"I'm a Believer"

All the evidence, then, points to substantial positive short-run effects from the Obama stimulus. And there were surely long-term benefits, too: big investments in everything from green energy to electronic medical records.

So why does everyone — or, to be more accurate, everyone except those who have seriously studied the issue — believe that the stimulus was a failure? Because the U.S. economy continued to perform poorly — not disastrously, but poorly — after the stimulus went into effect.

http://www.nytimes.com/2014/02/21/opinion/krugman-the-stimulus-tragedy.html?partner=rssnyt&emc=rss&_r=0

Interesting expression of faith.  By what means could we "know" what would have happened without the stimulus?  Dr. K moves with ease from the role of economist to true believer.

"Big Investments"?  Where the money bro?

Keynesianism = Hubris = The Fatal Conceit

Real business nonresidential fixed investment (RBNRFI) was lower in 1Q2012 than it was in 4Q2011, falling at a 2.1% annual rate, quarter to quarter. This continued a decelerating trend. After growing at 15.7% during 3Q2011, RBNRFI slowed to a 5.2% growth rate in 4Q2011 and then fell at a 2.1% rate last quarter.


Why does this matter? It matters because RBNRFI is what actually drives the economy. Both real GDP (RGDP) and employment growth are a direct function of RBNRFI. The notion that “spending” drives the economy is the Keynesian Superstition.

Plans based upon superstition tend not to work very well. Obama’s $831 billion “stimulus” program of early 2009 failed utterly, as did Bush 43’s $152 billion stimulus program a year earlier. The economists in the grip of the Keynesian Superstition (e.g., Paul Krugman) were left sputtering that the stimulus “just wasn’t big enough”.

Because stimulus works in exactly the same way as trying to raise the level of a swimming pool by drawing a bucket of water out of the deep end and pouring it into the shallow end, no stimulus can ever be big enough. In retrospect, it’s unfortunate that Obama didn’t push through a $2 trillion stimulus. It would have been worth wasting another $1.2 trillion to finally bury this deadly superstition.
http://www.forbes.com/sites/louiswoodhill/2012/05/02/president-obamas-2012-re-election-prospects-suffer-an-ominous-gdp-report/
I think of the Keynesians as some peacock like bird, strutting around with an undue sense of self significance imagining all the great things they can do with power.  They are defined by pretense.  The pretense that men can act as gods, pulling strings, manipulating the world economy as if it was their backyard creation.  Only man's fatal conceit would allow him/her to believe they possessed the depth of understanding and knowledge necessary to try and manipulate such complexity.  Hubris is not something humans are running short on.

Samuelson - Post Keynesianism

Standard Keynesian remedies for downturns -- spend more and tax less -- presume the willingness of bond markets to finance the resulting deficits at reasonable interest rates. If markets refuse, Keynesian policies won't work.

I like the author's approach, in that instead of the long standing debate about whether or not Keynes' ideas were right or wrong, he points out the obvious - which is that it hardly matters since there's no money to be had to continue the experiment. 

Frankly, looking at this point - "in the mid-1930s, governments in most wealthy nations were relatively small and their debts modest. Deficit spending and pump priming were plausible responses to economic slumps" - one could easily conclude that this is the natural effect of dosing willing politicians with all the Keynesian self justification they could ever hope for to meddle, as if they were gods, in the affairs of their subjects (OK, still technically citizenry) via legislative coercion sold as do-gooderism.

But as Keynesian C. Romer points out in regards to those Keynesian approaches to economic stimulus, "estimating the effect is "incredibly hard." "

So, we should just trust all those genius economists and the politicians who use their work to do what's best ...

Samuelson writes:  "Were Keynes alive now, he would almost certainly acknowledge the limits of Keynesian policies."  I wonder if, after almost 100 years of experimentation, Keynes wouldn't just say "It seemed like a good idea at the time." 

The Dangers of Not Understanding Keynes

The author seems not to understand that the key point of "stimulus" spending is that there is a presumption of a "multiplier" - in other words, Keynesians believe that for every dollar the government spends, there's an amount of activity stimulated equal to a multiple of the government dollars spent.  While the Keynesians believe their research shows a "multiple", the effect has not ever and cannot ever be proved.

