Economics & Finance

A Delayed Feedback Loop from 1982

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Western Europe is currently a shining example of Normalization of Deviance.

Why?

This is why.

In his book Riding Rockets, Astronaut Mike Mullane explained that NASA ignored known risks with the Shuttle because the craft had flown without those risks manifesting themselves in an incident. It is a common feature of humanity. Someone tells you that riding motorcycles without a helmet is dangerous. But you do it once and get away with it. You do it twice. A thousand times. But on the thousand-and-first, someone cuts you off, and you spray your brains all over the landscape, realizing, in your last, painful instants on this Earth, exactly why doctors call people like you “rolling organ stockpiles”.

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It Isn’t A Good Idea Over There, So Of Course We Have To Copy It

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Milo clued me in to a new scheme the British government came up with. Turn in your old car to be destroyed (at taxpayer expense!) and get a credit towards a new one.

There already is an incentive offered to get people to buy new cars. It is called a “trade in”, where cash or credit towards a new car is offered by the dealers themselves. And then the dealers fix up the old cars and sell them for a lower price to those who can’t afford a new one. Everyone wins!

But the new scheme in Great Britain would do away with used cars. Buy a new one or go without. I suppose the government over there just hates poor people.

I wouldn’t even bother to mention this at all, considering how it is an internal political matter in a foreign country, except that I just found out that Pres. Obama has suggested that the US adopt the same stupid plan!

Words fail me.

(Hat tip to Insty, and I cross posted this essay over at Hell in a Handbasket.)

How Faddish Leftism Kills: Part 2,658,893

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While people in  Zimbabwe  starve,  Robert Mugabe’s [sic] “consumer rights group” raids stores that sell genetically modified food.  In  Zimbabwe, GM plants provide basic staple foods that the country must import. Their loss  seriously  depletes the food supply.

This is a case in which the intellectual fads of western leftists in rich countries mutate into something lethal in the less  sophisticated  political systems of the 3rd world. In this case, the hysteria over genetically modified foods promoted by revenue-seeking, activist-corporations (e.g., Greenpeace) in the developed world provides the moral justification for a thug like Mugabe to kill people.

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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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Farmer Dan – Hay and Pork

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A little while ago, I purchased a small parcel of land, just under 20 acres. This was a big deal for me, as my whole life I have pretty much banked every single penny I have ever made, preferring to “live small”. On this parcel are a few buildings, one of which we are rehabbing (the old barn). Oh the surprises you run into when rehabbing an ex-dairy farm. But those stories are for another day.

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