Quote Box Archive Past Quote Boxes

May 2, 2013

Investing in New Technology

Cabinet Secretary:  We will assure a bright energy future by investing in exciting, new technology on an impressive scale.
Mike:  Have you evaluated the business plans?
Secretary:  They are new and have no real comparison.
Mike:  How do you know they will work?
Secretary:  We have the best and the brightest. The government has deep pockets. We must explore the future. We can't just do nothing. Think of how wonderful it will be if it works.


Partisan Thinking About Energy
04/30/13 - CoyoteBlog by Warren Meyer  [edited]

[edited]  Kevin DrumAt Mother Jones:  The Right does not use empirical data [facts] to discuss climate change and global limits on oil production. This is weird as hell. I mean, why would they disparage development of renewable energy?

Statists like Drum believe that support for renewable energy requires support for government subsidies and interventions. Few people, even conservatives, oppose renewables per se. This is a straw man. They oppose the subsidies and government mandates for renewable energy.

Conservatves criticize the incentives of politicians, their weak oversight over spending, and the typical wasteful results from political incentives. Money is almost always directed toward supporters who provided campaign contributions. These supporters mysteriously increase their contributions after winning contracts.

New technologies are particularly ripe for graft and manipulation. The government always "invests" (spends) for technology that private investors will not voluntarily pursue on a large scale. These projects by definition have no comparison to private projects. There is no way to compare a government investment in "new technology" to similar investments, until the disaster at the end.

Politicians proudly announce along the way that the new technology is more expensive than current alternatives. That is why "the government must do it", because no one else is going to invest into a product which starts out more expensive (wasteful of resources) than the competition.

The politicians announce that the price will come down after a few years of experience. They don't consider that the price of the alterntives is also likely to come down during those years.

The result has been obvious and awful. Massive "green energy" projects regularly go bankrupt when they produce an unreliable product which is more costly than the already existing alternatives. Politicians excuse the huge expense and waste of these failures by saying "Private projects also fail. Don't blame us."


What do you expect?

Consider this business plan. I will sell candy bars, drinks, and sandwiches for far less than the competition. You can examine my spreadsheets. This is a winner. I will lower my costs through a revolutionary idea. I will place the goods on shelves in the morning, and people will pay for the goods on the honor system, leaving the money in a small box. I will collect the money in the evening, and will save on overhead by not employing any staff or cash register clerks.

I hear the shouting now. "You're nuts. Some people will steal your goods, and the money too. You will be broke in 5 days." I might object that most people are honest and will follow the rules. But, I would have to agree that some immoral people would ruin this plan. Oh well.


The Process of Government

Consider this business plan. I will empower politicians to select the best and the brightest to subsidize the best energy plans for a glorious future. Naturally, the investments will be huge and somewhat risky. That is why the fraidy-cat private markets won't do this necessary work.

I hear the shouting now. "You're nuts. The contracts will go to cronies who will bend the projects to their private benefit. These government plans are proposed by groups that expect to benefit. Most of the money will disappear with no viable project remaining. You will be broke in 5 years." I might object that most poltiicians are honest, patriotic, and will follow the rules. But, I would have to agree that some immoral politicians and businessmen would ruin this plan. Oh well.


Faith in Government

Here is the funny thing. An even louder shouting arises that "Government is good. Let's plan for a glorious energy future. Don't let a few immoral people spoil what can be a great plan and a better society. Don't be so pessimistic. You have an irrational hatred for government."

Both of these plans must entirely fail for the same reason. They must both work on trust. Even if most people and politicians are honest and good, it only takes a minority to steal all of the money. Each plan can only work in a world of angels. So, they can't possibly work.

Why do most people immediately see the problems with the sandwich plan, but can't see the problems with the energy plan?

This mystifies me.

Jan 30, 2013

Upper Class Inequality

Progressives:  We must break the cycle of privilege where lucky, wealthy businessmen bestow the means of production onto their children.
Mike:  Instead, wealthy politicians and bureaucrats will bestow their connections and access to prestigious schools onto their more worthy children.
  Notice how often the children of politicians enter politics. Just name recognition, I guess.


Upper Class InequalityRead the whole thing
01/30/13 - ChicagoBoyz by David Foster  [edited]

Progressivism is not about equality. It is about shifting the distribution of power and wealth in a way that benefits those with certain educational credentials and connections.