In short, they gambled 800 billion on their assumption of a multiplier.

http://www.washingtonpost.com/business/economy/the-dangers-of-being-wrong-on-keynes/2011/07/18/gIQAIuGYMI_story.html

The author, sounding patient and sycophantic in his worship of the oh so wise Keynes, writes:

Keynes — and others who later elaborated on his work, like Hyman Minsky — taught us that although markets are usually self-correcting, they occasionally enter destructive feedback loops in which a shock to, say, the financial system scares business and consumers so badly that they hoard money, which worsens the damage to the system, which further persuades other economic players to hoard, and so on and so forth.  In that situation, the role of the government is to break the cycle. 

This bit of pap may or may not be true, we don't actually know how free market economies work because we've only had small ones in recent times, but it assumes that the Fed and massively influential economy distorting practices by the US government are not to blame for the "destructive feedback loops" such as the one we've seen since 2007 or so.  In short, the present circumstance is at least as likely to be the result of the negative unintended consequences of prior government interventions as it is a cyclical result of a free market's "destructive feedback loops."  In fact, there's simply no reason to believe that our present difficulties are anything but the result of government interventions.

What Keynes taught us is that, when faced with the perception of responsibility for making a depression ravaged economy work, Keynes and most other politicians will happily endorse a model which justifies their choice to spend other people's money "for their own good."  It is political Darwinism at its finest.

The Author's argument is, in effect, "Keynes might have been right."  My dog might have been right, too, and there's equal evidence supporting either theoretician.  I wonder if, were he alive at this juncture, even Keynes wouldn't have realized his theory does not hold water.

The author cites C. Romer's defense of the lack of impact of the 800 billion dollar "stimulus", in which she claims she just underestimated the seriousness of the recession, and the 800 billion dollars wasn't "enough".  Oh, and there's also the problem that we just don't keep enough "shovel ready" programs on hold, waiting for a downturn in the economy, so we can spend our way back out (but we should).

As I read this part, the word nincompoop came to mind.  The author's argument has now become:  "Because Keynes might have been right, we should be ready to spend a much larger amount of money next time on a stimulus - to see if he really was right.  We'll probably know how much money to spend on the stimulus next time, because we missed it so badly this time."

To whom does the author think he is writing?  We didn't all stop learning after our public school education.

Even if the Keynesian multiplier is real, no one "knows" how large it is, and no one knows how much of it will be required to provide an adequate stimulus given that no knows how bad any given recession is, or how long it will last, or ... anything that would amount to more than the pretense of knowledge about how to massage an economy back to health.  The entire Keynesian concept - that an economy is like a football team that just needs a few coaching pointers to perform correctly - is such a joke it's difficult to believe anyone fell for it.

Here's the sad part - there's just no way a politician can do what he/she should - nothing, following the dictum "first do no harm" - when there's a recession on.  The imperative to act is dominating - every President knows they must make it look as thought they know what they are doing, as thought they have the answers, and they must act - even if none of these things are true.  They must act as if they have the fatal conceit even if they are smart enough to know better.

Krugman Hits Another Winner

http://dailycaller.com/2011/07/12/krugman-i-didnt-mean-that-stimulus/

Another interesting case of Krugman v. Krugman.  Entertaining as always ...

Stimulating ... Politician's Sense of Significance

The real mystery is not that stimulus doesn't work, but why anyone would ever expect it to. After Obama signed the compromise bill on December 17, 2010, one of the first things that the Treasury did was to revise its borrowing plans upward to compensate for the reduction in tax revenue that it knew was coming on January 1, 2011. Additional bonds were sold, and extra money was withdrawn from the economy before the payroll tax cut showed up in workers' paychecks. If there was any impact upon demand at all, it was to reduce it.
Fiscal stimulus always works this way - additional bonds must be sold before additional money can be spent or tax cuts implemented. What Keynesian economists miss is that if there are multipliers for government spending, there are also multipliers for bond sales. Because stimulus consists of bond sales followed by spending, the two sets of multipliers cancel each other out - at best. Fiscal stimulus can never produce any net increase in total demand.
Nails for Keynes' Coffin

No Evidence Necessary

http://cafehayek.com/2010/09/finally-some-evidence-from-krugman.html
People believe what they want to believe.

As for me, the idea that anyone believes that money spent by government has a multiplying effect is stupefying.  There are a lot of smart people who DO believe this to be true.  Like the AGW crowd, for some reason, they desperately want to believe it.  Evidence ... optional.

