determine whether we will have inflation or deflation. Since not all of my readers are sophisticated traders I have tried to present the issues in a direct and hopefully understandable way. To those sophisticated readers, please bear with me.
Part 1
The Problem
The economy is not acting according to plan. At least not the plan devised by the Fed or the Obama Administration. According to the plan we should have liquidity flowing through the economy and the credit crunch should be over. In fact we should have moderate inflation by now. Government likes inflation because it gives the false impression that things are doing better than they really are: people confuse rising prices and wages with economic gain. As well, debtors, especially the government, can pay down debt with newly minted dollars. But the signals from the economy are mixed: mild inflation yet we still have a credit crunch as credit has continues to contract. Initial enthusiasm for a “recovery” is now giving way to concerns about deflation.
So what is it to be: inflation or deflation?
The Dispute
There is a rather significant running argument going on in the Austrian economics theory community about whether we are experiencing inflation or deflation. Further there are the gold bugs who are predicting, as they have for many years, hyperinflation. The deflationists are led by Mike Shedlock, known as “Mish” who argues that we are seeing deflation and that it will continue for some time. The inflationists are a variety of folks, but the loudest voice and harshest critic of Mish is Gary North. The most credible inflationists are Bob Murphy, a well known Austrian school economist, and Frank Shostak, chief economist for MF Global, formerly the trading arm of Man Financial, the world’s largest hedge fund. They insist that we are seeing inflation now and that more is coming.
I will side with the inflationists but I think Mish makes some valid points and that his timing has been good. I would say that some inflationists have been excellent on theory, but less accurate on timing. I call my position Modified Inflationism. … Continue reading Will We Have Inflation, Deflation, or Hyperinflation?
You’ve noticed that I haven’t posted recently. There is a lot going on in the world that I will be reporting to you. But, I decided that I needed to do some fundamental research into what I believe is the most pressing issue in the economy right now. It is an issue that will [...]
The New York Fed just published a study on the political and civic behaviors of college graduates based on their majors (“Is Economics Coursework, or Majoring in Economics, Associated with Different Civic Behaviors?” Sam Allgood, William Bosshardt, Wilbert van der Klaauw, and Michael Watts (no. 450, May 2010)). Don’t ask me why they study these things, but they do.
This was a longitudinal study based on surveys mailed out to over 25,000 graduates from Florida Atlantic (FAU), Nebraska-Lincoln, North Carolina (UNC), and Purdue. The surveys were done in 1976, 1986, 1996, and 2003. They broke down majors into three broad categories–economics, business, and general (not the other two majors).
They concluded that econ majors were statistically significantly likely to be Republicans. They also found that econ majors were more likely to donate money and volunteer on behalf of candidates. Further it found that business majors behaviors were no different than genral majors.
Here are the significant results:
[O]ur results clearly suggest there is more to the story than simply “being educated” – so that what people study in college, or what they choose to study, is associated with their civic behaviors many years after they graduate.
Most previous studies that look at the link between education and civic behavior simply include a control for the amount of education a person has. This implies “being educated” influences a person’s civic behavior, but it ignores the possibility that the content of what a person is learning might also influence behavior. … Continue reading Why More Econ Majors Are Republicans Rather Than Democrats
This is an article on behavioral economics, markets, business cycles and Austrian theory. It was written by Doug French, president of the Mises Institute. I am reproducing it in its entirety. Anyone who invests in stocks, bonds, real estate, gold, or whatever, should read this article.
After reading the article I was reminded again of the brilliance of Ludwig von Mises and how perceptive he was about his favorite topic, the study of the behavior of human beings, or what he called “human action” (praxeology). The Austrian School was originally called the Psychological School of economics because of its focus on individual behavior rather than aggregate behavior.
The hot new branch of praxeology is behavioral economics, although many behavioral economists are probably not aware of this fact. In this piece, French summarizes current behavioral research and examines it in light of Austrian theory as it pertains to market behavior. The behavioral examples align well with Nassim Taleb’s Black Swan and his conclusions. Although Taleb doesn’t get into Austrian theory as a framework for economic behavior in his book, he, based on my understanding of reading other articles by Taleb, is Austrian in his outlook and conclusions.