Many progressives graduated from Ivy League universities. How many of them would eliminate alumni preferences and have their children considered for admission on the same basis as everyone else? An alumni preference is an inter-generational asset in the same way as a small businessman’s store or factory.

Power and connections are convertible into wealth.

  • Former president Bill Clinton was paid millions of dollars in speaking fees last year.
  • Former government officials leverage their contacts into executive jobs with green energy companies, despite having minimal knowledge of either energy or business.
  • There are in-kind benefits, like a university president’s mansion. Residents of the old Soviet Union and Eastern Europe know all about those benefits for nominally low-paid officials.
  • Today’s progressivism is almost always about transfering power from individuals to credentialed experts who will coerce or “nudge” people to do what they think is best.

The talk about equality is substantially a smokescreen, possibly unconscious, behind which progressives pursue wealth, status, and ego satisfaction.


T.S. EliotThomas Stearns Eliot was an American-born English poet, dramatist, and literary critic (1888–1965).:  Half of the harm that is done in this world is due to people who want to feel important. They don't mean to do harm, but the harm does not interest them. Or they do not see it, or they justify it because they are absorbed in the endless struggle to think well of themselves.

Jan 21, 2013

Prudent Spending

Republican:  Your spending is out of control.
Democrat:  We are only continuing the Bush 2009 spending, so stop complaining.
Pub:  You exploded that budget with the $831 billion stimulus.
Dem:  And you agreed.
Pub:  But, that stimulus was supposed to be a one-time thing.
Dem:  Yes, but we are continuing the goodness. We want more stimulation. If you disagree, just vote against that spending.
Pub:  We are trying to, but you won't discuss a budget, or even support Obama's budget.
Dem:  You are trying to wreck the country by dismantling the government. Have you no shame?


Democrats say that Republicans are spinning lies about Democrat spending. Here are the Democrat talking points, and they are mostly true from a distorted perspective:

  • Bush's outrageous FY 2009 spending is causing our huge yearly deficits and exploding debt.
  • Obama has been stingy in increased spending since 2009, every year he has been in office.
  • House Republicans approve of US spending every year, so why are they complaining? First they approved increased spending, and now they are making a fuss about the amount of debt, which their spending must increase.
  • The House and Senate have passed a budget every year as a continuing resolution. Yet, Republicans claim that we have no budget.
  • Republicans want to block the established, default operation of our government.


The Rest of the Story

Approving a federal budget in "normal order" means constructing and approving a budget in each of the House and Senate, then reconciling differences, and presenting that legislation to the the President for signature, if he approves.

The last US budget established in normal order was for the 12 months ending Sep 30, 2009. That is FY 2009 (Budget year, or spending yearFiscal Year 2009). Obama became President in January 2009. No usual budget has been passed under his direction for four years. See below for why.

The 2009 flood

The unusual spending event in 2009 was the Wikipedia$831 billion of stimulus spending proposed by Obama, generally approved by Bush, and signed by Obama in Feb 2009. That was added into the spending limits for government departments in FY 2009, and implicitly into the 2009 budget. It was sold as a one-time kick-start to the economy. It increased the FY 2009 NPR.org - The federal government collected taxes of $2,300 billion, borrowed $1,300 billion, and spent a total of $3,600 billion in 2011debt by $831 billion and did little except reward Democratic government agencies and political groups.

Since that time, Obama takes credit for an historically slow increase in spending in the following years, a model of spending restraint. Democrats point to Bush's 2009 budget as the spending blowout that is creating all of our debt today. They don't mention the $831 billion increase to that budget pushed through by Obama.

A flood every year

What about following years?  Senate Democrat majority leader Harry Reid has refused to even hold budget conferences in the Senate since 2009. Instead, the House and Senate pass "continuing resolutions" which allow the President and executive agencies to spend what they did in the previous year, plus some. The $831 billion "kick-start" has become a repeated increase in spending every year. That is why the US is accumulating massive, unprecedented debt.

Why does the majority Republican House agree to these continuing resolutions?  They have proposed and passed budgets for each year 2010 - 2012,  just as they should. These budgets call for less spending. The Senate did not even consider them.

