Month: May 2009

Financial Crises: a Friedman-inspired solution

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Guest Post by Robert Leeson (contact: rleeson at stanford.edu)

Relentlessly printing and spending money may, with time, realign the self-interest of financial intermediaries with the social objective of lubricating our economic system. But by then we will be dancing with other demons: accelerating inflation and ballooning deficits. We must, therefore, attack financial instability at source by increasing the incentive to save and securing the channels by which savings are transformed into capital.

Milton Friedman’s correspondence (which I am currently editing for publication) contains numerous references to the benefits of a consumed income tax relative to the existing tax on income. Friedman also favored restricting banks to deposit taking (and obliging banks to hold 100 percent of those deposits in liquid assets).

Combining these two proposals produces a variety of structural reform possibilities – all of which would disburden capitalism of many finance-induced crises.

Currently, the Federal Reserve influences interest rates (and thus, they hope, the economy) by buying and selling financial instruments (usually Treasury securities). The Fed could also create and sell new savings-into-capital instruments to initiate an investment-led recovery.

A pre-tax savings vehicle could add to our capital stock on a dollar-for-dollar basis. These pre-tax dollars could be deposited with the Fed both through the withholding tax system and through supplementary contributions. These deposits should be inflation-protected and accessible to the saver at any time as income (minus provisional tax, which could be a declining function of the length of the deposit, tailing off to zero at, say, age 65).

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Further to the previous posting

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As Lex, probably wisely, decided not to have any comments on his posting about No. 230873 Second Subaltern Elizabeth Windsor I thought I would put up a link to my own posting on the subject.

May I just add that there is no need to worry about Her Majesty: she will survive this snub and continue serenely on her way. The last politician who thought he could supplant her in people’s hearts and minds was Tony Blair. Ha! That’s all I can say, to quote Bertie Wooster. Ha!

Elizabeth Windsor, Subaltern, Women’s Auxiliary Territorial Service

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“As Elizabeth Windsor, service number 230873, she volunteered as a subaltern in the Women’s Auxiliary Territorial Service, training as a driver and a mechanic. Eventually, she drove military trucks in support roles in England.”

Queen Elizabeth II is the last living head of state who served in uniform in World War II.

Obama, Sarkozy and Brown do not want her in Normandy on June 6, 2009. It is unlikely she will be alive or fit to travel in 2014.

They are correctly afraid that they would shown up as the petty, trivial men they are if they had to stand next to her.

These three detestable men just became even more loathsome in my eyes.

The three of them are not worthy to change the bedpans of our World War II veterans.

Princess Elizabeth WW2

Jonathan adds: When I heard about the decision to uninvite the Queen, my first thought was, Who wouldn’t be thrilled to be in her presence and ask her about her life experiences and views on various historical figures and controversies? My second thought was that Sarkozy, whom the press reported as the instigator of the exclusion, is a jerk. But of course I was naive and Lex is correct. The President of France would never do such a thing on his own, nor is it clear what he would gain by doing it. He is merely the designated fall guy. This had to be a conspiracy, and a fairly transparent one at that, which makes the participants appear even worse — Brown in particular, but he couldn’t have done it without Obama’s cooperation. Midgets, the lot of them. Here’s hoping she lives to be 100 like her mother and outlasts them.

The Killcullen Doctrine

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Dr. John Nagl, president of CNAS, lead author of The U.S. Army/Marine Corps Counterinsurgency Field Manual, retired lieutenant colonel and top COIN expert, has penned an important review of Accidental Guerrilla by Col. David Kilcullen, in the prestigious British journal RUSI. Unfortunately, at present no link is is available, but my co-author Lexington Green is a subscriber and sent me a copy of the review, which I read last night. I now look forward to reading Kilcullen firsthand and have put Accidental Guerrilla near the top of my summer reading List.

I state that Nagl’s review is important because beyond the descriptive element that is inherent in a review, there is a substantive aspect that amounts to an effective act of policy advocacy. First, an example of Nagl’s descriptions of Kilcullen’s arguments:

We do not face a monolithic horde of jihadis moti vated by a rabid desire to destroy us and our way of life (there are some of these, although Kilcullen prefers to call them takfiris); instead, many of those who fight us do so for conventional reasons like nationalism and honour. Kilcullen illustrates the point with the tale of a special forces A-Team that had the fight of its life one May afternoon in 2006. One American was killed and seven more wounded in a fight that drew local fighters from villages five kilometres away who marched to the sound of the guns – not for any ideological reason, but simply because they wanted to be a part of the excitement. ‘It would have shamed them to stand by and wait it out’, Kilcullen reports

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If You Can’t Dazzle Them with Audacity…

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David Foster’s post on the Blatherification of America, specifically based on this post over at Joanne Jacob’s site by guest blogger Diana Senechal, reminded me of my own problems with the American educational system.

I have a daughter in first grade. Although Blatherification is evident in her classroom, it is probably the least of my concerns. I’m a physical chemist by primary training, but I make my living with my MBA in Marketing, so this is not a Snowian Two Cultures disconnect. The No Child Gets Ahead errr… No Child Left Behind standards have had a pernicious effect on education, and nowhere is this more evident than in the phenomenon of curriculum reorganization.

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