Don’t Go With The Flow
By Doug French
Anyone who follows financial markets has to wonder at times, “What are people thinking? How did they come to make those decisions?”
It’s hard to imagine that John Muth and Robert Lucas came up with what’s known as the “rational-expectations theory,” wherein, as explained in Wikipedia,
it is assumed that outcomes that are being forecast do not differ systematically from the market equilibrium results. That is, it assumes that people do not make systematic errors when predicting the future, and deviations from perfect foresight are only random.
Muth and Lucas should watch daily programs on the financial channels like Jim Cramer’s Mad Money, which is supposedly to help individual investors, or CNBC’s Fast Money, a show clearly geared toward speculators. No viewer can watch these shows and walk away believing, “people do not make systematic errors when predicting the future.”
So while financial markets have been a series of speculative bubbles as the Federal Reserve creates money ad infinitum, rational-expectations economists Robert Flood and Robert Hodrick daringly conclude, “The current empirical tests for bubbles do not successfully establish the case that bubbles exist in asset prices.” [!] … Continue reading Stock Markets, Cycles, and Dopamine
I had no idea who Seth Klarman was until I read this article in today’s Wall Street Journal. I don’t closely follow the world of investors, except from a human interest perspective (what are these guys’ philosophies, what makes them tick). I must say that this guy is good, really good. As a fan of Black Swan theorist Nassim Taleb, I would admit it’s hard to tell if he’s lucky or good, but …
Sometimes I feel a bit lonely among the large crowd of economists and investment advisors who are diametrically opposed to me as an Austrian School student of economics. I think and analyze and read about this stuff constantly and when I find someone who agrees with my conclusions or at least the main concepts I have about the economy and economics, I feel something between vindication and pride.
Read this article and let me know what you think. I know many of my readers are far more sophisticated at investing than I am. But, after reading about Mr. Klarman and his commentary about the present situation, I think I would like to get to know him.
Seth Klarman is worth listening to, especially when markets go mad.
Mr. Klarman is president of the Baupost Group, an investment firm in Boston that manages $22 billion. His three private partnerships have returned an annual average of around 19% since inception in 1983—and nearly 17% annually over the past decade, as stocks went nowhere.
To measure Mr. Klarman’s importance as an investor, you need only see the value his rivals place upon his words. You could have earned at least a 20% average annual return since 1991—better than twice the performance of the market—merely by buying and holding Mr. Klarman’s book, “Margin of Safety”: Published that year at a cover price of $25, hard copies now fetch up to $2,400.
But the professorial Mr. Klarman speaks in public about as often as the Himalayan yeti. He made an exception last Tuesday, when I interviewed him in front of a standing-room-only crowd of 1,600 financial analysts at the CFA Institute annual meeting in Boston. He then made another exception, speaking with me over the phone later to clarify points that he feared had been misconstrued.
… Continue reading Seth Klarman Is Worth Listening To
 Meredith Whitney
 Dr. Party Boy
It is no news that Nouriel Roubini sees a double dip in the economy, but now Meredith Whitney sees a double dip due to housing problems. You will recall that she made her bones on a correct call on Citigroup and several other banks.
Here’s what Whitney said on Bloomberg last week:
Banks continue to suffer from losses on non-performing loans, and U.S. home prices will fall again amid increasing supply and sluggish demand, according to Whitney.
“I’m steadfast in my belief there’s going to be a double- dip in housing,” she said. “You will see clearly that the banks are under-reserved when housing dips again.”
Whitney said yesterday in an interview with Tom Keene on Bloomberg Radio that the nation’s largest banks are susceptible to another dip in the consumer-credit market. While Wall Street rebounded in the first quarter, consumers haven’t seen a similar improvement and U.S. states may cut jobs, she said.
