Wednesday, December 30, 2009
The Monetary Base is exploding. So what? - Greg Mankiw's Blog
"An article in Saturday's Wall Street Journal says that some big-league investors are betting that inflation will rise significantly. The reason? 'The nation's exploding monetary base is a harbinger of inflation.' Is this right? Probably not."
Solving Whose Problem? - Thomas Sowell
Solving Whose Problem?
By Thomas Sowell
No one will really understand politics until they understand that politicians are not trying to solve our problems. They are trying to solve their own problems-- of which getting elected and re-elected are number one and number two. Whatever is number three is far behind.
Many of the things the government does that may seem stupid are not stupid at all, from the standpoint of the elected officials or bureaucrats who do these things.
The current economic downturn that has cost millions of people their jobs began with successive administrations of both parties pushing banks and other lenders to make mortgage loans to people whose incomes, credit history and inability or unwillingness to make a substantial down payment on a house made them bad risks.
Was that stupid? Not at all. The money that was being put at risk was not the politicians' money, and in most cases was not even the government's money. Moreover, the jobs that are being lost by the millions are not the politicians' jobs-- and jobs in the government's bureaucracies are increasing.
No one pushed these reckless mortgage lending policies more than Congressman Barney Frank, who brushed aside warnings about risk, and said in 2003 that he wanted to 'roll the dice' even more in the housing markets. But it would very rash to bet against Congressman Frank's getting re-elected in 2010."
By Thomas Sowell
No one will really understand politics until they understand that politicians are not trying to solve our problems. They are trying to solve their own problems-- of which getting elected and re-elected are number one and number two. Whatever is number three is far behind.
Many of the things the government does that may seem stupid are not stupid at all, from the standpoint of the elected officials or bureaucrats who do these things.
The current economic downturn that has cost millions of people their jobs began with successive administrations of both parties pushing banks and other lenders to make mortgage loans to people whose incomes, credit history and inability or unwillingness to make a substantial down payment on a house made them bad risks.
Was that stupid? Not at all. The money that was being put at risk was not the politicians' money, and in most cases was not even the government's money. Moreover, the jobs that are being lost by the millions are not the politicians' jobs-- and jobs in the government's bureaucracies are increasing.
No one pushed these reckless mortgage lending policies more than Congressman Barney Frank, who brushed aside warnings about risk, and said in 2003 that he wanted to 'roll the dice' even more in the housing markets. But it would very rash to bet against Congressman Frank's getting re-elected in 2010."
Saturday, December 26, 2009
Venezuela's President Threatens Toyota, GM - WSJ.com
Venezuelan President Hugo Chávez, beset by a recession that is hurting his popularity, has turned his sights on international car companies, threatening them with nationalization and pledging to ramp up government intervention in their local businesses.
The populist leader has threatened to expropriate Toyota Motor Corp.'s local assembly plant if the Japanese car maker doesn't produce more vehicles designed for rural areas and transfer new technologies and manufacturing methods to its local unit. He said other car companies were also guilty of not transferring enough technology, mentioning Fiat SpA of Italy, which controls Chrysler Group LLC, and General Motors Co.
The president ordered his trade minister, Eduardo Saman, to inspect the Toyota plant. He said if the inspection shows Toyota isn't producing what he thinks it should and isn't transferring technology, the government may consider taking over its plant and have a Chinese company operate it.
'We'll take it, we'll expropriate it, we'll pay them what it is worth and immediately call on the Chinese,' Mr. Chávez said in a televised address late Wednesday.
Mr. Chávez, a former army officer who has been in power longer than a decade, has nationalized dozens of foreign-owned companies—and sometimes entire sectors of the economy, including electricity firms, cement companies, coffee companies and oil-services firms."
The populist leader has threatened to expropriate Toyota Motor Corp.'s local assembly plant if the Japanese car maker doesn't produce more vehicles designed for rural areas and transfer new technologies and manufacturing methods to its local unit. He said other car companies were also guilty of not transferring enough technology, mentioning Fiat SpA of Italy, which controls Chrysler Group LLC, and General Motors Co.
The president ordered his trade minister, Eduardo Saman, to inspect the Toyota plant. He said if the inspection shows Toyota isn't producing what he thinks it should and isn't transferring technology, the government may consider taking over its plant and have a Chinese company operate it.
'We'll take it, we'll expropriate it, we'll pay them what it is worth and immediately call on the Chinese,' Mr. Chávez said in a televised address late Wednesday.
Mr. Chávez, a former army officer who has been in power longer than a decade, has nationalized dozens of foreign-owned companies—and sometimes entire sectors of the economy, including electricity firms, cement companies, coffee companies and oil-services firms."
Friday, December 25, 2009
Thursday, December 24, 2009
A bridge too far - How to think about a government-designed health-care system
"Trying to restructure an industry that constitutes one-sixth of the United States economy is indeed complicated. It is so complicated that it's impossible to accomplish without risking catastrophic failure.
Our world is full of complexities that defy human engineering. Can Congress engineer winter snow so that it never again falls on Minnesota? Can it engineer human romance so that none of us ever again suffers a broken heart?
Of course not. Any attempts that Congress might make to do so would be correctly read as arrogance of the highest and most hazardous sort.
Attempts to consciously redesign the health care industry are equally hubristic and hazardous. That industry is one of billions of unique, often personal, relationships, each of which is part of countless long chains of efforts to transform raw materials and human effort into life-improving and life-saving drugs and treatments.
Like weather and the mysteries of love, these long chains of human relationships weren't designed by anyone. Like weather and love, they change, often unexpectedly; they also possess as many unique properties as there are persons involved.