Irresponsible Republicans

If the Republicans forced the issue and did not agree to the continuing resolutions, then there would be no spending authorization, and the government would "shut down".  They don't want to face a politicized press, which would report this action as an irresponsible blocking of vital government services. So, the Democrats get their way on spending.

President Obama has submitted his own budgets for consideration. The Senate has voted unanimously against the outrageous spending contained in them. No Democrat wants it reported that he voted for such spending, or that he voted to reduce spending. So, Sen. Reid won't consider a detailed budget.

The common wisdom

We have the above set of talking points supposedly showing Obama's responsible administration of the government. It would be nice if the mainstream press explained what is really happening.

Jan 12, 2013

American Revolution Against British Gun Control

Fred:  Amazing. Colonial Americans started a shooting war because of high taxes.
Mike:  Not quite. They didn't like the taxes. They really didn't like the British army going town to town taking their rifles and gun powder.
Fred:  They could have negotiated.
Mike:  They didn't like the prospect of negotiating after being disarmed.


American Revolution Against British Gun ControlWhy the American revolution started
01/11/13 - DailyPundit by Bill Quick  [edited]

General Thomas Gage was the Royal Governor of Massachusetts. He had restricted town meetings to once a year.

He dispatched the Redcoats to break up an illegal town meeting in Salem. 3000 armed Americans responded, and the British retreated. Everyone in the area aged 16 years or older owned a gun and plenty of gunpowder.

Military rule would be difficult to impose on an armed populace. Gage had only 2,000 troops in Boston. There were thousands of armed men in Boston and more in the surrounding area. One response was to deprive the Americans of gunpowder.

Government evolves. It can be reasonable one year, and tyrannical ten years later. The government is armed and dangerous. A free people must remain armed and dangerous to preserve a reasonable negotiating position.


President George WashingtonGeneral of the revolutionary army and first president of the United States:

•  Government is not reason. It is not eloquence. It is force. Like fire, it is a dangerous servant and a fearful master.

•  Firearms are second only to the Constitution in importance. They are the teeth of the people's liberty.


The Connecticut Gun Ban04/02/13 by Bob Owens
04/02/13 by Bob Owens  [edited]

The second amendment to the US Constitution:

A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed.

AMG:  Some people want a powerful government which directs each person's life for his own good and forces community through high taxes and detailed regulation. They usually dismiss the Second Amendment as applying to bands of fighters who haven't been around since the end of the American Revolutionary War. But, there are eloquent people of that time who explained the purpose of the Second Amendment.

Owens:  The men who wrote the Constitution and the Bill of rights were some of the most educated and intelligent men to assemble anywhere at any time. They were all “damned rebels” who had taken up arms against a far-away tyrant. They meant for every American citizen to be armed with weapons of war, to beat back not just frontier raiders or encroaching foreign powers, but to beat back government itself.

Tenche Cox was a Pennsylvania delegate to the Continental Congress. He wrote to his fellow citizens in The Pennsylvania Gazette of Feb. 20, 1788  [edited for modern usage]:

The militia of these free commonwealths are entitled and accustomed to their arms. They must be tremendous and irresistible when compared with any possible army. Who are the militia? Are they not ourselves? Should we fear that we shall turn our arms against ourselves?

Congress has no power to disarm the militia. Their swords and every other terrible implement of the soldier are the birth-right of an American. The unlimited power of the sword is not in the hands of either the federal or state governments. I trust in God that power will always remain in the hands of the people.

[a year later]

Civil rulers may forget their duty to the people and attempt to tyrannize. We must occasionally raise military forces to defend our country, and they may misuse their power to the injury of their fellow citizens. The Second Amendment confirms the right of the people to keep and bear their private arms to oppose these misuses of power.

Nov 29, 2012

Pickled Jalapenos and Spicy Carrots

Fred:  A recipe? Really?
AMG:  Munching on spicy carrot sticks aids thinking about the big issues.

Warning: Cook at your own risk

-  Don't burn or cut yourself, and don't blame me.

Brine

4 ounces apple cider vinegar
2 teaspoons sugar
2/3teaspoon salt
7 ounces water
Stainless steel saucepan
Clean 16 ounce pickle jar with cover, washed, no need to sterilize.

