Friday, February 20, 2009

 

Potpourri

* Here is Nouriel Roubini explaining that laissez-faire capitalism has failed. I'm not sure how the Federal Reserve (which caused the boom) or the trillions in bailouts and other rescue moves (which caused/exacerbated the financial panic) qualifies as laissez-faire. But beyond that quibble, I love how Roubini lists all of the things that can go wrong with more regulation (such as regulatory capture and jurisdictional arbitrage), and basically says, "So the politicians should avoid those pitfalls when saving the world."

* Have you ever wondered how economies got out of liquidity traps before the advent of wise countercylical fiscal policy? Krugman explains in this post. Apparently what happens is that the capital stock wears out and thus businesses have no choice but to go invest. (BTW Krugman links to this New School outline of Keynesian Business Cycle Theory, which I haven't read but looks like it might be interesting.)

* Here's a disgusting story of two Pennsylvania judges who took payoffs from "private" juvenile prison camps--that's my term, but it's what they were!--in exchange for finding defendants guilty and shipping them to the companies. (Presumably the companies got paid per "criminal" processed.) I am sure a lot of leftist prisoner advocates are going nuts about this, saying that you can't bring in the profit motive to something like justice. But on the contrary, this just shows how screwed up the government is. It was the government judges who abused their awesome power over these kids' lives. To switch contexts, suppose it turns out that the owners of that Georgia peanut butter factory paid off the FDA inspectors to look the other way. Would that prove profits and peanut butter don't mix, and that the government should nationalize Skippy and Jif along with Bank of America?

* Wintery Knight has an interesting follow-up discussion to my post from last Sunday. I had wondered why Jesus spoke in parables (rather than plainer language), and Wintery Knight discusses God's "hiddenness" more generally.



Comments:
Please keep linking to Paul Krugmans hilarious "contributions" to the field of economics. This part caught my eye

"That is, it isn’t something like the 1981-82 recession, which was brought on by the Fed to control inflation, and ended when the Fed decided that we had suffered enough."

Is he seriously insinuating that Paul Volcker raised the interest rates to make people "suffer", and not because it was the only way to kill the cycle of rising inflation and unemployment that the US had been stuck with for years? I am guessing that Paul Krugmans solution would instead have been fiscal spending to the tune of 150% of GDP until things turned better....isn't there any banana republic that the western world can offer Krugman to? And to think that the country I come from gave him a Nobel Price for his "contributions"...
 
Krugman is scaring me. This sounds like he is advocating war to end the current recession, but he is disappointed that the political environment makes a major war unlikely.

"Now, the Great Depression was ended by massive fiscal expansion, in the form of World War II. Maybe that will happen again; but so far policy seems inadequate to the task, and the political environment raises concerns about whether we’ll be able to do much more."
 
Well, progressives do need a crisis to justify massive government spending and regulation. But they don't necessarily need a real war.

They can just declare a war on poverty or a war on global warming. Anything will do so long as it justifies spending. Sorry to be mean, and I hope I'm wrong.
 
"Now, the Great Depression was ended by massive fiscal expansion, in the form of World War II"

Ha. It's amazing he can say this so soon after his criticisms of barro, if taken to their logical conclusions, concede that WW2 improved the performance of the economy in just the same way as I improved the performance of my car by fitting a speedometer with bigger numbers on it.
 
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