“For the consumer, nothing has changed and the large banks are still weighed down by exposure to consumers,” she said. “If consumer credit turns, which we think it will, you will underperform with all these banks.”
Then Dr. Doom, my favorite playboy economist, is out promoting his new book, Crisis Economics, and is getting a lot more air time than usual. You want to be a famous economist? Make an accurate forecast about the next collapse like he did. Will he be right again? I think so.
He is predicting 9.7% unemployment will still be around in a year:
… Continue reading Roubini and Whitney See Double Dip
A couple of good articles on the euro bailout this morning. This first one is from Barry Ritholz’s Big Picture, an article by Lee Quaintance and Paul Brodsky of QB Partners, a private macro-oriented investment fund based in New York. Also, see their excellent article, “We Are All Austrians Now.”
The lead in this morning’s paper WSJ provides all necessary guidance for global wealth holders: “The European Union agreed on an audacious €750 billion ($956 billion) bailout plan in an effort to stanch a burgeoning sovereign debt crisis that began in Greece but now threatens the stability of financial markets world-wide.” This weekend’s behavior demonstrates without equivocation the thesis we have been following: naturally occurring credit deflation will be met with an overabundance of monetary inflation that will hyper-inflate the global economy. (Please see the piece we distributed last week for a comprehensive analysis of our thesis and our expected outcome.)
Global policy makers continue to demonstrate that when push comes to shove they will forcefully apply policy that sustains the near term nominal values of financial assets. They continue to choose to use their unique powers to cover all bad bets with paper money and credit that only they can manufacture. In doing so, they claim victory when nominal financial asset prices predictably rise, as they must, and they hide the loss of real wealth denominated in their diluting paper currencies. The stock of real wealth is the same as it was a week ago and at every point between then and now, though there is a trillion more dollars (€750 billion) in the global system. … Continue reading Save The Euro By Destroying It
When I make a mistake I will admit it.
In my analysis of consumer spending I asserted that the sources of increases in spending were (1) a draw-down of savings and (2) the redirection of defaulted mortgage payments to spending. I was half-right which another way of saying I was half-wrong.
I missed one the basic laws of economics, Bastiat’s “Broken Window Fallacy.” You know, the kid breaks the cobbler’s window, the cobbler pays for a new window and everyone thinks that the cobbler’s spending helped the economy because the glazier had work. The fallacy is that the cobbler was going to buy new clothes from the tailor and now can’t afford it. So the cobbler still has a window, is out the cost of the window repair and the new clothes. It’s a net loss to the economy.
The lesson is that you always need to look at the unseen as well as the seen. I missed that point entirely when I claimed that people spending their mortgage payments on consumer goods. Someone loses here and that is the lender. I forgot to ask what the lender was going to do with the money. Thanks to Caroline Baum, the very excellent writer for Bloomberg to point out the obvious. (See, “Honey, I Lost the House. Now It’s Time to Party.”)
Mea culpa and apologies. Unfortunately many, many people made the same mistake (Mark Zandi, David Rosenberg among others).
So, back to the numbers.
Analysis of Sales Report
March retail sales were up 1.6% over February, and +7.6% from a year earlier, not adjusted for inflation. The annual nominal rise was the largest since July 2005. Eleven of 13 major categories showed increases in sales.
Here are the major components of the Census Department report representing 77.4% of total sales:
| % Total Sales (Weighted) |
Category |
% Change |
| 19% |
Motor vehicles |
+6.7% |
| 13.5% |
Food and beverage |
+0.2% |
| 13.5% |
Department stores and big box retailers |
+0.6% |
| 10.8% |
Restaurants and bars |
+0.3% |
| 9.2% |
Gasoline |
-0.4% |
| 6.6% |
Building and garden |
+3.1% |
| 6.1% |
Health and personal care |
+0.2% |
| 4.8% |
Apparel |
+2.3% |
First, it is important to note that sales have trended upward since reaching bottom in December, 2008. … Continue reading Revisited: Where is the Money Coming From to Fund Spending?