Pickled Thin Sliced Jalapenos

6 green jalapeno peppers
- Wash, cut off stems, slice in half the long way, remove the seeds and white membranes. The seeds and membranes are edible, but are the hottest parts. Slice into very thin half-moons, the better to distribute in sandwiches.

Bring brine to a simmer, dissolve the sugar and salt. Add the sliced jalapenos, 30 seconds on medium heat. Spoon the jalapenos into the pickle jar, fill nearly to top with the hot brine. Place cover loosely on the jar 3 minutes to become hot. Tighten. Allow to cool. Refrigerate.

These are about half as salty, acidic, and sweet as the store product. For more heat, leave more of the white membranes attached to the green. Include some seeds in the brine for the most heat.

These must be refrigerated from the start, and will keep about 3 months. They are not safe for cupboard storage. Throw out if the brine becomes cloudy or if mold develops. This hasn't happened to mine.

Spicy Pickled Carrot Sticks

(brine)

3-4 carrots (12 ounces)
- Wash, peel if you wish, cut into 1/4 inch thick spears and rounds to fit into your pickle jar.
1/3 teaspoon crushed red pepper flakes
- Add to the brine as you bring it to a simmer.

Follow the recipe for the jalapeno peppers, substituting the carrots. Simmer the carrots in the brine for 1-2 minutes if you like them softer. Adjust the sugar and red pepper flakes as you wish, and prepare as much carrot as will fit into the jar.

These must be refrigerated from the start. Treat like the jalapenos above.

Oct 4, 2012

Obama's Foreign Policy

Fred:  What is our foreign policy?
Official:  Our model could be called "the reformed alcoholic".
Fred:  What?
Official:  We were alcoholic. We now dislike our former friends who used to party with us. We will not continue to be co-dependent by supporting them.
  We now agree with our former enemies, that our behavior was outrageous. We will apologize and make reparations.
Fred:  But, our enemies hate and want to kill us.
Official:  We think they have good reasons for that attitude.


The Disgust Limit
10/03/12 - The DiploMad  [edited excerpt]

Everywhere one looks abroad, one sees the consequences of Team Obama's incompetence, delusions, and anti-Americanism.
  • Qaddafi was cooperating with us against Al Qaeda. Team Obama removed Qaddafi with no real thought to what would replace him. This created a chaotic situation in Libya that has greatly benefitted AQ's rebuilding efforts, and has resulted in the murder of the US Ambassador and three other diplomatic staff.
  • We turned victory in Iraq into defeat. Iran is now the predominant player in Iraq.
  • We have done the same in Afghanistan, allowing the Taliban and AQ to reappear after the decisive defeat administered them.
  • In Egypt, we sold out Mubarak, and got in exchange the Muslim Brotherhood. The Muslim world openly ridicules and attacks us.
  • Israel increasingly fears for its survival as Obama refuses to stand up to Iran's mad pretensions.
  • Obama has betrayed Poland and actively sought to undermine the UK in its confrontation with the Argentines over the Falklands.
  • In Asia, the misadministration's fecklessness re Russia and China is having serious consequences for the global economy and for key US interests and allies in the region.
  • The insane Communist monarchy in North Korea grows evermore aggressive and dismissive of the United States.
  • We see a deliberate stiffing of our Canadian friends.
  • We have a policy of drift and disengagement that alienates allies such as Chile and Colombia.
  • We allow autocrats such as Chavez, Ortega, Correa, Morales, and Castro a free hand, and encourage clowns such as Cristina Fernandez to drive Argentina's economy into the ground.
  • We have turned the OAS into an anti-American sounding board.
  • Our one effective policy  [sarcasm]  in Latin America was the selling of guns to drug cartels.

Sep 10, 2012

Sending Jobs to Other States

Fred:  We should stop importing cheap foreign goods and
      support US jobs instead.
Mike:  May I ask, what work do you do?
Fred:  I make donuts.
Mike:  Well, I saved $100 last year buying Korean tools.
Fred:  That must stop.
Mike:  If so, I'll have to buy $100 less donuts.


There is much concern about "sending jobs overseas". Some people call for consumers and businesses to "Buy American" even if it costs more. They claim that much of US unemployment is caused by selfish businessmen who buy foreign goods or invest in foreign factories merely to increase their profits. They say that people should be more important than profits.

