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Opinion: Why tax cuts would have been better than govt spending sprees
By Neville Bennett
According to CNBC, the "cash-for-clunkers" program cost the US tax payer US$24,000 per car. Still, along with the stimulus, it helped to convince many people that the US is out of recession.
As a contrarian, I believe the GDP figures were horrible. Moreover, there are increasing doubts about the stimulus: recent research shows that a dollar spent does not create a dollar's worth of activity, but only 60cents-80 cents worth.
I suggest it would have been more cost -effective to grant an income-tax holiday.
GDP Data
Most media failed to explain that the US economy grew by 0.9%. It reported the annualized figure of 3.4%; a figure which will be achieved if subsequent quarters are equally positive. They may not be because this quarter incorporated some one-off increases. The largest was a 22% increase in consumer durables, which was largely the clunkers, not consumer whiteware etc.
A rise in home construction was the result of tax credits for first home buyers. Much of the rest was money from helicopters. US consumer confidence is at a 26-year low: reflecting massive unemployment and other untoward patterns.
Imports exceeded exports, government expenditure increased by 8%, private industry decreased inventory. Real personal disposable income fell by 3.4% and savings fell as the cars and houses purchases increased debt. Any detailed reading becomes quite gloomy.
The market realized this when it received an update on consumer sentiment. The Conference Board reported an index figure fall of 53.5 to 47.7. Economists had predicted stability or growth, not this large fall. An index of 90 is needed before real growth can occur.
GDP rose because of exceptional spending and its rise seems a poor return for the massive stimulus expenditure. The US Government has spent about $10,000 per person. The next quarter could return negative figures.
Ongoing Destruction
As I write, the failure of CIT as been announced. This follows the failure of 100+ other banks this year. The housing deleveraging has hurt many banks world-wide, but the cancer is still spreading in huge write -offs of commercial mortgages and company loans.
These write offs have erased about 10 years worth of banking profits. Unfortunately, the banks have not been able to rebuild their capital sufficiently to feel secure in lending. Many authorities believe it will take many years before lending reaches pre-crisis levels. This view is supported by declining world trade and a shrinking world economy.
The world economy is projected to decline by 2.3% this year. As the trend has been a positive 2% growth, the loss is enormous (about US$ 2 tr). At a time when governments are pumping billions into the economy, the EU has declared that, for the first time on record, bank lending to business and households has fallen. This is an impediment to recovery.
China's exports are down over 15% on September 2008. The OECD reports that the jobless rate in the OECD was 8.6% and predicts 10% next year. The crisis has put limits on future growth. Over the next few years government debt will be a call upon the budget. In the UK's example, debt servicing in 2014 is expects to equal the present education budget.
As the IMF's World Economic Outlook emphasizes, recessions that are caused by financial crises are twice as severe as ones from other causes. output is permanently impaired and 10% below trend for 7 years. The British Treasury accepts that 5% of UK output is lost permanently.
Stimulus:Effective?
The "Greater Depression' has created debate on policy to smooth out fluctuations in the business cycle. Some governments gave taxpayers money, some cut taxes, all of them increased purchases of goods and services to replace falling private demand.
The assumption is that the multiplier is greater than 1: that is, the economy's output will grow more than government purchases. Some empirical research by Robert Barro and Charles Redlick cover many years of US history and studied defense spending in particular. It concluded that the multiplier falls in the range of 0.6 and 0.8. They express doubts "that non-defense multipliers are larger".
Granted that some stimulus was needed in the 2008 panic. Were there alternatives?
Barro and Relink opt for tax cuts as preferable, as" a one percent point decrease in the average marginal tax rate (leads) to about 0.6% in the growth rates of real per capita GDP". This is a very exciting finding. While there may be a good rationale for funding some projects with excellent long- term benefits, it is probable that others have dubious returns.
In the New Zealand context I favour a national cycleway, but regard some roading as equivalent to the wasteful funeral projects of the pharaohs: I would prefer the private sector bear the risk through toll roads, and apply user-pays principles rather than load our children with debt.
Job Destruction
The standard advice to middle class people at present is to extend their working life as savings and house values have shrunk. But in the US, where this advice seems very pertinent because it has had the hardest housing hit, there has been a rush to retirement. Why? The reason is that it is rational to retire.
Most older households have few investments; the median stock assets for households aged 55 to 64 is US$8,000. The research suggests that only higher educated workers in their 60's respond to stock market fluctuations. Houses are more important as 81% of households aged 55-64 own homes with a median equity of US$140,000.
Courtney Coile and Phillip Devine found no evidence that workers responded to changes in house prices. But people in their sixties, especially those with low education, are responsive to the labour market: they accept retirement. They throw in the sponge, and rather than job seek and receive benefits from Unemployment Insurance, prefer to accept Social Security . The labour market (unemployment) is much more important than stock market wealth. The average US elderly person feels forced into retirement to make ends meet, resulting in lower income in later years and increased poverty in old age.
* Neville Bennett was a long-time Senior Lecturer in History at the University of Canterbury, where he taught since 1971. His focus is economic history and markets. He is also a columnist for the NBR where a version of this item first appeared.
74 Comments
<i>It concluded that the multiplier
It concluded that the multiplier falls in the range of 0.6 and 0.8. They express doubts "that non-defense multipliers are larger".
This just seems to make such intuitive sense. How can the multiplier effect of government spending 'ever' be greater than one when:
a) The enormous transaction costs of government are considered.
b) Government will never be as efficient with their spending as the private sector.
It's a no-brainer to me, quite outside the philosophical issues, that money is best left with, and spent/saved by those who earned it in the private/productive sector. For those who think the multiplier 'can' be greater than 1, then I would love one of them to explain how that could be.
"According to CNBC, the “cash-for-clunkersâ€
"According to CNBC, the "cash-for-clunkers" program cost the US tax payer US$24,000 per car."
To add insult to injury the most popular vehicles purchased in this program were large pick ups e.g Ford F150, which have a fuel consumption of approx. 15 mpg. So much for the fuel efficiency argument. Only the Americans could have enacted such a ridiculous policy. However they will probably have the last laugh because they borrowed all the money for this program and they will most probably default on their debts in the future, leaving China holding the bag.
Have a little finger in
Have a little finger in tourism and the cycleway idea will be a winner...Shocked that 50% of NZ pensioners rely on this benefit to survive,,,Also was informed that in Oz if you own more than 5acres no pension....Thanks Neville for your articles..
if you are lucky, those
if you are lucky, those 5 acres will have a fat gold deposit just beneath the dust.
One could argue that it
One could argue that it was " spending sprees " that partially created the bubble which led to the current bust . But clearly , the US is repeating the mistake of Japan , in propping up its' banks , as " too big to fail " . The failure of central governments to act correctly and decisively , will lead us to years of stagflation . The stimulus packages , as Rick Santelli argued on CNBC , are gutting the value , the respect , for the dollar . What the heck is the point if the whole wide world debases its currencies . Utter foolishness . We have merely put off to a future date , that which we should have faced up to today . The bully is appeased , for now ...........But he'll be back !