After The Revolution

My favorite joke for years:

Four comrades are sitting around talking about what happens after the revolution.  Revolutionary 1 says “Yes, after the revolution, we’re going to find anyone with two houses, and we’re taking one of those houses to give one to someone who has no house!”   Comrades:  “Yes yes after the revolution!”

Revolutionary 2 says “Yes, after the revolution, we’re going to find anyone with two cars, and we’re taking one of those cars to give one to someone who has no car!”   Comrades:  “Yes yes after the revolution!”

Revolutionary 3 says “Yes, after the revolution, we’re going to find anyone with two mules, and we’re taking one of those mules to give one to someone who has no mule!”   Comrades:  “Yes yes after the revolution!”

Revolutionary 4 is slow, but he’s caught on by now and chimes in:  “Yes, after the revolution, we’re going to find anyone with two chickens, and we’re taking one of those chickens to give one to someone who has no chicken!”   Comrades:  No response.

Revolutionary 4 says “What’s wrong?  What did I say?” 

Comrade:  “That’s a really bad idea.  I have two chickens.”

If He Could Only See the Fruit of His Handiwork Now

"The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist."
John Maynard Keynes
The General Theory of Employment, Interest and Money

Paying People Not To Work?

What could go wrong?
Well, how about the fact that the money has to come FROM someone to go to someone?!?
http://online.wsj.com/article/SB10001424052702303828304575180243952375172.html#printMode

Stossel Takes Down Krugman

Does Krugman purposefully make these claims to humble himself?
http://stossel.blogs.foxbusiness.com/2010/05/14/krugman-misleads-on-greece/
"Wow, the expected US deficits are lower than the Greek ones. One commenter on Krugman's blog laments that Americans won't be able to understand Krugman's graph:
The "Just Like Greece" scare is targeted to those who cannot (or will not) understand the facts... When, oh when will the American people learn to read a chart?

But it's Krugman who is confused. All his graph shows is that Greece is worse off than the US now, and in the near future. That should be obvious to anyone following the news of riots in Greece.
His graph hides the fact that, while our annual deficits are expected to shrink -- because forecasters expect the economy to get better and stimulus funding to phase out -- every year the government will still spend more than it takes in, so total U.S. debt will keep rising. And Krugman's graph doesn't get at the important question: are we on track to become what Greece is like now? This graph, which uses the same data set as Krugman's chart, helps answer that: (see link for graphs)
In short: In 10 years, under Obama's budget plan, the USA will likely be in same debt position as Greece is now."
Read more: http://stossel.blogs.foxbusiness.com/2010/05/14/krugman-misleads-on-greece/#ixzz0oCCyszCo

Boudreaux on Krugman, 2

Fatten the Beast
Posted: 14 May 2010 09:27 AM PDT
Here's a letter to the New York Times:
Paul Krugman asserts that "taxes have lagged behind spending partly thanks to a deliberate political strategy, that of 'starve the beast': conservatives have deliberately deprived the government of revenue in an attempt to force the spending cuts they now insist are necessary" ("We're Not Greece <http://www.nytimes.com/2010/05/14/opinion/14krugman.html?ref=opinion> ," May 14). Prof. Krugman's interpretation of the facts is worse than bizarre.
During the alleged ascendancy of laissez-faireism - roughly, the last 30 years - Uncle Sam's inflation-adjusted tax revenues have skyrocketed. Compared to 1980, inflation-adjusted tax revenues for 2010 are projected to be higher by 61 percent. And in 2007 (the last year before the current recession), Uncle Sam's real revenues were more than 100 percent higher than they were in the year that voters first put Ronald Reagan into the Oval Office.* During this same time, U.S. population increased by only 35 percent.
This beast is no more deprived of revenue than Prof. Krugman is deprived of the gall necessary to misrepresent facts with a straight face.
Sincerely,
Donald J. Boudreaux
* Figures calculated from data found in Table 1.3 here <http://www.whitehouse.gov/omb/budget/Historicals/> .
If your real income rises by 61 percent, but your real expenditures rise by 142 percent, do you blame your resulting financial woes of your being "deprived" of income?
Here's John Stossel's dissection of Krugman's column <http://stossel.blogs.foxbusiness.com/2010/05/14/krugman-misleads-on-greece/> .