Maybe these claims don't go far enough.

A Glorious Plan For Jobssarcasm

This plan will benefit all US workers. Each state must stop outsourcing its demand for great products to the two states who happen to be the best producers.

Identify the two states that are the most efficient producers of each product, and ban that product from being shipped to the other states.

If a ban is too sudden, then impose increasing taxes on the production in those two states. The Constitution may currently prevent this ban, but that doesn't make this a bad idea, and we should change the Consititution to benefit us all.

This will redirect demand in all of the other states. Local production will no longer be savagely depressed by the competition of the former top two states. Local producers outside those two states will agree with this. Jobs will be created locally to produce these goods, possibly at lower efficiency. No caring person thinks cold efficiency is more important than warm, local jobs.
 

Yes, there will be some gnashing of teeth from the former cold hearted, most efficient producers. And, there will be some realignment of resources and prices. Prices for goods might go up.

Some former top dogs will need to be dissuaded from manufacturing for a black market. They may attempt to retain jobs for themselves by selfishly selling goods at a lower price, to the harm of all other producers. They should be punished for predatory under-pricing.

Workers could take pride in producing goods less efficiently at higher prices and lower wages, in good local jobs. They would support their counterparts taking the same pride in their work across America.

Apologists for business will argue that the goods from the top two states were cheaper due to hard-won experience and previously high volume. They will argue that cheaper goods allowed consumers to spend the difference on other products, many from the other 48 states. That seems to make sense, but I wouldn't bet on it.
 

In later rounds, we can continue to identify the top producers and limit them also. The increased jobs and wealth will support a grand solution:  No trading between the states. Each state will have local jobs producing fine local products. No more job-stealing by the other states, and certainly not by foreign countries.

If this doesn't produce enough jobs, then we can limit trading between all cities and incorporated areas. Our motto: "Good, local jobs. No scab competition from other states or cities".

We can no longer allow efficiency to sap the strength and eliminate the jobs of this great nation. Maybe we can have special rules for California and Florida strawberries, but that is it.


Reality

The above is sarcasm. In reality, most people understand that producers in any state should be allowed and enouraged to sell their great products to consumers everywhere. Most people do not think it is unfair for companies in Ohio to compete with companies in Tennesee, even if this means (say) fewer jobs in Tennessee making a particular product.

Products don't care about political boundaries. A product purchased from a company in China, or a job outsourced to China, is no worse than purchasing a product from Ohio or moving a job to Ohio. The Chinese or the Ohioans use the dollars they earn to spend them on something else in the US economy. The pattern of production and employment changes, but not spending demand. Overall production goes up and prices come down.


Efficiency Is Prosperity

Efficiency produces prosperity. Whatever you personally produce, whatever is your income, you are better off buying things at lower prices, because you can buy more things which benefit your life. Lower prices result from the invention and work of companies that produce a greater volume of products using fewer people.

Necessarily, other companies and other people will not be producing those products. Either they won't try to produce, or they will reluctantly lose customers and the jobs associated with those products.

Your charitable instinct may suggest that people should not lose their jobs. But, that would require telling you, and everyone else, that you cannot ever do anything better. If you do it better, then someone loses the customer that you gain. If you can never do it better, then you can never increase your income.

In reality, increased efficiency producing one product sends a signal to other people, to work on producing other products. Eventually, that signal of lower prices requires them to work on something else. At the same time, consumers save money which they can spend on those other products. Thousands of such rearrangements result in more and better goods available at lower cost. Everyone becomes more efficient and is able to buy more things.


The Problem Of Regulation

The problem for the United States is not that the Chinese and others are supplying inexpensive goods to us. The problem is that we are preventing business development in the US that would employ people to produce many things that we would like. Limiting trade does not create jobs overall or increase prosperity. We need to free ourselves from suffocating government restrictions on being productive.

Selling us what we won't make ourselves

Why was the IPad manufactured in Asia?

Dallas Weaver:  [edited]  You cannot manufacture products in the US for rapidly changing markets. Our malevolent government permit system and legal parasites slow projects far beyond the point of responding to changed market opportunities.