The Americans should outsource the
The Americans should outsource the running of their Treasury and Central Bank to India and give the boot the the Goldman Sucks cronies.
<b>Emkay</b>:The Indians takeover the cowboys
Emkay:The Indians takeover the cowboys , ya reckon , pardner !
I personally think the Banks
I personally think the Banks should have been left to fail. The effect would have been dramatic of course, disasterous even in many cases. But where are we now? We face a long agonising strangulation from Gov't debt for generations. All the 'stimulus' theft has pretty much taken away any chance of investment in alternative energy which would have been the real saving grace because that is what drives all economic activity. If the Banks were left to their devices the greediest would have died. New ones of a different flavour would have evolved, possibly more of the mutualised versions that got killed off a couple of decades ago. At the same time I believe a substantial reduction in personal tax, and possibly in company tax, would have meant money would flow to where it was going to have maximum benefit, and the increased activity would keep tax receipts up through GST and other indirect taxation (user pays). Also crucial would be the rolling back of some of the red tape regulation...for example allow people to drive cars that might not currently get a WOF (because a tail light glass is broken for example) rather than just fine them money that could fix it, and allow people to do more of their own building/fixing of houses and the like without endless regulatory controls impeding the work. And the young should be looked after by providing tax breaks to local companies who employ local people. That would encourage more people into work and provide more tax receipts rather than a growing benefit dependency and cost. And a strong move toward decentralised Gov't would increase activity in the provinces toward independence and resilience. This would provide more employment and opportunities to get the young involved in using their education for innovation. They're also more likely to participate more in the democratic process as it would be possible for them to have more of an effect (to their benefit) at that level.
@Andy Rodgers: The last numbers
@Andy Rodgers: The last numbers I saw on the car being bought from the cash for clunkers was it was a Ford Focus....where did you get the F150s from?
regards
@Mark H: "make such intuitive
@Mark H: "make such intuitive sense." uh huh.....lets not base a position on sound economics or reasoning ....lets go with fringe ideology....nuff said really.
um no
a) The enormous transaction costs of government are considered.
b) Government will never be as efficient with their spending as the private sector.
Pharmac....
Paul Krugman has already come out the opposite way...ie tax cuts dont stimuate as much as one off payments....
http://krugman.blogs.nytimes.com/2009/08/04/spending-versus-tax-cuts/
"Democrats preferred spending because they feared, based on quite standard economics that tax cuts would be ineffective. And so they have proved."
they also dont decimate future Govn income.
http://krugman.blogs.nytimes.com/2009/08/27/a-note-on-the-bush-fiscal-le...
and we can look at California...
We can also see that the clasic divide of freshwater v salt water economists,
"Leading fresh water macroeconomists include Robert Lucas, Ed Prescott Thomas Sargent, Lars Hansen, John Cochrane, Larry Jones, Robert Barro" who are adverse to anything not "freshwater"
http://krugman.blogs.nytimes.com/2009/09/14/freshwater-rage/
"For when freshwater macro took over a good part of the field, its leaders gleefully dismissed all the work Keynesian economists had done over the previous few decades, often with sneers and sniggers."
I also think that there are comments on defence spending as being unique almost ie a total economic loss you make a bomb and drop it....you make a hole or destroy something(s)....result on improvement. Build a road for that money and there is an enduring national benefit....so I would suggest there is a huge difference between the two......
And Krugman has been shown
And Krugman has been shown to be utterly wrong, Steven. All this stimulus spending has not had a multiplying effect. The over 10% unemployment rate figure out of the US this morning (17% when under-employment is added) is further proof of how stimulus spending has abjectly failed: that spending was supposed to have saved and created jobs (and it probably did, but only in the parasitic public sector which will be a futher drain on production in the future, and make any recovery even slower).
So, perhaps Krugman (who is now widely discredited) should have gone with the tax cuts given we now know stimulus didn't work. That is the finding of Neville's article, was it not?
And you were better shooting your mouth off than answering the quite civil (for me) question I asked: how, given the huge transaction costs of government, and the inefficiency of government, can there be a multiplier greater than one?
I feel some Ludwig von Mises coming on:
It is in the nature of the men handling the apparatus of compulsion and coercion to overrate its power to work, and to strive at subduing all spheres of human life to its immediate influence.
And:
State interference in economic life, which calls itself economic policy, has done nothing but destroy economic life. Prohibitions and regulations have by their general obstructive tendency fostered the growth of the spirit of wastefulness.
And:
What transformed the world of horse-drawn carriages, sailing ships, and windmills step by step into a world of airplanes and electronics was the laissez-faire principle.
And:
The macroeconomic concept of national income is a mere political slogan devoid of any cognitive value.
Finally:
'"Every socialist is a disguised dictator."
Thankyou Mark : I had
Thankyou Mark : I had to give up battling the quasi-socialists last night . Me head starts to throb . They want more government control in our economy , as if we don't have way too much , as it is . Nice to see your blog here . Good way to start the weekend .
All the stimulus packages have been an utter waste of taxpayers money . Or an utter waste of ruining certain currencies , via the printing presses . The Fed . should've studied what Michael Cullen did to knee-cap our economy , and enacted the opposite . No chosen few , no bail-outs , no " packages ". Cullen showed the way . Take the other one , the road he didn't travel .
Steven - http://usnews.rankingsandreviews.com/cars-trucks/daily-
Steven - http://usnews.rankingsandreviews.com/cars-trucks/daily-news/091106-Cash-...
@Mark H: And Krugman has
@Mark H: And Krugman has said it wasnt enough
http://krugman.blogs.nytimes.com/?8dpc
and it was diluted by tax cuts that are in-effective...also you cannot say its failed, to do so you have to compare with waht was done and PK's recent graph shows where we could have been by now..
http://krugman.blogs.nytimes.com/2009/11/03/the-story-so-far-in-one-pict...
I dont think you can class PK as dis-credited as you probably never credited him anyway.
Tax cuts have not worked in the past...this can be shown from the recent Bush era...in fact they probably helped the housing and cedit bubble and made things worse...
@Andy R: Yet the data
@Andy R:
Yet the data I see says the opposite,
Top 10 cash for clunkers purchases
1. Toyota Corolla
2. Ford Focus
3. Honda Civic
4. Toyota Prius
5. Toyota Camry
6. Hyundai Elantra
7. Ford Escape FWD
8. Dodge Caliber
9. Honda Fit
10. Chevrolet Cobalt
Top 10 cash for clunkers trade ins
1. Ford Explorer 4WD
2. Ford F-150 Pickup 2WD
3. Jeep Grand Cherokee 4WD
4. Jeep Cherokee 4WD
5. Dodge Caravan/Grand Caravan 2WD
6. Ford Explorer 2WD
7. Chevrolet Blazer 4WD
8. Ford F-150 Pickup 4WD
9. Chevrolet C1500 Pickup 2WD
10. Ford Windstar
http://blogs.consumerreports.org/cars/2009/08/cash-for-clunkers-most-pop...
