Economics & Finance

Healthcare: The Supply Side

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Here’s a thought experiment. Suppose the year is 1902. Automobiles exist, but they are rare and expensive. The assembly line has not yet been invented, and car manufacturing, such as it is, is done entirely by craft methods.

Now imagine that our politicians decide that every American family, as a matter of national policy, should have its own automobile. (Let’s also stipulate that the trades involved in automobile-building–machining, welding, carpentry, etc–are tightly controlled by guilds.)

What would happen?

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Compare and Contrast

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Murdoc very kindly gave us a heads up to this fascinating photo blog. Pictures taken in Normandy during the 1944 invasion are compared side-by-side with images taken from the very same spot today. Looks like they cleaned up the place a bit since then.

Uncle points us to this photo array. The weekly food intake of families from various parts of the world are shown in graphic fashion, and the money spent is tabulated. Makes me proud to be an American.

Well worth your time.

The Coming Debt Repudiation

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In-Cog-Nito sent me a pair of links, to an article entitled Why Default on U.S. Treasuries is Likely, and a shorter summary of the article. Troubling reading indeed, but still, RTWT.

It is not literally impossible that the Federal Reserve could unleash the Zimbabwe option and repudiate the national debt indirectly through hyperinflation, rather than have the Treasury repudiate it directly. But my guess is that, faced with the alternatives of seeing both the dollar and the debt become worthless or defaulting on the debt while saving the dollar, the U.S. government will choose the latter. Treasury securities are second-order claims to central-bank-issued dollars. Although both may be ultimately backed by the power of taxation, that in no way prevents government from discriminating between the priority of the claims. After the American Revolution, the United States repudiated its paper money and yet successfully honored its debt (in gold). It is true that fiat money, as opposed to a gold standard, makes it harder to separate the fate of a government’s money from that of its debt. But Russia in 1998 is just one recent example of a government choosing partial debt repudiation over a complete collapse of its fiat currency.

Zimbabwe option, anyone? Or the alternative of tax rates exceeding the peak from World War II — forever.

Have a nice day.

Kennedy the Catholic

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A brief, charitable, fair yet accurate assessment of Sen. Kennedy. RTWT.

Many will speak and write of the legacy of Ted Kennedy in the days ahead. For me, as an East Coast “ethnic” grandchild of immigrants, Kennedy’s death symbolizes several cogent moments in Catholic America.
 
It marks the passing of a generation that thought that being Catholic, Democratic, and proNew Deal were synonymous. We now live in an age where many Catholic Americans are very happy to be described as pro-market and are suspicious of New Deallike solutions — as, of course, they are entitled to be in a way that they are not on, for example, life issues. Senator Kennedy had it exactly the wrong way around.

The author, Fr. Robert A. Sirico, of the Acton Institute, is a prolific writer and activist on behalf economic freedom: “The Mission of the Acton Institute is to promote a free and virtuous society characterized by individual liberty and sustained by religious principles.”

UPDATE: Here is an excellent article by Carl Cannon, about Sen. Kennedy, entitled “Mary Jo Kopechne and Chappaquiddick: America’s Selective Memory”. It is fair and fact-based.

In similar fashion, the editors of National Review do justice to the man, and end on a charitable note I will also end on: “May he encounter the divine mercy that both the greatest and the least of us will require at the end.” Amen.

How Most Economists Make Their Reputations

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psychic

From xkcd

Economics is not a predictive science, i.e., economists do not make better predictions than mere chance. Yet most economists build their careers based on selling the idea that they can predict the consequences of different economic decisions under real-world conditions. Just like the character in the cartoon, economists build their reputations by advertising the few times they got lucky and guessed right, while convincing people to ignore their many, many failed predictions.

As one wag said of  Paul Krugman,”He has successfully predicted 9 of the last one recessions.”

He’s far from alone in that.

The only economists whose works stand the test of time are those who explain why economics isn’t a predictive science and that we shouldn’t make decisions based on the belief that it is a predictive science. This is why Adam Smith is still studied 230 years later while all his contemporaries who argued that they did have predictive powers have been forgotten or discredited.