Jul 26, 2012

Taxing the Sort Of Rich

Fred:  The Democrats are going to tax the rich. I like that.
Mike:  They might collect $60 billion more per year.

Fred:  That's a lot.
Mike:  They need $1,140 billion more.

Fred:  Where are they going to get that?
Mike:  Guess.


Over the Cliff We Go
07/26/12 - WSJ Opinions by Stephen Moore

[edited]:  The Democrats' official position is to continue current tax rates for the middle class and raise taxes on upper-income individuals by ending their "tax cuts".

Un-advertised, Senate Majority Leader Harry Reid's (D. NV) tax plan retains the alternative minimum tax, with Obama's support. It imposes a $3,400 tax hike on 28.8 million middle-class families. The Republican controlled House will probably ignore it.

House Ways and Means Committee Chairman Dave Camp: "The Democrats almost have to raise taxes on the middle class. Where else could the money come from?"

Reid's and Obama's plan would reduce the deficit by only 5%  (if it raises any money at all), and Democrats don't want to cut spending. Democrats will have to tax the middle class if they want to seriously reduce the $1.2 trillion deficit. There aren't enough millionaires and billionaires to pay for it.

Jun 11, 2012

Statistical Prosperity

Gov't Economist:  Eureka! We can hire more government workers. Everything we pay them will add to GDP according to our accounting rules. And, they will be employed.

Assistant:  What will be hire them to do?
Economist:  That doesn't matter. The statistics will be better.

Assistant:  Why not just "adjust" the statistics?
Economist:  You should be ashamed. That would be dishonest.


Government promotes itself as a scientific manager. It sets goals with numeric precision and finds direct ways to meet those goals.

Obama's economists come into his office each week and discuss how to improve the economy. They discuss the official statistics of GDP (Gross Domestic Production) and jobs held. The government wants a statistical recovery.

They want to report hard numbers, however that is accomplished. If you argue with numbers, you are a moron. Who are you to question the non-partisan measurements of a government bureaucracy analyzing huge datasets with giant computers? You are a peasant.

Those economists offer a direct plan. When government hires more workers, their pay and benefits are counted as increasing GDP no matter what they do or accomplish. Obviously, they now have a job, so the employment statistics improve. This is a no brainer!  It's a two'fer.

Expanding government employment directly and immediately improves the two statistics which government cares about. It is the direct path to statistical prosperity.

Plus, Team Obama believes in the Keynesian Multiplier. They actually believe that they will produce more wealth for us all, if they can pay out more cash to accomplish anything or nothing. So, it is a three'fer.

If the Multiplier were true, then we could Counterfeit Our Way to Wealth. But sorry, it isn't true.

Here is how government master plans, oversight, and statistics work out in reality.

Unintended Consequences and Perverse Incentives
06/2012 by M.J. Perry

[edited]  Managers and employees of glass plants in the former Soviet Union followed master-plan production guidelines.

First, they were rewarded according to the tons of sheet glass produced. Unsurprisingly, most plants produced sheet glass so thick that one could hardly see through it.  (And, this glass did not fit prior applications such as broken windows.)

The rules were changed to reward the total area of glass produced. Then, they produced glass so thin that it broke easily.

Team Obama wants to manufacture higher statistical GDP and jobs numbers in any way it can. Thick or thin doesn't matter.

May 28, 2012

Street Light Economics

It is dark. Jim is looking around under a streetlight.

Frank:  What are you looking for?
Jim:    I lost my keys up the street a way.

Frank:  Why are you looking for them here?
Jim:    The light is better here.

This is a funny comment on human nature. The tragedy is that this type of thinking rules our political and policy world. It is the problem of the seen and unseen. Politicians and economists report in official tones about their measurement of what is under the light, when there is a big, complicated world in the darkness. They should know better

Prosperity and Vacations

Suppose that a Prof  (Professor of Economics) studies past spending on vacation travel and lodging, and finds that periods of higher income are definitely associated with higher spending on vacations. The Prof has assembled the data with statistical precision.

So, the Prof proposes to raise everyone's income and end a recession by requiring that people use their savings to spend more on vacations.

He says that this will increase GDP directly (Gross Domestic Production), and vacation spending was associated in the past with even larger gains in personal income. He calls this the "Vacation Spending Multiplier". Everyone will become wealthier when they buy more vacations.