"Ford says the vehicle most often traded in was its popular Explorer SUV, the very vehicle that kicked off the SUV craze in the 1990s."
"That is likely one of the reasons the Focus is the most purchased car under the program, according to government data."
http://finance.yahoo.com/family-home/article/107469/Cash-for-clunkers-ca...
Steven, if Government taking money
Steven, if Government taking money away from those who earned it, can then grow the economy so well via the multiplier effect, which I'm assuming must result in higher growth than can be had by business people spending it, that's the justification for doing it (?), then surely we should go for 100% tax and let the Government do everything?
Geez Mark : Thank God
Geez Mark : Thank God you didn't opine that little nugget when Clark & Cullen were our dictators . They would've taken you seriously ! Cullen was on that path already , I surmise .
Mark H: Now you take
Mark H: Now you take the extreme and out of context...in fact not even the same subject...
The multipler effect from the money spent is in the context of spending/stimulus to prop up an ailing economy. Its a short term stilumus multiplier that does not happen with tax cuts...ie if you want to stimulate the economy short term a lump sum is the way as there is a positive multiplier and if you want it spent and not saved then the Govn has to do it for public works or ppl may save it (which for the last tax cut it went into my mortgage).
So, I didnt/dont say that....ie 100% tax....what I say is balance...
Supposition: What makes a country rich is the exporters bringning in $, everything else ie money spent within a country is churn....it might make individuals richer but not the country.
So based on the above I see it as in-different whether a Govn provides a needed service or private industry or a mixture, the main thing is efficiency and effectiveness.
Demonstrably Govn's can provide a public health service at less cost in terms of GDP and better outcomes ie longer lifespan than private providers...therefore the blanket statement that Govn's are always least efficient is un-founded and un-justified....
So beyond that proof must be shown that private or Govn is the most efficient....
Mixed example, Telecom....they have indeed greatly improved service over the old Govn owned Post Office....however they enjoyed a quite effective monopoly....and have dis-advantaged other NZ businesses....so simply selling was not effective long term....
So we need to find balance.....
regards
Hmmm the F150 is odd.....
Hmmm the F150 is odd.....
cash for clunkers.... out of 677,081 "swaps" 8200 were F150 for F150...this was the most popular swap...
So thats 1.2%......yet AP uses the words "mostly involved swaps of old Ford or Chevrolet pickups" on the face of it, it doesnt seem to make sense....especially combined with the URLs I posted.
<i>Demonstrably Govn’s can provide a
Demonstrably Govn's can provide a public health service at less cost in terms of GDP and better outcomes ie longer lifespan than private providers"¦therefore the blanket statement that Govn's are always least efficient is un-founded and un-justified"¦.
Demonstrably? Okay, demonstrate that?
'And the point of Neville's article was that the multiplier effect did not work. As is again proven by the US's unemployment figures this morning, and out own.
... our own. And as
... our own.
And as the US is also finding, once, as you call it the short term stimulus is over, then you have all of the same problems left, plus new ones, being a whole bunch more of debt that future tax takes will have to cover, and that you have propped up a ream of malinvestments that the market would otherwise have solved by allowing them fall over. For a quick fix in the present, the government has thrown away the future.
If governments are thought to
If governments are thought to be so much better at business than the private sector , why were all the old SOE's , and the few current ones , such basket cases of inefficiency and over staffing ? Why do we prop ACC up , when private insurers could do the same job so much cheaper ? And now we're a crutch for KiwiRail too ( a premium asset , ask Cullen ) . Why do private hospitals not have the same overweight of highly paid administrators , some on $ 500 000 p.a. , like the DHB's do ? How is it that TV3 doesn't pay $ 700 000 salaries to newsreaders , or $ 830 000 to the CEO , as TVNZ has / does ?
Interesting debate over Gov't vs
Interesting debate over Gov't vs Private. Personally I think there are some things the Gov't should remain in charge of, primarily because it means the focus is on the delivery of the service, whatever that may be. They also use central pools of resources rather than it being multiplied for every privatised sector, so has some efficiencies in that. A private enterprise is driven soley by profit and has no interest beyond that. This can create all sorts of distortions as they compete for the most profitable sectors, and leave the unprofitable sector languishing. The thing's I feel Gov't should do are the essential services such as health, water, electricity, public transport. These are essential for everyone, and shouldn't be allowed to be hijacked for private gain. I do believe that Gov't can be efficient if it is decentralised and regions are allowed to get on with what is in their best interest. The problem is Gov't has been more and more centralised and tries to make one size fits all policy.
Someone mentioned KiwiRail. What I recall very clearly was that rail in NZ was quite a widespread service in the past, and while not patronised as much as it should have been....especially in urban areas, it has now been reduced to a shadow. That happened because the Gov't, after spending $1.8b electrifying and upgrading the line between WN and AK, then sold it for $800m to a private company that eventually ran it down. Now, at a time approaching when public transport is going to become much more important as energy dries up...it's nowhere near adequate.
Steven I seldom arrive at
Steven
I seldom arrive at the same point as Mark but
...Demonstrably Govn's can provide a public health service at less cost in terms of GDP and better outcomes ie longer lifespan than private providers"¦therefore the blanket statement that Govn's are always least efficient is un-founded and un-justified"¦.
I have an issue that longer life spans necessarily = better outcomes. If those longer life spans = more years suffering a condition that requires 'at best' a family member (usually a daughter) giving up productive work to care for an elderly family member or 'worst case' the poor elderly person gets minimum care from the state/taxpayer. How can that, in this day and age, be seen as a good outcome? Given that more people are increasingly going to die through a long inhumane condition like Alzheimer's, the carer may as well be anyone and guilt be done with. Progress - 'yeah right'. We are at a pivotal point where saving for retirement requires 2 incomes for a couple - much like buying a house over the last 20 years. Who is going to pay for our privilege of 25 plus years of progressive decline in retirement?
I do realise that I
I do realise that I am bringing this back to the argument of the 'particular' - but this is where the reality of the politics happens. I have recently faced the reality of being faced with the outing of my income to support my elderly mother's 'health issues' upon my father death 4 years ago versus supporting the costs of my son's tertiary education cost. My family never contributed to the cost of my tertiary education. They couldn't, and I don't hold that against them - my problem, for punching above my economic weight. How do I justify the expense of looking after my mother vs. my son's student loan? I would like to do both but can't on current income. And that is only addressing the needs of one grandmother. We have two! I would appreciate any input as to how to manage the emotional and financial responsibility of this dilemma. Or was the Liberal Ideal of social movement a 'crock' - where does this leave us? Or ... do I just offer the oldies cyanide pills or take them myself. Perhaps only women of my age and class background can realise the dilemma of the current situation (or what shit we were sold in the 90's).
