Economics & Finance

Don’t Be Preedy

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While linking to a Megan McArdle comment  on a childish Matthew Yglesias post on bankers, Instapundit asks a question  that reveals a void in our language and world-models:

“DOES GREED MAKE YOU A BAD PERSON? What about greed for power, a trait exhibited by many of those who denounce greed for money? Which is worse?”

Why does Instapundit have to use the cumbersome phrase “greed for power” to describe a very common human behavior? Why do we have to describe the lust for power in terms of the lust for money?

Language can tell you a great deal about the world models held by those who speak the language. Specifically, if a language lacks a specific, neat word for a particular concept, it tells you that the people who speak the language don’t use the concept very often.  

What does it tell us that English and every other Western language have a single word to describe the destructive lust for money but that they lack a single word to describe the destructive lust for political power?

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Mad Max Days

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The mayor in Flint, Michigan seems to be pondering something that used to seem impossible. The idea is to cut off abandoned neighborhoods from city services. No police, no fire, no services of any kind.

It certainly seems logical from a purely realistic standpoint. As more and more property is left to rot, there simply isn’t enough tax money coming in to provide services to every corner of the city. Might as well concentrate on the areas that still have enough legal residents still paying their taxes.

What do I think of the scheme? The very first thing that comes to my mind when someone tells me of a pie-in-the-sky project is “How are we going to pay for that?”, and this just seems to be the reverse. If the situation has deteriorated to the point that there just isn’t enough of a tax base to pay for basic services in less populated areas, yet the city government still tries to provide those services, then pretty soon the system would collapse and there wouldn’t be anything.

And, before I get a lot of angry comments, I realize that good, honest, hardworking people will suffer for this. People who have followed the rules, paid their taxes, and watched while the good neighborhood where they bought their house decades in the past became a criminal infested blight are going to get the shaft. But they will be screwed anyway if Flint goes bankrupt and everyone inside the city limits is left swinging in the breeze. They are just the one in the lifeboat who drew the short straw.

So far, it seems to be a notion the mayor of Flint has discussed only in passing, but I don’t see the situation improving any time in the future. It will be interesting to see if they have to go through with it.

(Cross posted at Hell in a Handbasket.)

Money and Power

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There are two passions which have a powerful influence in the affairs of men. These are ambition and avarice—the love of power and the love of money. Separately, each of these has great force in prompting men to action; but, when united in view of the same object, they have, in many minds, the most violent effects.

—Benjamin Franklin

(also posted at Photon Courier as part of my Worth Pondering series)

Quote of the Day

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Capitalism is not too important to be left to capitalists. It has to be left to them. Politicians simply do not understand. They are contaminated by a desire to redistribute, and to regulate, to keep large constituencies of non-productive voters happy. No politician has been more ruined by this, or caused more ruin, than Mr Brown: and this week he was still at it. In his drivelling speech on “morality” on Tuesday (the absurdity of which would have been exceeded only by Lord Rumba of Rio delivering it) he castigated people for taking risks. Capitalism is based on risk. The reward for risk is profit. The punishment for bad risk should be bankruptcy. Mr Brown wishes to avoid all such extremes, which is why he rails against capitalists, and bails out pointless banks with our money. Let him bask in his “triumph” while he can, for he is very near the end of the plank.
 
Roosevelt’s New Deal failed because it hindered people from helping themselves. This welfarist event this week risks making the same mistake on an international scale, with its £1 trillion slush fund for wrecked economies. The politicians have left the stage, thank God. Now let us hope they stay off it for as long as possible, and let the people who can sort out this mess get on with doing so whatever the risk entailed.

–Simon Heffer

(via Alan Sullivan)

Bond Crash Ahead?

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One might think so, given the huge increase in federal spending, and the likelihood that the govt will sell bonds and/or print money to pay for it.

Yet the govt bond market remains strong*. Why?

I think there are several possibilities:

-Our economy will recover quickly enough for the money-supply expansion to be absorbed by economic growth without a big increase in the price level; we will grow our way out of debt.

-Today’s bond buyers and traders are too young to remember the 1970s; the bond market will crash eventually.

-Even considering the risks, US govt bonds remain the best place to park money until investors have better alternatives.

-Investors are playing a hot-potato game: holding govt bonds now is like keeping money in Mexican banks before a peso devaluation. Investors trade high returns (price appreciation for bonds, high interest rates on non-dollar bank deposits) against the risk of substantial capital loss in the event of a bond crash or currency devaluation.

Only time will tell what the answer is. Perhaps it will be “all of the above.”

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*I started writing this post a few days ago. Govt bond markets, particularly the Japanese market, have weakened since then.