That advice would be crazy.

A cushion of savings gives people some flexibility in uncertain times when they might lose their own job. Yes, spending more on vacations would temporarily employ more people. But, at the end of the forced spending, those other people would again lose their jobs, and the buyers would have spent their savings. They would only have some nice memories.

The Prof has completely confused cause and effect. People buy more vacations when their income increases. More vacations is not the key to building the wealth of society.

Prosperity and Government Spending

Instead, the Prof  (one of many government economists) reports that past periods of increasing personal income highly associate with increasing GDP and higher government spending. The Prof has assembled the data with statistical precision.

So, the Prof proposes to raise everyone's income and end this recession through massive government borrowing applied to massively higher spending.

Not only does this increase GDP directly, but it has associated in the past with even larger gains in personal income. The Prof calls this the "Government Spending Multiplier".

The Prof says that everyone will become wealthier when they indirectly buy more of anything through the government.

That policy is crazy. That is our current policy.

Yes, spending more on government bureaucracies, planning meetings in Hawaii, and filing cabinets has temporarily employed more people. But, at the end of the forced spending, those other people have again lost their jobs, and the people of our country miss their savings. They don't even get a nice memory of a vacation.

The Other Guy

The public is truly doing the buying, because it will have to pay back the government loans from the economy created from that extra spending. Additional sidewalks, filing cabinets, and regulations do not support producing more things that support people's lives.

You may think that the other guy, the rich guy, is going to pay back the loans, so why worry?

  • The amounts are so large that the politicians are coming after you through innovative taxes.
  • Even if the rich pay an outsized portion, that comes from money that they would have invested in things that produce more opportunities for jobs. They are only trying to make a profit, but they will want to hire you along the way. More businesses produce a long-lasting need for more workers and managers.

    Government borrowing has a temporary effect and wastes resources. It is unsustainable at the current, massive levels.

  • The government may convince the rich that they can't gain anything personally from investing. So, they will stop, and go on vacation. OK for them, bad for you.

Professionals

I might forgive Jim above for looking only under the light. He might figure that he has no chance of finding his keys in the dark. He is an amateur.

But, people who call themselves economists claim to have studied the situation. They claim to be experts about the dark. They should know the probability of finding those keys. They should be expert at presenting just what is seen and unseen, known and unknown.

Instead, they crunch statistics about past events, ignore the uncertainties, mash together the complexities into simplistic measures such as GDP itself, and recommend policy based on the numeric results of untested (and often unverifiable) "models". Not all economists, but almost all who advise the government.

A Choice

We mistakenly trust in supposed experts who bask in the precision of their statistics. Yet, they measure only what is under the light, and then recommend using government force to guide the public through the darkness.

We are going to face a world-wide breakdown caused by governments printing money, borrowing wealth, and wasting it. Immoral and ignorant politicians have failed to provide the utopia promised to a gullible public. The outcome will depend on what the populace comes to believe.

Some politicans will say that this is another stage in the collapse of Capitalism, unable to be restrained by a caring government.

Or, people may see that government was in control, printed the money, borrowed the wealth, and failed miserably. Maybe, as after WWII, the people will reject goverment plans and promises and cut the power of government. Another prosperous period of growth and power like the 50's and 60's would follow.

- -
Spending did not end the Great Depression
Reduced spending and lowered tax rates did it.

[edited] What happened in 1945 at the end of WWII? FDR was convinced the only way to employ the 12 million returning soldiers was another New Deal program, but he died before he could impose his plan. The new President Truman proposed it, along with national healthcare.

Both the Congress and Senate had Democratic majorities. They said "No" to the whole New Deal revival:  no federal program for health care, no full-employment act, only limited federal housing, and no increase in minimum wage or Social Security benefits.

Instead, Congress reduced taxes across the board. Top marginal corporate tax rates effectively went from 90% to 38% after 1945.

By the late 1940s, a revived economy was generating more annual federal revenue than the US had received during the higher tax rates of the war years. Price controls ended in late 1946. The US began running budget surpluses.

Unemployment had remained double-digit throughout the whole New Deal. One year after the end of New Deal policies and the return of economic freedom, it was under 4%,  despite the return of a huge number of soldiers.