Sharonv, I feel you may
Sharonv, I feel you may have the answer within your own statement."My family never contributed to the costs of my tertiary education. They couldn't and I don't hold against them". If you can't fund it you can't fund it and you shouldn't feel quilty about it either. You cannot be all things to all people, and why should they hold it against you? If they do they are being selfish. You have your own life too ....... never forget that!
Pete Wilson Says: "Interesting debate
Pete Wilson Says:
"Interesting debate over Gov't vs Private. Personally I think there are some things the Gov't should remain in charge of, primarily because it means the focus is on the delivery of the service, whatever that may be. They also use central pools of resources rather than it being multiplied for every privatised sector, so has some efficiencies in that. A private enterprise is driven solely by profit and has no interest beyond that."
exactly...
There are some essential services that should be co ordinated, administered by a citizen owned central body
Education, health, justice.....
Take The crisis in the US on health thats been going on for a decade or so...
Where did that start...in the Oval Office , under Nixon, and according to white house tapes (remember those tapes) Nixon was advised, agreed of the eventual outcome of the American health system.
Co ordination...take our Old railways..all those huge over staffed workshops (Otahuhu)
The bean counters, reading balance sheets said " what a waste" what happened, we destroyed one of the most efficient critical tradesmen/apprentice training education schemes in the country....leaky houses, shortage of trained tradesmen, and cowboys with highly substandard practices...
Then to top it off its given out to the private sector (as a patchup) which milked the whole industry/Gov coffers with so called pretraining training
Pretraining training??? is that not what our schools are for?
We also see these similar moves in education( thu not privatised) where curriculum and admin was given over to the local community with too much freedom...
Lost the sight of what education is ...
Education is to provide a FUTURE work force AT ALL LEVELS to meet the needs of the of the country.....This requires a structured syllabus, no each school going of in its own direction...
Result: a heap of the 'dumbies" trying to come to grips with a computer, bored bulling, and idle...instead of coming to grips with a hammer and nail or a file and hacksaw.
It is these 'Dumbies' that build the factories and maintain the machines, the same dumbies who eventually employ tradesmen, build real productive business...And used to move into the education system to train more
Many of you talk about moving investment from housing into real production...yes correct...but we cant do it if we do not have the tradesman skills to do so.
Yes we can, and we have...abandond the Dumbies we have, and import tradesmen.
Or we can, make it easy to get qualified...realy quailfication means expetise right...
How disd we do it, reduce the trade education from 5 yrs to 3 yrs.
So lets look at this logic...an example
A mechamic was quailfied in 5 yrs to learn how to fix a 1965 Superminx, no electronics, no injection, no turbos, no ABS brakes, no air bags....now in 3 yrs a mechanic is "qualified " educated to be able to fix all of these.
Tehnology has progressed 10 or 20 times in all trades industries, yet training is reduced in most cases to less than 1/2
It is this we need to address at the core, and even then it will take another 50 to 60 yrs, to repair the damage done in the last 25 to 30 yrs.
Steps bring some equlity into
Steps
bring some equlity into the mix - in today's world it isn't just about the contribution of males. Looking after the needs of the older generations requires at least 2plus incomes. How do we reconcile this with the needs of of our own kids - loath to burden them with the cost of our care. Heaps of ethical decisions placed on the generation sandwiched 'between' the old world and the new. 2 incomes are required to look after the past - 4 to look after the future as well. Not sustainable within a family unit.
@Mark H: Ive already commented,
@Mark H: Ive already commented, you obviously cant see what I rote. Neither Nevll or the article he pointed to says it does not only that it may. "They express doubts "that non-defense multipliers are larger"." They dont say it isnt.....
To re-iterate, Nevill pointed to a professor of one of the freshwater schools..who commented that defence spending isnt a good multiplie (0.6), which is pretty much a proven...ie even the saltwater economics schools say the same thing...the difference as Ive said is, build a bridge get 50 years out of it useful adder to GDP....build a bomb and nothing is advantaged, you either get a hole or have to dismantle it later both cost...therefore their comment that other spending is probably no better seems wonkish....PK pretty much shoots that one down.
Demonstrate healthcare: Just look at the USA costs for healthcare, 18%? GDP v 6~9% for UK/Canada/NZ systems and we have a longer life expectancy...So 9% of a USA person's money is lost to a PRIVATE tax and that person may not even get care as the PRIVATE companies try and dodge paying...if you cant see that, well I really dont care, my vote goes with what we have and not with what you want.
In terms of US un-employment, you have to compare with doing nothing...what would the un-employment be if the stimulus hadnt been in place....all the data I see suggests the stimulus did indeed save jobs....certainly every Govn seems to have spent money to stave off the worst, and from my prespective has had some positive effect. Your claim "it has not worked" isnt surprising, it was quite expected that after the GOP weakened the bill(s) that their failure to work sufficiently would be seen as their failure...this will be Obama's un-doing.....he's likely to be a one term President...the next one will be Pallin, and she will take us to the Greateest Depression (or at least the USA) but that's America's problem.
Where its gone astray is the banks like GS or AIG needed to be broken up and next time allowed to fail....and money has been thrown at the likes of GM, they should be broken up and/or allowed to fail...they are a dodo...efficient industries will spring up in as they likes of GM be around wont smother them.
@Sharonv: "I have an issue
@Sharonv: "I have an issue that longer life spans necessarily = better outcomes. If those longer life spans = more years suffering a condition that requires "˜at best' a family member (usually a daughter) giving up productive work to care for an elderly family member or "˜worst case' the poor elderly person gets minimum care from the state/taxpayer. How can that, in this day and age, be seen as a good outcome?"
Sharonv Again all being equal...if an aged person has no private healthcare they cant get an operation to fix their condition then a child has to give up work and support them....with a Private system there is absolutely no other alternative. With a public system they could probably get that operation and be perfectly healthy again....
I would suggest reading on the US health system failures and ppls experiences...its quite stark.
"We are at a pivotal point where saving for retirement requires 2 incomes for a couple "“ much like buying a house over the last 20 years. Who is going to pay for our privilege of 25 plus years of progressive decline in retirement?"
I agree we struggle on my salary...however a private system would be even worse in terms of cost of GDP and personal income...The USA has Medicare etc where I think its 70%? of hips are done on the Govn tab....Here look at Southern Cross's cost v age...once past about 60 the costs are way higher, most pensionable ppl cant afford these costs so drop off...
So what we are saying here is get care or dont get care...? The likes of the Cullen fund is / was supposed to help address these issues...for me it makes sense for a Govn to save in the good times to prepare for the bad....countries like Singapore who are cash rich seem to be doing so successfully....in stark contrast to those who have wasted and spent and have not saved their tax.
@sharonv "(or what shit we
@sharonv "(or what shit we were sold in the 90's)." We were indeed sold it....but not just in the 90s it was the 50s, 60s, 70s and 80s...what was sold in the 90s was liberating and free markets would make the world all better off....NZ however was an earlier example of that misnomer a good comparison is OZ v NZ. OZ didnt go "free market, Rogernomics"...NZ didnt yet who is in the better position? and who is suppesed to catch up with yet more changes by the far wonky right?