And like weather and love, their all-important details are beyond the comprehension of would-be redesigners. These long chains of human relationships cannot be undone and reassembled at will by politicians and 'experts' without risking enormous and unintended catastrophe.
For proof, look no further than Mr. Schieffer's lament that the very 'engineers' -- the members of Congress -- who are now attempting to redesign the details of the health care industry cannot themselves grasp the full meaning of, or even simply read all the words in, the bill that they're debating.
It's as if a committee of engineers trying to design, say, a bridge to connect New York and London draft a blueprint that is so huge and complex that none of the engineers can possibly comprehend its details. No engineer knows, or can know, exactly what it is he or she is helping to engineer.
Each engineer might fervently endorse the prospect of a bridge to connect North America to Europe. Each engineer might be able to offer a long list of all the wondrous benefits that a trans-Atlantic bridge would bestow upon motorists on both continents.
Some of these engineers might also even insist that crossing the Atlantic by car is a basic human right, one that must be guaranteed by government.
But despite the realness of the benefits of a trans-Atlantic bridge, if that bridge's own designers cannot comprehend what they're designing, no sane person would volunteer to drive across that structure if and when it is built.
If an engineer can't read and understand even his own blueprint, why should we trust him to understand the vastly more complex reality that his blueprint allegedly represents? And, more importantly, why should we trust that what is built based upon the incomprehensible blueprint will work as advertised?
A trans-Atlantic bridge, of course, is not the same thing as a health care system: The bridge is much less complicated.
No matter how complicated the bridge, ultimately it is a physical structure, composed of lifeless materials that metallurgists, chemists and engineers understand quite well.
A human economy is very different. Each person -- as producer and as consumer -- has his own unique abilities and wants. Each person can respond imaginatively to unexpected problems that she encounters. Each person is a potential source of creative new ideas that might improve the operation of his medical office, her research lab or his insurance company.
With hundreds of millions of customers -- everyone from those whose health care needs go no further than an occasional aspirin to those who need round-the-clock care in cancer wards -- and with millions of providers doing countless different tasks, the idea that 535 geniuses on Capitol Hill can design this industry so that it will improve human well-being is laughable.
There are steps that Congress can sensibly take, but all of these involve removing government-imposed restrictions on the abilities of individuals to seek out, and to supply, health care provision within markets."
Our world is full of complexities that defy human engineering. Can Congress engineer winter snow so that it never again falls on Minnesota? Can it engineer human romance so that none of us ever again suffers a broken heart?
Of course not. Any attempts that Congress might make to do so would be correctly read as arrogance of the highest and most hazardous sort.
Attempts to consciously redesign the health care industry are equally hubristic and hazardous. That industry is one of billions of unique, often personal, relationships, each of which is part of countless long chains of efforts to transform raw materials and human effort into life-improving and life-saving drugs and treatments.
Like weather and the mysteries of love, these long chains of human relationships weren't designed by anyone. Like weather and love, they change, often unexpectedly; they also possess as many unique properties as there are persons involved.
And like weather and love, their all-important details are beyond the comprehension of would-be redesigners. These long chains of human relationships cannot be undone and reassembled at will by politicians and 'experts' without risking enormous and unintended catastrophe.
For proof, look no further than Mr. Schieffer's lament that the very 'engineers' -- the members of Congress -- who are now attempting to redesign the details of the health care industry cannot themselves grasp the full meaning of, or even simply read all the words in, the bill that they're debating.
It's as if a committee of engineers trying to design, say, a bridge to connect New York and London draft a blueprint that is so huge and complex that none of the engineers can possibly comprehend its details. No engineer knows, or can know, exactly what it is he or she is helping to engineer.
Each engineer might fervently endorse the prospect of a bridge to connect North America to Europe. Each engineer might be able to offer a long list of all the wondrous benefits that a trans-Atlantic bridge would bestow upon motorists on both continents.
Some of these engineers might also even insist that crossing the Atlantic by car is a basic human right, one that must be guaranteed by government.
But despite the realness of the benefits of a trans-Atlantic bridge, if that bridge's own designers cannot comprehend what they're designing, no sane person would volunteer to drive across that structure if and when it is built.
If an engineer can't read and understand even his own blueprint, why should we trust him to understand the vastly more complex reality that his blueprint allegedly represents? And, more importantly, why should we trust that what is built based upon the incomprehensible blueprint will work as advertised?
A trans-Atlantic bridge, of course, is not the same thing as a health care system: The bridge is much less complicated.
No matter how complicated the bridge, ultimately it is a physical structure, composed of lifeless materials that metallurgists, chemists and engineers understand quite well.
A human economy is very different. Each person -- as producer and as consumer -- has his own unique abilities and wants. Each person can respond imaginatively to unexpected problems that she encounters. Each person is a potential source of creative new ideas that might improve the operation of his medical office, her research lab or his insurance company.
With hundreds of millions of customers -- everyone from those whose health care needs go no further than an occasional aspirin to those who need round-the-clock care in cancer wards -- and with millions of providers doing countless different tasks, the idea that 535 geniuses on Capitol Hill can design this industry so that it will improve human well-being is laughable.
There are steps that Congress can sensibly take, but all of these involve removing government-imposed restrictions on the abilities of individuals to seek out, and to supply, health care provision within markets."
President Obama on "Cadillac" Health insurance plans
OBAMA: "I'm on record as saying that taxing Cadillac plans that don't make people healthier, but just take more money out of their pockets because they're paying more for insurance than they need to, that's actually a good idea and that helps bend the cost curve; that helps to reduce the cost of health care over the long term. I think that's a smart thing to do."
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