Those Nasty Tax Cutters

Dr. Congress and Mr. Hydieous
Posted: 15 May 2010 09:47 AM PDT
Here's a letter to the New York Times:
Paul Krugman claims that anti-tax conservatives have "deprived" Uncle Sam of tax revenues ("We're Not Greece <http://www.nytimes.com/2010/05/14/opinion/14krugman.html?ref=opinion> ," May 14). Because these inflation-adjusted revenues reached an all-time high in 2007 (just before the current recession) - and because, even in 2010, they remain 61 percent higher than they were in 1980 (the year the alleged curse of laissez-faireism befell America) <http://cafehayek.com/2010/05/fatten-the-beast.html> - the only way Prof. Krugman can salvage his claim is to note that these revenues, although growing, haven't kept pace with Uncle Sam's even-faster-growing spending.
Alas, this attempted salvage operation fails. It assumes that the expenditure side of Uncle Sam's budget accurately reflects the appropriate will of The People while the revenue side reflects the evil machinations of forces bent on undermining The People's will and best interests. Prof. Krugman can't have it both ways. If he insists that Congress and the President are inspired public servants when they fashion the spending side of the budget, he cannot legitimately insist that these same officials are dupes or miscreants when they fashion the revenue side.
Put differently, it's at least as justified to accuse left-liberals of recklessly fattening the beast with excessive spending as it is to accuse conservatives of greedily starving the beast with brakes on tax hikes. Indeed, given human beings' natural irresponsibility when spending other people's money, the former accusation is far more plausible than the latter.
Sincerely,
Donald J. Boudreaux

Steyn in Reversoworld

http://www2.macleans.ca/2010/05/13/a-slow-burn-bonfire-of-liberties-2/
At the time of writing, I have no idea who's won the British general election. At the time of reading, you probably have. But, whatever the result, I doubt it will make much difference to the fate of the United Kingdom, which is in the fast lane of the not-so-slow-burn bonfire of the liberties consuming much of the Western world.
The official "defining moment" of the campaign was Gordon Brown's unguarded post-photo-op dismissal of Gillian Duffy as a "bigoted woman." Mrs. Duffy, a plain-spoken working-class granny and lifelong Labour voter, had made the mistake of asking Mr. Brown, her party leader, a very mild question about immigrants from eastern Europe. He got back in his car and wrote her off, forgetting he was still miked. So she's a "bigot." He's not. That's why he makes all the decisions for her, and she just makes the best of them. What part of that don't you understand?