The Pollies sold us a never ending "improvement" what they have sold us is a disaster...pay for today tomorrow and pay for tomorrwo with tomorrow's tomorrow. Right now that after 40 years is coming home to roost....with us the voter....ultimately its our fault we voted for never ending growth, sure we were sold snake oil, but our duty was to cast our vote wisely....we failed IMHO.
The situation you mention is similar in a way to mine (ailing parents), yet I also have a sick wife to cope for and a son to go thrugh medical school and save on a single salary for retirement, and clear a mortgage...and survive the Second Great Depression in one piece...a bit of an ask....
I'm with you Steven on
I'm with you Steven on healthcare - and my extended family are in the US, so I am very aware of their costs, as well as the crookedness of their health system. The Washington lobbyists are HUGE - and everything they lobby for is aimed at exploitation of the masses. There is nothing humane about healthcare in the US - and particularly not so for those with insurance. I have had two different relatives for which I had to fly over after they suffered trauma and 'work the system' just to get them off life support. It was disgusting - if you are insured in the States the system refuses to allow you to die with dignity.
Private health care is worse than horrible - the system extracts every bit of money it possibly can out of your policy and then when the cap runs out - they leave families to sell their homes to provide on-going care for a relative who in many cases never should have been kept alive in the first place.
Even people with Living Wills find their relatives have to fight to keep their wishes in place. I loathe everything about private medicine - it is more cut throat, down right dirty, profit driven than any other industry going.
Just a thought Thanks, but
Just a thought
Thanks, but as much as it is a personal issue I think it is also driven by the contradictions inherant in the political dogma of the last 25 years. Loath as I am to raise the feminist catch phase of my mother's generation - the personal is political. It was a golden age they lived in (and still do).
This is a very revealing
This is a very revealing discusion - Steven, Kate ... all in very much the same place. It just doesn't add up does it? Super funds the world over invest in the sure fire profits of drug companies and insurance providers. Yet who picks up the true cost of their services??? What are we to do? Do we have to swallow the lies and carry the cost at our kids, and their kids expense? How do we define dignity these days. I hate where the logic is taking me - 'Sophie's Choice'
Kate said: <i>I am very
Kate said:
I am very aware of their costs, as well as the crookedness of their health system. The Washington lobbyists are HUGE "“ and everything they lobby for is aimed at exploitation of the masses.
Yes, the US do not have a laissez faire, private health sector: it is crony capialism again, only possible in our planned/mixed economies, where crony capitalists can lobby, that is, pursue monopolistic rent seeking via collusion with the State.
That is, the problems with the US health system, now, is that it is utterly distorted by State interventions: and it's about to get a lot worse.
Kate then said:
Private health care is worse than horrible
But as I have just pointed out, it is not a private health system.
More Ludwig love coming on:
There is simply no other choice than this: either to abstain from interference in the free play of the market, or to delegate the entire management of production and distribution to the government. Either capitalism or socialism: there exists no middle way. Ludwig von Mises.
The American system is a variation of the mixed system we have, and any mixed system, because there is government involvement, is not, is not even close to, a true free market. And the latter is the answer.
<b>Sharonv</b>, some really interesting posts.
Sharonv, some really interesting posts. Off the top of my head could I say that your position, and it is not enviable, is the result of the huge presence of the State in our lives promising your parents something the State was in no position to offer - it's the generational conflict that State involvement has now set up, that Bernard often writes on.
All I can say is what I would do if I were you, and that is I would look after your mum (was that mother and mother-in-law). Your son can work off his student loan, and work part time to get him through his education: he is the one with the time, and presumably gaining the earning power via qualifications, to pay his way, whereas your parents probably don't have that ability. Just my thoughts, please don't take offense as none is meant.)
Well I don't disagree with
Well I don't disagree with you, Mark - but capitalism has gone so far, too far down the path of crony capitalism, that I really don't see any way other than socialism - because at least under a socialist system the laws of disclosure are in place, and hence the cronyism has a better chance of being exposed.
Effectively, both you and I want the same thing - something more humane than exists presently. But, "interference in the free play of the market" is so ingrained in the behaviour of the private sector market itself, they it (the "market") will fight tooth and nail with all of their money and power to retain the "crony" in capitalism.
<B>Kate</b> just wiped out the
Kate just wiped out the sacrifices of millions of men, women and children made in the last world war by saying:
Well I don't disagree with you, Mark "“ but capitalism has gone so far, too far down the path of crony capitalism, that I really don't see any way other than socialism "“ because at least under a socialist system the laws of disclosure are in place, and hence the cronyism has a better chance of being exposed.
No, we have a fundamental disagreement, and referring to your last paragraph, we definitely want different things: I want a society where I am a free man, you are willing to allow a state of tyranny in which you are nothing but a slave.
A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism: is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings. Ludwig von Mises.
Appalling.
No offence taken Mark -
No offence taken Mark - the discussion is welcome and it has to happen. Hmmm only just paid off my own student loan - wages have not kept up with inflation over the last 20 years and now there is even less hope. Indeed having any job at all, let alone well paid, is a luxury that todays graduates can only dream of. This great global moderation defies the logic of the left and right. New thinking and some honesty is needed. We have really screwed up and the realities on the ground are not pretty. The west can not sustain the promises it has made. It's not about who is at fault any more but how we move forward and halt the debt loaded on future generations.
By the way Kate's last
By the way Kate's last post is the reason why I feel like running everytime I see someone on these forums, and the man who wrote the neoliberalism article, stating they are a pragmatist.
The outcomes of pragmatism when dealing with the economy and politics is always socialism, and always evil.
Get your history right, Mark.
Get your history right, Mark. The last war, if you are referring to WWII was not fought against a socialist State(s). And regardless of what political label you want to assign to Hitler, Mussolini and/or Hirohito/Tojo - they all had one thing in common - they were aggressors who invaded the freedom and sovereignty of other nations - and I think that is what was men and women in the free world were prepared to fight for: the sovereign right of individual nations.
As for you wanting a society where you are a "free man" - does this mean free of the burden of being a member of society?
Regardless, surely your ideal of what constitutes a "free society" is also a more humane society? And so, in that sense we agree - what is needed is a more humane society?
</b>Sharonv</b> I agree completely with
Sharonv I agree completely with your analysis, but again, my answers are simple: the West is this way because of our mixed economies, thus, per my Mises quote above, socialist/planned economies, which have held our standards of living back. For me there is only the one 'honest' solution, which is the size of the State has to be reduced, and reduced dramatically in every sphere of our lives. Every proffered solution that sees the State as somehow part of the answer, will only ever increase the pace along the cycleway toward out demise. Unfortunately, it is in the vested interest of all those in power that could do this, to grow government, not demolish it.
