Monthly Archives: October 2011

Bill Niskanen on Inequality

The late Bill Niskanen on inequality:

Rawls recognizes that individual well-being is dependent on more than income and wealth, but he does not acknowledge the implications of the fact that the other dimensions of well-being are not fungible. Consider the following example.

One young man is healthy and handsome, spends his days on the beach, has his pick of young women companions, and makes $10,000 a year by busing tables in the evening. Another young man is confined to a wheelchair, has congenital body odor, has never had an intimate relationship, and, with no other life, makes $100,000 a year as an expert computer programmer. In this case, who is worse off? Who should redistribute what to whom and how?

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Filed under Economics, Philosophy

Monday Smorgasbord

I don’t have time to post these by themselves. They’ve been sitting in my “to do” pile for too long, but I find them all to be interesting reads. Read what interests you.

“How to Prevent a Depression” by Nouriel Roubini.

France imposes a “fat tax” on sugary soft drinks to combat obesity.

CNAS publication: “Hard Choices: Responsible Defense in an Age of Austerity,” by LtGen David Barno, Nora Bensahel, and Travis Sharp.

Megan McArdle: “By 2020, cases of throat cancer caused by the human papillomavirus may outnumber those of HPV-caused cervical cancer.”

Hitch on the killing of Anwar al-Awlaki.

Maurizio Viroli: Silvio Berlusconi and the moral malaise of Italy.

“The Value of Values: Soft Power Under Obama” Mark P. Lagon

A debate on whether too many students are in college. (My answer is yes.)

Cliff May, “Autocracies United: Why “reset” with Russia and “engagement” with Iran have failed”

A journalist on the argument for better football helmets, and an economist on the trade-off.

Lot of stuff going on here. Enjoy.

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Filed under Economics, Education, Europe, Foreign Policy, Health & Nutrition

Allan Meltzer vs. Keynesians

Allan Meltzer offers four reasons why Keynesian economics via the Obama stimulus has failed:

First, big increases in spending and government deficits raise the prospect of future tax increases. Many people understand that increased spending must be paid for sooner or later.

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Second, most of the government spending programs redistribute income from workers to the unemployed… Permanent tax reduction generates more expansion than increased government spending of the same dollars.

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Third, Keynesian models totally ignore the negative effects of the stream of costly new regulations that pour out of the Obama bureaucracy. Who can guess the size of the cost increases required by these programs?

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Fourth, U.S. fiscal and monetary policies are mainly directed at getting a near-term result. The estimated cost of new jobs in President Obama’s latest jobs bill is at least $200,000 per job, based on administration estimates of the number of jobs and their cost. How can that appeal to the taxpayers who will pay those costs?

Meltzer concludes:

Clearly, a more effective economic policy would aim at restoring the long-term growth rate by reducing uncertainty and restoring investor and consumer confidence. Here are four proposals to help get us there:

First, Congress and the administration should agree on a 10-year program of government spending cuts to reduce the deficit. The Ryan and Simpson-Bowles budget proposals are a constructive start. (Note to Republican presidential candidates: Permanent tax reduction can only be achieved by reducing government spending.)

Second, reduce corporate tax rates and expense capital investment by closing loopholes.

Third, announce a five-year moratorium on new regulations.

Fourth, adopt an enforceable 0%-2% inflation target to allay fears of future high inflation.

Now that the Keynesian euphoria has again faded, perhaps this administration—or more likely the next—will recognize the reasons for the failure and stop asking for more of the same.

I post this for a two reasons. First, Meltzer is an accomplished economist and deserves to be read, just as Krugman or Stiglitz. Second, and more important, since the collapse of the financial sector and the resulting recession, people have taken an interest in the economics of stimuli. Here Keynes is a clear winner. There are no invisible hand economists in recessions. Or at least, there are no invisible hand politicians in recessions. There is always the urge to do something; to not be seen doing nothing. Since Keynesian economics offers a clear idea of what to do – more stimulus to increase aggregate demand in the short term until normal economic activities can return to pre-recession levels – everyone appears to be a Keynesian. But there are those like Meltzer who are not Keynesian. Next time you hear someone – Joe Biden? – say that “all economists agree,” you will know that they all do not. Keynesianism is a theory, and not the final or even most accepted view.

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Filed under Economics

Capitalism Without Failure

“Capitalism without failure is like religion without sin. It doesn’t work.” -Allan Meltzer

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Filed under Economics, Quotations

Ooh La La!

A special thank you to the readers of TOTPS. Readership in October was up 60% over September! Please continue to share your thoughts on the comments page and what you find interesting with your friends. I’ll do my best to keep the content thought provoking and fun.

Like this:

Source.

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Filed under Health & Nutrition, Humor

Michael Lewis on Charlie Rose

Michael Lewis was on Charlie Rose earlier this month talking about both Moneyball and Boomerang. Great interview, and worth the listen if you are unfamiliar with his writings.

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Filed under Business, Economy

Not a Good Sign

Overheard at a Barnes & Noble today:

Random Lady: "I’m sorry, I thought it was a costume."
Guy dressed in a black Obi-Wan Kenobi-style cloak: "No, this is what I wear."

Happy Halloween!

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Filed under Miscellaneous