The other "defining moment" got less coverage. Another "pensioner," 74-year-old Roy Newman, got sick of the various party hacks knocking on his door and put a sign up in his front window: "GET THE LOT OUT." Ninety minutes later, two police officers arrived at his home to arrest him for "racism."
Racism? Why, yes. His sign was a piece of white card with red and blue lettering. Red-white-and-blue, geddit? The colours of the Union Jack. If using the same colour scheme as the national flag isn't coded racism, I don't know what is. Mr. Newman was prevailed upon to alter some of the letters to yellow, thereby diminishing the racist subtext.
With bigotry and racism running rampant, it was inevitable that homophobia would raise its ugly head. Dale McAlpine, a practising (wait for it) Christian, was handing out leaflets in the town of Workington and chit-chatting with shoppers when he was arrested on a "public order" charge by police officer Sam Adams (no relation), a gay, lesbian, bisexual and transgender community outreach officer. Mr. McAlpine said homosexuality is a sin. "I'm gay," said Officer Adams. Well, it's still a sin, said Mr. McAlpine. So Officer Adams arrested him for causing distress to Officer Adams.
In fairness, I should add that Mr. McAlpine was also arrested for causing distress to members of the public more generally, rather than just the aggrieved gay constable. No member of the public actually complained, but, as Officer Adams pointed out, Mr. McAlpine was talking "in a loud voice" that might be "overheard by others." And we can't have that, can we? So he was fingerprinted, DNA-sampled and tossed in the cells for seven hours.
The other day, upholding the sacking of a black Christian for declining to provide "sex therapy lessons" to gay couples, Lord Justice Laws ruled that "law for the protection of a position held purely on religious grounds is irrational, divisive, capricious, arbitrary." Actually it's the law of Lord Justice Laws that is increasingly "irrational, divisive, capricious, arbitrary." Or as George Orwell, in Animal Farm, formulated it: all animals are equal, but some animals are more equal than others. In the land of Laws, a gay is more equal than a Christian. A Muslim is more equal than anybody. A black man is more equal than a white man, unless the white man is gay and the black man a Christian. An eco-zealot is more equal than an Anglican. Not long before Lord Justice Laws' decision on the "irrationality" of legal protection for Christianity, Tim Nicholson, a "Head of Sustainability" fired for questioning his property management group's environmental policies, sued for wrongful dismissal under "Employment Equality (Religion And Beliefs) Regulations." He wound up with the best part of one hundred thousand pounds after Mr. Justice Burton ruled that Mr. Nicholson's faith in anthropogenic global warming was a "philosophical belief" on a par with religion. So the Employment Equality (Religion And Beliefs) Law protects belief in apocalyptic "climate change" but not in Jesus.
As for Muslims, in December Tohseef Shah sprayed the words "KILL GORDON BROWN," "OSAMA IS ON HIS WAY" and "ISLAM WILL DOMINATE THE WORLD" on the war memorial at Burton-upon-Trent. But the Crown Prosecution Service decided his words were not "religiously motivated." Phew! Thank goodness for that, eh? So a week or so back he walked out of court a free man, except for £500 in compensation to the municipal council for cleaning off his non-religiously motivated "ISLAM WILL DOMINATE THE WORLD" graffito.
I am currently slogging my way through a rather stodgy 650-page tome called Extreme Speech And Democracy. On the back is a question from Christopher McCrudden, professor of human rights law at Oxford: "What are the appropriate limits to freedom of expression in societies that wish to be democratic, multicultural, and committed to the human rights of all?"
Whether or not you regard that as a legitimate query, it's certainly an irrelevant one. Because whatever you decide are the "appropriate" limits, by the time they percolate down to the transgendered liaison officer patrolling Workington shopping centre they'll be reliably inappropriate. As I always point out in retailing the latest idiocy from Canada's "human rights" fanatics, none of the above are "right-wing" in any sense that Steyn or Rumsfeld or Cheney would recognize the term. Mrs. Duffy is a lifelong Labour voter; Mr. Newman is one of those pox-on-all-their-houses types; the property company that fired Mr. Nicholson is so wretchedly politically correct it employed him as "Head of Sustainability," a title of near parodic bogusness. Yet all fell afoul of Lord Justice Laws' "irrational, divisive, capricious, arbitrary" laws. Because it's hard not to. Because once you establish the principle that the state has the right to police ideas, sooner or later one of yours will catch their eye. I say "principle," but that's not really the word. The spirit is more aptly caught by a new joint initiative by the Canadian "Human Rights" Commission, the Manitoba "Human Rights" Commission and the Treaty Relations Commission of Manitoba to "promote and enhance the learning experience relative to human and treaty rights for all people living in Canada and around the world." No idea what that means, but, as the CHRC press release says, this is the first time that these three useless taxpayer-funded sinecures have come together to "further their cause." Since when do government agencies have ideological "causes"? And what happens if you disagree with their "cause"?
Professor McCrudden's question on "appropriate" limits is very adroitly formulated: in today's advanced Western society, there are no absolute rights—for all individual freedoms must be "balanced" against the state's commitment to "multiculturalism" or "equality" or whatever other modish conceit tickles its fancy. Everybody talks like this now: for Canada's Chief Censor, Jennifer Lynch, Q.C., freedom of expression is just one menu item in the great Canadian salad bar of rights, so don't be surprised if we're occasionally out of stock. Instead, why not try one of our tasty nutritious rights du jour? Like the human right to a transsexual labiaplasty, or (per a recent Quebec ruling) the human right to non-Eurocentric table manners. Real "rights" are restraints upon the state—"negative" rights, as constitutionalists have it; they delineate the limits of the sovereign's power. But in the modern era "rights" are baubles in the state's gift, and the sovereign confers them at the expense of individual liberty. Truly, this is an Orwellian assault on the very foundations of freedom.
The statists justify this on the grounds of what Lord Justice Laws calls "public tranquility"—a phrase that rings very hollow in contemporary Britain. In his last years of office, Tony Blair used to fret about "social disintegration." You can see what he means in the Hogarthian depravity of not just decayed urban centres but leafy villages and prosperous suburbs. His response, of course, was the effete smack of socially progressive authoritarianism: ever more government micro-regulation of public discourse, until we reach the surreal point where the gay outreach officer arrests the Christian for causing distress to the gay outreach officer. In truth, the Big Blairite Brother, like Nanny Lynch in Canada, incentivizes identity-group grievance, frivolous victimhood, and social atomization. Meanwhile, aggressive, confident identities can drive a coach-and-horses through the PC flower beds: the remorseless feasting of Islamic polygamy on the Eurowelfare gravy train is only one example of how feeble "rational" secular statism proves in the face of a minority that has its number.
As for the "balancing act" that Professor McCrudden urges between individual rights and broader responsibilities, only a truly free people have the incentive even to seek it. The more you haul nobodies off to the cells for putting up a poster or quoting the Bible, the more a timid conformist populace will keep its head down, mind its own business, and avoid broader social engagement—or at any rate non-alcohol-fuelled engagement. Big Government is dismantling civic identity, and the slow-burn bonfire of liberties in Europe and North America will eventually consume us all.