So for me, easy answer, but I know it won't happen in my lifetime because the 'average man' is now a brainwashed socialist, and sees free markets, hence freedom, as the enemy. Insane, isn't it. But just read many of the posts on this forum.
<b>Kate</b> one thing I have
Kate one thing I have learned with you is to simply make my points, and then leave them to stand: beyond that, because you have no consistent viewpoint, just a lethal hotchpotch pragmatism of contradicting positions, there is no point arguing.
But one clarification: WWII - the Nazis were National Socialists. Collectivism of all ilks always ends at the same tragic point.
Sunday lunch time for me. Spinach and beets from my vegetable garden.
" at least under socialism
" at least under socialism the laws of disclosure are in place " : Kate : Yes , that is true . Yet it did not prevent Michael Cullen from not given National a " heads-up " on the state of the ACC books , prior to the last election . Cullen broke the law . There was a multi-billion dollar forward-funding hole , which he knew about .
I was unaware unti recently
I was unaware unti recently that unlamented ex-Fed chairman Greenspan was a rabid disciple of Ayn Rand.
Explains a great deal doesn't it?
Nonetheless terrifying that the second most powerful man in the US (as he then was) should be in thrall to such extremist dogma - and that he should have risen so far as he did with this on his resume.
Nazism was fascism, Mark -
Nazism was fascism, Mark - you are going by the label, not the doctrine.
Exactly, Andy - and even with his power and position the extremist in him couldn't put humpty together again.
Greenie was in Ayn Rand's
Greenie was in Ayn Rand's social circle . She thought very highly of him . If you expressed a contrary view , you were eliminated from the group . Expunged ............... Big Al adored her ! And lapped up the wisdom she imparted . Bless him !
<b>Andy</b>, Greenspan knew Rand, but
Andy, Greenspan knew Rand, but he was neither Objectivist nor Libertarian throughout his career, which was solely in the service of the State. Indeed, in that regard, given the Austrian School of economics doesn't hold with Central Banks, then he was a treasonist.
As I have previously stated very clearly here, October of last year:
http://www.solopassion.com/node/5483
The Ayn Rand Centre itself has been at pains to put as much distance as possible between them and that dreadful man. Here is just their latest release:
http://www.solopassion.com/node/6983
Quote: "The last thing we need is more czar-like powers for the Alan Greenspans of the world. As Greenspan demonstrated by inflating the housing bubble during his tenure as Fed Chairman, government power to manipulate markets is a financial weapon of mass destruction."
For the record, I admire Rand immensely, but I am no Randoid. Now perhaps we can get back to the ideas, rather than trying to play a straw man.
On the comment “We are
On the comment
"We are at a pivotal point where saving for retirement requires 2 incomes for a couple "“ much like buying a house over the last 20 years. Who is going to pay for our privilege of 25 plus years of progressive decline in retirement?"
We are focussing on the wrong problem - Across the globe we are faced with a gisintegration of the money supply. It is global and the impacts are significant. We are entering a period of the death of money, as 40 years of compound inflation is tearing the world apart.
What took 1 income to provide, now takes 2.25 incomes. Social policies that made sense when there was 6 workers for every benificiary colapse and die when the ratio drops to 1.9 to 1.
We are looking at a future of higher taxes, reduced benifits, and less options. This will be compounded by soon to materialise collapse of the debt bubble in the country. We have survived because people have been making ends meet by using the house as an ATM.
One final thing - we are getting to a tipping point where the majority of people will benifit from the status quo - that I believe will mean that anybody who does not pander to the "social benificiaries" will be voted out of office - and that will be the final death of the and the beginning of the decent into true third world status.
Staronv, The golden age you
Staronv, The golden age you speak of rose out of the ashes of two world wars, be happy for your parents generation . It was their parents before them that made all the sacrifice, millions our lives lost, millions maimed, families shattered, countries torn apart. (For what reason ,were they battling political ideology and expansionism?)
I'm sure through all that they would have wished, dreamed and agonised that their children would have a different world to live in. My father's war diary shows the same entry over a 30 day stretch ( The hun's artillery started again, always starts at 7.00am, at least we have time for breakfast but not much after that) He fought in North Africa with the 23 rd battalion. He was away for over four years, do you think he would have wished for a golden age for his children, if he managed to produce any after the war.
He and many others eventually achieved their goals and as we all know the world was rebuilt . Again people could fulfil their dreams, build lifelong careers , families and prosper. Yes the last fifty years could very well discribed as a golden age, but nothing lasts for ever. The pendulum is always swinging, no society in history has been able to maintain it's "golden age " periods. We ,the people destroy it, we pull it form every angle, every level. From individuals to administerations, from companies to countries , from political ideology and profit driven motifs.
For what ,we always crave more ,we don't have a "that's enough button". For years growth has been the driving force, a accepted measure of "success" . To achieve that debt has spiralled, risk has become a tool for greater rewards.
I believe this world we live now we come crashing down , for what ever reason, there are many to choice from. From this current set of ashes a new society will rise, not neccessarily better, just different........this is evolution. (Just incidentally I'm 51)
sharonv Says: "Steps bring some
sharonv Says:
"Steps
bring some equlity into the mix "“ in today's world it isn't just about the contribution of males."
What the hang are you on about?
PC BS?
tradesman? or is a manhole cover now a person hole hole cover?
I come from a very strong background of equiality..in the work place and in the home.
For near the last 40 yrs I will employ an experienced females over a male any day, the work harder, are more exacting, look after details far better, screw up far less, and dont slack around... and I pay what employees are worth, not what I can screw out of them.
And screw what the PC BS people go on about..they live in a as big a dream land as chauvinist plonkers
@mark H: "Either capitalism or
@mark H: "Either capitalism or socialism: there exists no middle way. Ludwig von Mises." Spoken like a true extremist, its black or white, I have news for you life isnt. While we have no Libertanian examples we have lots of totaliarian examples of that system's failure, by far the best (if maybe in-adequate sysetms) is the present NZ/UK style democracy we have... so of course there is a middle way...
America is a sick country....its freedoms and ideals have become corrupted which is extremly sad....but it clearly shows any system, even one proported to be the best can fail and indeed badly...The system if anything shows that give some ppl the freedom to do anything and they will, ie corrupt it to their own ends...
regards
@MArk H: "All I can
@MArk H: "All I can say is what I would do if I were you, and that is I would look after your mum (was that mother and mother-in-law). Your son can work off his student loan, and work part time to get him through his education: he is the one with the time, and presumably gaining the earning power via qualifications, to pay his way, whereas your parents probably don't have that ability. Just my thoughts, please don't take offense as none is meant.)"
What is sad is that such a poor system was put in place and kept, ie those in the 1950s~1960s were promised so much that indeed they didnt have to pay for...so those at say 65 in 1960 got a pension yet never contributed....the younger paid for them....and this kept rolling on....what should have happened is something like the Cullen fund where saving for a rainy day, which even back in the 1950s could be seen as coming 50 years off....right now we are at the point where we have to pay the ferry man for the broken system, but dismantling it isnt the way.
regards
<i>… so of course there
"¦ so of course there is a middle way"¦
Which is not working ...