OK. Here is the opportunity. Reader Dylan reads this blog, obviously interested in ideas that run counter to what he has learned. He is very critical of capitalism. Can we win his heart and mind? That’s my goal and, because of his background (see below), I think he could be convinced that capitalism is, well … good. Let’s give him a try. I apologize in advance for the length of this piece. Now that I’ve written it, I see that Dylan and I are quite windy.
For those of you joining us late, Dylan commented on my article “Health Care in America: We Now Join Europe,” my lament over the passage of the health care bill. Dylan thought I should be more willing to accept these government programs as a social safety net. I took his comment and made it into an article, “A Comment on Health Care Reform: Winning Hearts and Minds.”
Here is Dylan’s response to my answer to his original comment. I’ve taken the liberty to highlight some of the key terms and ideas in his response:
Jeff
Thanks for the response.
And yes this is a debate i’d like to have with you.
First to your questions:
“If there was a better system of distributing wealth and bringing the most economic benefits to the most people at the least cost, [and the most freedom] would you be in favor of it?” – Yes as long as it was sustainable.
“If I told you that your assumptions about capitalism were wrong and that everything you were taught about capitalism was wrong, would you believe me?” – Maybe put you’d have to do more than tell me. Youd need to explain this to me. I like [Marx's] Capital Vol.1 but im sure you would rather i read the book you mentioned, which in the spirit of fairness i shall go and look at.
“If I told you that almost everything you read in the popular press and what you see as commentary on TV was faith-based economics, would you be willing to question them?” Most definitely (btw i already think this so score one for common ground!)
“If I told you that your views would achieve exactly the opposite of what you intended, would you blindly follow them regardless of the consequences?” No. Im not against capitalism, im against the zero sum mechanics of it. You i am led to believe believe in free market capitalism, i would prefer a capitalism with more of a social conscious and hence direct state intervention such as free education and healthcare which i believe are fundamental human rights.
You then go on to say – quite condescendingly [JH: mea culpa, but you started it with "fundamentialist"] i must add because we can compare letters after our names whenever you want – that i have not studied economics and that I unquestioningly accept everything i was told. If that isnt a playground put down im not quite sure what to call it.
To be most correct i am an social anthropologist (you know, one of those public academics trained to think critically). My background is in social justice so granted i am coming from a different point of view than most economics Phds. Added to which I do not have a full economics background as you do. However that does not mean i cant cite academics such as Gillian Tett who now writes for the FT who have shown that much of the belief of free market economists have many of the same cultural qualities as other fundamentalisms. Yup, you got it, those religious ones. Some people say that sort of fundamentalism and faith in free market capitalism since the late 1970s is how we got into the economic mess were currently in, i prefer to think of it in terms of blatant ponzi inspired theft.
Also i’d like to hope youd know that a persons’ background on theory and history might be far more solid than one emotional post about health care could reveal (especially as i’d just woken up and had my coffee). In fact in my personal work I have written much on the collision between colonialism and capitalism, how the two are related and the conduits, mechanisms, motives and personalities between both. My theoretical is not Marxist, but it does refer often to Marx, David Harvey, Antonio Gramsci, Rosa Luxembourg – all intellectuals who could take your position to task quite easily. It doesnt mean they are right and you are wrong, or vice versa, it means you and I both think there are different answers to the questions of the times. … Continue reading Winning Hearts and Minds: Part II
In my research for my series on “China’s Fragile Economy,” I came across two blockbuster statements from the very top of China’s ruling structure: Premier Wen Jiabao and He Keng, vice chairman of the Financial and Economic Committee of the National People’s Congress. Both were to the effect that they feared a [...]
If you don’t watch John Stossel’s program on Fox Business Network, you should. It airs on Thursdays at 8:00 P.M. They re-broadcast several times through Sunday. Fox Business Network isn’t the same as the Fox News Network channel so you have to look for it. Check your local TV listing for the channel.
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