Insurance Price Control Inevitability

"Unthinkable or not, though, it's an outcome that should have been entirely predictable to any student of the most basic elements of supply and demand: Price controls result in service cuts."
http://reason.com/blog/2010/05/11/the-health-insurance-trade-off

Will on Greece

Crony Capitalism: From GM to Greece, the Lies Keep Growing
By George Will

WASHINGTON -- To understand the pertinence to America of events in Greece, notice General Motors' most recent misbehavior. A television commercial featuring CEO Ed Whitacre demonstrates the institutional murkiness and intellectual dishonesty that result when the line between public and private sectors disappears.

In the commercial, Whitacre says GM has "repaid our government loan in full." Rep. Paul Ryan, R-Wis., noted that GM used government funds to pay back the government: It "simply transferred $6.7 billion from one taxpayer-funded TARP account to another." The government still owns 60.8 percent of GM's common equity, and the Congressional Budget Office projects that the government will lose about $34 billion of the $82 billion of TARP funds dispersed to the automotive industry.

When Ryan and two colleagues asked the Treasury Department for clarification, they got this careful reply: "Treasury has never suggested that the loan repayment represented a full return of all government assistance." A Treasury press release did say "GM Repays Treasury Loan in Full." The loan is, however, a small part of taxpayer exposure. Under crony capitalism, when government and corporate America merge, both dissemble.

Now American taxpayers also own a little bit of a small nation. They provide the U.S. contribution of 17 percent of the assets of the International Monetary Fund, which is giving Greece $39 billion (the IMF also is contributing $321 billion to a "stabilization" fund for other eurozone nations with debt problems). So the U.S. government, which would borrow 42 cents of every dollar it spends under the president's 2011 budget, is borrowing to rescue Greece and others from the consequences of their borrowing.

That nation, whose GDP is below that of the Dallas-Fort Worth metropolitan area, is "too big to fail," meaning too inconveniently connected to too many big banks. Bailing out Greece really rescues European banks that improvidently bought Greek bonds. Visit here for a useful New York Times graphic illustrating how European nations borrow from one another. For example, Italy owes France (French banks) $511 billion, a sum nearly equal to 20 percent of France's GDP. About one-third of Portugal's debt is held by Spain, which has $238 billion of its debt held by Germany and $220 billion by France. Russell Roberts of George Mason University notes that this "discourages prudence and wariness" because when "everyone has financed everyone else, you can justify bailing everyone out."

At the Parthenon last week, the Greek Communist Party, which got 8 percent of the vote in the last national election, draped banners emblazoned with the hammer and sickle: "Peoples of Europe Rise Up." Of course. "Arise ye prisoners of starvation" exhorts "The Internationale," the left's ancient anthem. But who is to arise against whom?

Time was, the European left said it spoke for horny-handed sons of toil oppressed in dark Satanic mills. But Athens' so-called "anti-government mobs" have been composed mostly of government employees going berserk about threats to their entitlements. Even Greek air force pilots went on strike. The government, unable to say how many employees it has, promises to count them. It cannot fire many of them because article 103, paragraph 4 of the Greek constitution says: "Civil servants holding posts provided by law shall be permanent so long as these posts exist."