@Mark H: there has been
@Mark H: there has been a middle way that has been corrupted by those who, instead of making things better have bent the system to their own ends...this is a failure of Politicians and indeed voters to allow this to happen....Fringe Idealouges have in effect from within hijacked the system, to their own advantage....if you go back to the 60s and 70s the Trotsky's did this with the UK labour party but failed....However the neocons took on the idea and succeeded with GOP...
Collectivism (as a general term for communists or marxist type sates) also suffered this, indeed it happened far more quickly....we can even look at the French Revolution as draw a similar conclusion, ie democracy where ppl have choices and vote would seem to be the more mainstream and robust in survival terms...
So how pray do you see a Libertarian system also not suffering the same fate as Collectivism and fail at the same dismal rate? ie what you are proposing is we all swap to a system we don't want on the off chance (and a pretty poor one) that is will do better and for longer....If this was the case we would today see a practical example of a country who should be now dominate the world, if Libertarian ideals worked...
@Martin: Actually for me, we are entering the period of the death of oil....or black gold....if you prefer that this money gerrymander was built on.
"We are looking at a future of higher taxes, reduced benefits, and less options. This will be compounded by soon to materialise collapse of the debt bubble in the country."
Agreed...
One final thing "“ we are getting to a tipping point where the majority of people will benifit from the status quo "“
Dont agree, actually I think we have past it....by a decade....
"that I believe will mean that anybody who does not pander to the "social benificiaries" will be voted out of office "“ "
Agree:.....HC/Cullen and now JK/BE are actively onto this...they are locking us into future pain.
"and that will be the final death of the and the beginning of the decent into true third world status."
Agree, sort of: Here comes the IMF....except I dont think its just us, I think the USA and Japan and probably the EU (or the UK at any rate) will drag us there....The deck of cards has tumbled but the Pollies are trying to prop it back up...we have, for 20 if not 30 years taken the easier option....stuff that was too hard was left to get even harder, reality is going to be a bitch....
@jaustathought: Agree....but I will add societies in the past were limited to the energy expenditure per person of not much more than per person. For our society oil / fossil fuels changed that. Today I, as a nobody enjoy more energy "power" than the richest king of any proceeding system/society. The next society will inherit a world where minerals and fossil fuels are effectively exhausted and un-attainable (in quantity) so the society/civilisation you see about you today, I think is/was probably as good as it ever was and ever will be.
regards
Tax cuts give voters the
Tax cuts give voters the freedom to tick whom they want....benefits lock voters into ticking whom they need if they wish to keep their benefit. That is why Key will protect the socialist agenda and that is why Noddyland is doomed to be an 'also ran but was not placed' lamb chop economy.
<i>there has been a middle
there has been a middle way that has been corrupted by those who, instead of making things better have bent the system to their own ends"¦this is a failure of Politicians and indeed voters to allow this to happen"¦
Precisely Steven. The middle way can never work, because the minute you impose state intervention, you are no longer a free market or a free society and you are some shade of socialist/planned economy, which will always be captured by vested interest. That cannot be avoided: if nothing else, the vested interest of the majority of voters (which scarily in NZ is becoming the State Sector worker/Beneficiary set).
So how pray do you see a Libertarian system also not suffering the same fate as Collectivism and fail at the same dismal rate? ie what you are proposing is we all swap to a system we don't want on the off chance (and a pretty poor one) that is will do better and for longer
Because a Libertarian system is neither a democracy, nor an autocracy. It is a constitutional republic/minarchy that simply sets up a small state to ensure no individual or group can use force on another (which includes fraud), and then enshrines individual rights, founded on property rights and laissez faire. There are no elections, no need for them, and no politicians or lobbying, just a very few 'bureaucrats' to run the police, army and justice - criminal and civil - systems. That is, no vested interest can vote itself, or assume for itself, privileges on the back of the efforts of others.
Needless to say, the laissez faire economy underpinning this would be based on sound money.
Two more von Mises quotations:
It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights.
And:
Sound money still means today what it meant in the nineteenth century: the gold standard.
Regarding the gold standard, my reading of late has been into the 'free banking' practiced in the US over the nineteenth century, which seemed to be quite successful - though I've not done a lot of reading on that.
Your final point:
If this was the case we would today see a practical example of a country who should be now dominate the world, if Libertarian ideals worked"¦
No. Because the way our democracies have developed, the only group with the power to pull the planned societies down, is the one group who has most to gain by leaving the existing system in place.
I admit, there will certainly be no Liberatian society in my lifetime, our societies are going headlong in the opposite direction. (Fed by just about every economist posting to this cite, I might add).
@mark H: We simply dont
@mark H: We simply dont agree....
What you are proposing is actually worse, by far,
"Because a Libertarian system is neither a democracy, nor an autocracy. It is a constitutional republic/minarchy that simply sets up a small state to ensure no individual or group can use force on another (which includes fraud), and then enshrines individual rights, founded on property rights and laissez faire."
So instead of the state becoming corrupted the system does...ie those who have the most money and property are able to do the most of what they want without check from the state. We can look at history and see that this is even more amoral than what we have today.
regards
With the non initiation of
With the non initiation of force, Steven how are the 'rich' going to hurt you? If I go through history and compare the number of people willfully 'hurt' by States, and then by private enterprise firms, I know who I would favour. Although again, that is not the point: non initiation of force, including fraud - no private firm is in a position to do me harm.
I've been quoting Ludwig von
I've been quoting Ludwig von Mises in this thread, so thought I would post this link to an interesting article about the great man in the Wall Street Journal:
http://online.wsj.com/article/SB1000142405274870447150457444360071177969...
Quote:
"With interest rates at zero, monetary engines humming as never before, and a self-proclaimed Keynesian government, we are back again embracing the brave new era of government-sponsored prosperity and debt. And, more than ever, the system is piling uncertainties on top of uncertainties, turning an otherwise resilient economy into a brittle one.
How curious it is that the guy who wrote the script depicting our never ending story of government-induced credit expansion, inflation and collapse has remained so persistently forgotten. Must we sit through yet another performance of this tragic tale?"
I also love the quote that this crisis was not a failure of capitalism but of hubris.
Mark, how would common resources
Mark, how would common resources (i.e. those not in private ownership) be allocated via a constitutional republic/minarchy?
Which 'common resources'?
Which 'common resources'?
Say, water in a river.
Say, water in a river.
Subject to private property rights,
Subject to private property rights, given same provide the strongest defense for the environment.
To quote from the Libertarianz site:
"Common law protects neighbour from neighbour and offers nearly 800 years of sophistication in protecting property and the environment. Libertarianz will repeal the c Resource Management Act, and uncover the common law that decades of planning legislation have buried.
