Saturday, February 28, 2009

Saturday round-up #6

  1. The Swedish model of bank nationalization has been pointed too as a possible model. It wasn’t actually a nationalization. Detail here.
  2. The Obama budget has been analyzed in multiple posts (Mankiw, Mankiw 2, RCM, EconLog, Cafe Hayek). Bottom line: rosy growth projections bolstering huge deficits beyond the recession. Credit for “fiscal discipline” to use worst year of the recession as the benchmark. Lots of spin, lots of ‘redistribution’, little financial discipline.
  3. ARI has posted the video of John Allison’s talk on the causes of the financial crisis. It is a very insightful talk from an industry insider with many concrete examples. Invaluable.
  4. For a near daily dose of examples of entrepreneurs, and businessmen who have changed the way we live, I subscribe to the Heroes of Capitalism blog. Headed up by Dr. Eric Daniels of the Clemson Institute for the Study of Capitalism. Great histories of capitalists from the last two centuries!

Friday, February 27, 2009

Follow up

And a follow-up to my last from Will on private vs. public education.

The international evidence shows that private provision of education is often better but never worse than public provision. That there is so little private provision — not just in the U.S., but anywhere – can seem like a puzzle if you happen to think policy will tend to reflect the preferences of a benevolent technocrat. As Carney’s piece below shows, powerful entrenched interests may have a stake in making sure private provision stays crowded out.

Want to know who has an interest in keeping school socialized? Read on.

Control of Education

Will Wilkinson has a great post on the absolute size and power of the public teacher’s union lobby in Washington. Think that big corporations are the ones with political pull. Guess again.

Saturday, February 21, 2009

Saturday Round-up #5

  1. Interesting article over at Forbes.com. “The Social Democratic Moment” asserts that political system that has come out on top over the course of the 20th century is “social democracy” rather than any sort of laissez faire liberalism. I’m interested in this and large scale economic/political/cultural trends since I’m involved in advocating for ideas I believe in. It certainly is not lost on me that most modern states have some variant of welfare statism, and I have to wonder if this trend is reversible.
  2. Over at simply Capitalism, my fellow blogger RealistTheorist, examines a variant of the “broken window” hypothesis, namely that war is somehow good for economies.
  3. Watch out for the N word (Nationalization) to become more prevalent in the discussion around the financial crisis. I feel another simply Capitalism post coming on.

Friday, February 20, 2009

Round-up

Latest O Round-up. Rule of Reason. Check it out!

Thursday, February 19, 2009

Epstein on Obamanomics

Over at VOICES for REASON, Alex Epstein has a great post recounting how Obama in eschewing the “same ideas that got us here” is actually embracing them.

Wednesday, February 18, 2009

Inflation at sCap

Over at simply Capitalism, I’ve just posted discussing the drivers of potential use of inflation as monetary policy during this crisis.

Greenspan on the Free Market

It’s gotten to the point that whenever I read about any of Alan Greenspan’s new commentary on the economy, I’m sure to be unable to finish the article without disgust. I’ve been working on a small op-ed for my OAC class regarding the mortgage crisis and as a result I’ve had to read some of Greenspan’s commentary over the last few years. What I’ve come to understand is that in any given context, it’s not what he says that is so crucial it’s what he fails to say. Take his commentary last night at a New York Economic Club dinner regarding the recent crisis, from a WSJ blog entry. [bold mine]

In comments at a New York Economic Club dinner late Tuesday, the retired Fed chairman steered clear of much self-reflection on his role in the credit boom. But he did take a new swipe at the market’s self-correcting tendencies and bowed his head to a new period of increased regulation.

All of the sophisticated mathematics and computer wizardry essentially rested on one central premise: that enlightened self interest of owners and managers of financial institutions would lead them to maintain a sufficient buffer against insolvency by actively monitoring and managing their firms’ capital and risk positions,” the Fed chairman said. The premise failed in the summer of 2007, he said, leaving him “deeply dismayed.”

Self-regulation is still a first-line of defense, Mr. Greenspan said. But after the financial collapse of 2007 and 2008, “I see no alternative to a set of heightened federal regulatory rules of behavior for banks and other financial institutions.” He said hoped hoped it would come in the form of tougher capital requirements for banks.

The glaring omission of course is that if sophisticated mathematics and wizardry did not allow bankers to see [past the distorted economic policy he himself was implementing – but I digress] the future then by what method will a regulator be able to a priori prevent the same thing from happening? This is the key omission when anyone clamors for central planning or regulation. Anyone can apply regulations in hind sight, which only guarantees that the next financial crisis will occur somewhere else that was also unforeseen.

Controls will not prevent financial crises. They will only breed more controls.

Tuesday, February 17, 2009

Follow up to my last post

About 10 minutes after my last came out, I saw a similar blog post come out of VOICES of REASON. Part 2 of a 2 Part series entitled “The Czars Come to America”, author Onkar Ghate discusses the growing role of regulators in running of the economy. Part I is here.

