Just a little bit scary Part 2

Here's something interesting. Just a look at the crazy bills that have been stopped in the senate b/c the Republicans currently have enough votes to filibuster (or threaten to do so). If the Dems win big this fall, several or all of these bills may be re-introduced - and, regardless of your personal proclivities, this slate of bills is objectively bad for the nation. Unless, of course, your goal is to remove the necessity and even the ability for individuals to take care of themselves and run their businesses.

Here's a snippet, but read the article yourself.

Just a little bit scary

So we now know that the federal government - and the treasury department in particular - has "essentially forced" nine major US banks to accept the government bailout. To accept partial government ownership of their company. From today Wall Street Journal:

While the program is voluntary, Treasury essentially forced nine major U.S. banks to agree to take $125 billion from the federal government. Treasury will buy $25 billion in preferred stock from Bank of America -- including soon-to-be acquired Merrill Lynch -- as well as from J.P. Morgan and Citigroup; $25 billion from Wells Fargo & Co.; $10 billion from Goldman Sachs Group Inc. and Morgan Stanley; $3 billion from Bank of New York Mellon; and about $2 billion from State Street. The remainder will be available to small and medium-size institutions that apply for an investment.

So, we have government requiring that private business sell a portion of their business to the government for the supposed good of the nation.

Are you comfortable with that? I, certainly, am not.

B HO 's tax plan and economist angst

Many economists (including several Nobel Prize winners) have signed a letter opposing Obama's tax plan.

I whole heartedly agree. This is the Link, and the key paragraph.

We are equally concerned with his proposals to increase tax rates on labor income and investment. His dividend and capital gains tax increases would reduce investment and cut into the savings of millions of Americans. His proposals to increase income and payroll tax rates would discourage the formation and expansion of small businesses and reduce employment and take-home pay, as would his mandates on firms to provide expensive health insurance.

Krugman and the Nobel Prize

I'm not going to beat a horse that's already moving, so rather than re-analyze the awarding of the Nobel Prize to Paul Krugman, I'll let economic minds with more institutional knowledge than mine have their say.

http://www.marginalrevolution.com/marginalrevolution/2008/10/what-is-new-tra.html

http://www.marginalrevolution.com/marginalrevolution/2008/10/paul-krugman-wi.html

http://www.marginalrevolution.com/marginalrevolution/2004/07/paul_krugman_gu.html


Well, I might say a few words.

Krugman can easily and truly be said to be the best-known and most popular left-wing economist in the United States, if not the world. Interestingly, though he is in favor of several government interventions that I'm uncomfortable with, Krugman's economic ideals are much, much closer to mine than are those of most politicians from either party.

His Nobel was technically awarded for his work on trade theory (much of which I was actually unaware of), but many economists feel that this award also signals the importance of social and policy relevance to the work of an economist. I agree. There is no point to theory if that theory cannot be used to better society in some fashion.

However, despite the undeniable successes that Krugman has achieved in issues of trade, he has also unquestionably fallen flat on his face regarding basic economic thinking. Please read this article!

Wow - what a ride.

So it's been a while, but times have been crazy. I've been spending more than 2 hours every day just trying to stay up on the current issues in the economy so I can answer the questions from my students and colleagues.

And there's a lot I could say.

But I won't, at least not right now.

Well, perhaps I'll say something.

In economics there is this concept called "regime uncertainty". Basically, the idea is that investors and businessmen will be less willing to take an active role in the economy if they have uncertainty about the future "regime". In the US this translates into "wow, the .gov just passed a $700B spending bill that tremendously expands federal power. I wonder how this will effect the future of business in the United States?"