The statement implies the environment
The statement implies the environment has been protected for hundreds of years!
So, the answer is the use of common resouces will be allocated by the judiciary. I wonder who gets to appoint them - and how Libertarianz propose to ensure it (the judiciary) won't/can't be corrupted?
If you've been following the
If you've been following the drama with the Central Plains Water Scheme you would realise that it couldn't be worse than that, Kate. But also, yes, issues such as water and private property rights will be difficult, often contentious, just as they are now, but at least worked from the principled (freedom) basis of private property rights and common law.
the statement implies the environment has been protected for hundreds of years!
Compare the environmental records of capitalist versus communist countries, and that claim can be made.
Yeah, Mark I've been following
Yeah, Mark I've been following CPW - indeed the whole of Canterbury problem. It is a problem grounded in private property rights - the problem being the private property owners aren't happy to simply exercise their common law property rights on their land based on the annual rainfall that falls on their private properties. There would be no problem if they just left the river's resources in common ownership well and truly alone.
The problem is they are attempting to make their private land more economically valuable than it is in it's natural state.
You'll probably be surprised at
You'll probably be surprised at my response, Kate. The problem with the CPW is the Resource Management Act, under which career bureaucrats, lots and lots and lots of them, are getting to decide this issue, oblivious of the private property rights of those affected farm owners who do not want to sell. If common law only was applied, private property rights, then CPW would be dead in the - excuse the pun - water, unless the farm owners chose to sell.
I am for private property rights, thus I am on the side of the farmers who do not want to sell their properties. Without the RMA and Nanny State, that should be the end of it. Note , this is even though I believe the CPW scheme would be a damned good idea, progress, and I would love to see it happen -it's just that all of that is by the wayside, freedom founded on private property rights is the most important issue here, CPW should not go ahead given a big group of farmers do not want to sell their farms to let it happen. Progress would be lost, yes, but in this instance that would be the price of freedom, and freedom is always the most important consideration.
You'll be surprised at my
You'll be surprised at my response, Mark - I totally agree with you!! But, that issue (the forced "take" by a regulatory authority of private land for flooding of the valley behind Colgate) is only one aspect. And indeed, if the landowners don't want to sell, I agree, the entire proposal should never have seen the light of day.
But beyond that, even if the landowners did want to sell to make way for the dam, you still have the issue of the "take" from the two rivers in order to fill the dam, and you still have the cumulative effects of nutirent loading and runoff - further adverse effects of the 'artificial' or 'unnatural' land-use intention of the proposed irrigators.
Hence, given technological advancement, I suspect our modern society will always need some values-based principles enshrined in a specific legislative provision which unfortunately must place limits on the exercise of private property rights, through the requirement that their uses somehow 'internalise' adverse effects on the surrounding environment - whether that surrounding environment is in common or private ownership.
Mark Hubbard says "Because a
Mark Hubbard says
"Because a Libertarian system is neither a democracy, nor an autocracy. It is a constitutional republic/minarchy that simply sets up a small state to ensure no individual or group can use force on another (which includes fraud), and then enshrines individual rights, founded on property rights and laissez faire. There are no elections, no need for them, and no politicians or lobbying, just a very few "˜bureaucrats' to run the police, army and justice "“ criminal and civil "“ systems. That is, no vested interest can vote itself, or assume for itself, privileges on the back of the efforts of others."
Thanks Mark I am keeping this for when I need a chuckle, the above would of course be in conjunction with your voluntary taxes.
Just of interest, how would you determine who the small group of "bureaucrats" would be?
Mark H, that was a
Mark H, that was a really good article about Mise that u gave the link too... Everyone should read it... No one can defy gravity... for long. ( in this case gravity is the natural, free market movement of interest rates )
Unless we take things back to "first principles".... any solutions will lead to more distortions... Central banks have created as many problems ..as they they have solved.
In this article is the answer to many of the problems we face... BUT it is very unlikely any government would allow interest rates to respond freely to market forces.
".......... Mises explained how the banking system was endowed with the singular ability to expand credit and with it the money supply, and how this was magnified by government intervention. Left alone, interest rates would adjust such that only the amount of credit would be used as is voluntarily supplied and demanded. But when credit is force-fed beyond that (call it a credit gavage), grotesque things start to happen."
"Government-imposed expansion of bank credit distorts our "time preferences," or our desire for saving versus consumption. Government-imposed interest rates artificially below rates demanded by savers leads to increased borrowing and capital investment beyond what savers will provide. This causes temporarily higher employment, wages and consumption."
"Ordinarily, any random spikes in credit would be quickly absorbed by the system"”the pricing errors corrected, the half-baked investments liquidated, like a supple tree yielding to the wind and then returning. But when the government holds rates artificially low in order to feed ever higher capital investment in otherwise unsound, unsustainable businesses, it creates the conditions for a crash. Everyone looks smart for a while, but eventually the whole monstrosity collapses under its own weight through a credit contraction or, worse, a banking collapse."
"The system is dramatically susceptible to errors, both on the policy side and on the entrepreneurial side. Government expansion of credit takes a system otherwise capable of adjustment and resilience and transforms it into one with tremendous cyclical volatility."
Cheers <b>roelof</b>, yes that is
Cheers roelof, yes that is a good article. And the Wall Street Journal states the case nicely of why is Mises completely ignored when he predicted the nature and path of the collapse we just had (are still having), and when he gave the correct solution to it, whch governments are currently doing the exact opposite of, simply setting us up for the next crash, and ensuring this ones hangs around for a lot longer than it would if free markets were allowed to correct all the imbalances created by the government interventions and distortions, centred around their counterfeit capital, and artificial interest rate manipulation via central banks.
Note I've not seen one economist posting to this site suggesting Mises correcting solutions: all are suggesting in one form or another more of the same distorting Nanny Statism.
Iain said, Thanks Mark I am keeping this for when I need a chuckle ...
Excellent, I appreciate a good sense of humour (and understand perfectly why you would need one if you intended an economy to run on funny money rather than sound money) :)
By the way, when was the last time the Wall Street Journal lauded the achievements and wisdom of a social creditor, or is that magazine part of ... [whispering], you know, the conspiracy ...
" is that magazine part
" is that magazine part of "¦ [whispering], you know, the conspiracy "¦"
No conspiracy at WSJ - just outright crony capitalist bias.
I don't know if these days there is anything that could be termed as 'sound money'. If it is something based on the gold standard - as we've recently seen reported - there is a whole lot of "funny money" precious metal out there as well.
Another option of course is that the world will heads toward the one currency IMF SDR - the Biggest State of all!
Mark H, You provoke some
Mark H,
You provoke some interesting thought. I find contradictory thoughts in favour and against the doctrines of your adored Mises. One thing that bugs me though is how elevated in importance the banks are in your idealised world, where in a sense the bankers (and by extension merchants & industrialists) are the government. Can't see that as an improvement given their self serving imperative. Evolution of humanity has happened as much through development of art as it has through commerce and exertion of power.