Great posts. Definitely check them out!

Wither Wesley Mouch

Just a follow-up note to RealistTheorist’s post over at simply Capitalism on economic bureaucrat Larry Summers and the concern over what his influence on the Obama administration might mean. Yves Smith at naked capitalism has a great post on the consolidation of power by Summers and Treasury Secretary Timothy Geithner. Paul Volker has already been marginalized in his role. Here’s Yves take:

For the record, we have never been happy about the prominent roles Geithner and Summers are playing. Both played significant roles in creating and maintaining the system that lead to our financial mess. They are simply unable to see beyond their ideological blinkers. And as proteges of Robert Rubin, they are epitomes of what Willem Buiter calls "cognitive regulatory capture".

It seems Realist’s concern expressed in his original post is founded. Here’s a quote from Wikipedia describing Wesley Mouch, the character in Atlas Shrugged who ends up becoming the nation’s economic Czar:

Eventually he becomes the most powerful Looter, and the country's economic dictator, thereby illustrating Rand's belief that a government-run economy places too much power in the hands of incompetent bureaucrats who would never have positions of similar influence in a private sector business.

Atlas is becoming more prophetic every day.

Sunday, February 08, 2009

Saturday (Sunday) Round-up 4

I’m sorry for the light posting and the delay in the round-up this week. My dog was sick all week and getting him back to health took up my time. Without further ado however here’s a few interesting links from the week.

  1. Speaking of my puppy, 3 Ring Binder has had a series of posts covering each of the classes in the upcoming Westminster Kennel Club show and she featured a few pics of my own poodle, Moxie, when she reviewed the Non-Sporting Group.
  2. Fr33 Agents has a summary of BB&T CEO John Allison’s recent talk in Washington DC regarding the roots and solutions to our current financial crisis. It is a very nice summary. I am working on an op-ed on the same topic for my OAC Intro to Writing class, and I’m glad to see Mr. Allison speaking out.
  3. The Keynesian notion that consumption drives the economy, in practice leads to the articulation of several interesting paradoxes. For example, the Paradox of Thrift decries saving during a recession since it can lead to supposed deflationary “death spirals.” I think these paradoxes actually expose the errors in Keynesian thinking. Last week discussion of another paradox seemed to be fashionable. Will Wilkinson calls it Macroeconomics as mind control. I like to think of it as “The Paradox of Panic.” It involves an inordinate amount of focus on consumer confidence, the restoration of which will recharge consumption. This is one of the main targets of stimulus packages such as the one working its way through the Senate this week. Of course the paradox here is that in order to spur Congress to such confidence-restoring action, the common tactic used is an attempt to scare the bejeezus out of the American public by asserting that eminent collapse of the economy greets those who do not vote to enact the stimulus. Of course, once passed we’re sure to see some of that stimulus money go toward public service campaigns aimed at telling the public that it’s ok to spend now. Go figure.
  4. Great post by Yves Smith on what continues to NOT happen regarding the financial system. The Paradox of Panic leads regulators to specifically NOT want to analyze bank balance sheets and to take any action that would serve to repair those banks because such action would serve to spook depositors. And as banks continue un-restructured, they remain broken. So concern for consumer confidence, leads regulators to forego just the actions that would restore consumer confidence. This is why bankruptcies would be better solutions compared with anything Treasury continues to propose.
  5. Oh, almost forgot. Update on the MSI Wind. I love it! It has met all my expectations, and I have now tested it on all the intended uses I articulated in my previous post. In fact, I’m writing this post from the coffee shop!

Monday, February 02, 2009

New Blog Online

I would like to introduce you to a new Objectivist blog devoted to discussion of economics, business and free-markets. It is called "simply Capitalism" and it is located at:

http://www.simplycapitalism.com/

Subscribe to our RSS feed at: http://feeds.feedburner.com/SimplyCapitalism

It is a multi-author blog, staffed by Objectivists who work in business and industry, and who have a special interest in economic and business issues. Our intent is to write on current events, attempting to dissect and disseminate clear ideas and principles.

Our audience is broader than just Objectivists. My intent in forming the blog was to try to insert Objectivist thoughts into a very vibrant blog environment that exists today covering economics. We are not an activist blog per se, but I expect that the topical concentration, the development of writers with that interest, and writing for a broader audience will eventually spawn activist efforts.

We've got a great panel of contributors, who each are seasoned bloggers in their own right, and who all blog regularly on economic topics. These include myself, and:

Galileo Blogs of "Galileo Blogs"
Doug Reich of "The Rational Capitalist"
Beth Haynes of "Wealth is Not the Problem"
Realist Theorist of "Software Nerd"

I'm excited about the concept and the stable of writers who've agreed to contribute their efforts! Check it out!

With that, this blog is getting re-tasked, and renamed. The Crucible and Column will become simply The Crucible, and its focus will become broader, although hopefully still known for thoughtful analysis. Most of my business and economic content will be featured over at simply Capitalism.