America's projected $9.7 trillion in budget deficits in this decade will drive the nation's debt to 90 percent of GDP (Greece's is 124 percent). So some people say that to avoid a Greek-style crisis, America should adopt a value-added tax (VAT). But Europe's most troubled nations -- the PIIGS: Portugal, Ireland, Italy, Greece and Spain -- have VATs of 20 percent, 21 percent, 20 percent, 21 percent and 16 percent, respectively. As part of its austerity penance, the Greek government is going to give itself more money by raising its VAT to 23 percent.

Germans are furious about being the biggest bailers in this bailout of a nation where tax evasion is pandemic. They have not been assuaged by being told by their chancellor, Angela Merkel, that the stakes are stupendous: Their money will save "Europe." Hearing that, Greeks bearing banners proclaiming "Out with the IMF" might think:

Why accept "austerity" (as that is understood in Greece -- no more annual bonuses of two months' salary, no more retirement at 53)? Suppose, after pocketing some of the bailout, we just threaten to collapse and make a mess of "Europe"?

Greece now knows the terrific strength of weakness. Beware of Greeks -- or any other people -- receiving gifts.

georgewill@washpost.com
Copyright 2010, Creators Syndicate Inc.

Page Printed from: http://www.realclearpolitics.com/articles/2010/05/13/crony_capitalism_105560.html at May 13, 2010 - 10:52:59 AM PDT

More Obamacare Surprises

"By granting amnesty for at least 10.8 million illegal immigrants, the Democrat health care bill will cost $162 billion a year -- or $1.62 trillion, which the CBO never took into account."


Not my favorite blogger, but who could doubt the charges.  This thing will be nasty ...
http://directorblue.blogspot.com/2010/04/demcares-secret-162-trillion.html

Excellent Polspeak AKA 'Nonanswer'

"Barney Frank's Fantasy World, Posted: 28 Jan 2010 09:07 PM PST, http://www.cafehayek.com/

At Big Think <http://bigthink.com/ideas/18439> , they used one of my questions in their interview with Barney Frank:  Question: How can Fannie and Freddie be structured to avoid the moral hazard problem and a too-cozy relationship with regulators? (Russ Roberts, Café Hayek)
Barney Frank: Yes, in 2004 the Bush Administration significantly increased those housing goals and particularly ordered Freddie and Fannie to start buying up a lot of low income individual mortgages, and I opposed it at the time.
Interesting answer. Here is the relevant data on the housing goals from my soon (really) to be finished essay:
Starting in 1993, Fannie and Freddie have affordable housing goals―30% of Fannie and Freddie's purchases of loans have to be loans made to borrowers whose income was below the median income in their area. These are interim goals. In 1996, the interim goal becomes firm at 40%. In 1997, the number rose to 42%. In 2001 it rose to 50%. The Bush Administration increased this number to 52% in 2005, 53% in 2006, and 55% in 2007.
So it turns out there was no increase in 2004 and a minimal increase in 2005. The big increase was in 2001, the legacy of Clinton and Andrew Cuomo his HUD chief. Of course Bush embraced the housing goals and did increase them. But "Bush in 2004″ is a red herring.
I'd love to see the evidence that Frank "opposed it at the time."
And none of Frank's answer addresses the moral hazard problem�that people kept lending to F and F as the quality of their portfolio deteriorated because they knew the government stood behind them."

Unintended Consequences Beget Laws Beget ...

more unintended negative consequences ... begets more laws ....

"The partisans on the left who preach with certainty about the effects of the new health care law -- it will reduce the federal deficit; it will allow you to keep your current coverage; it will lower premiums -- speak from ignorance. No one really knows what the bill will do, including the members of Congress who voted for it."
"A new Congressional Research Service study has found that the law appears to boot members of Congress and their staffers off the Federal Employees Health Benefits Program before the alternative insurance options created by the law will be ready."

http://unionleader.com/article.aspx?headline=Oops%2c+we+did+that%3f+More+health+care+surprises&articleId=95a06f2f-35f5-460b-8bff-a4dbc185aa59

What more need anyone say about the folly of politicians running a health care system.  Unintended consequences is a runaway train destined for additional future government intervention, just as the mistakes made by past and mostly dead politicians is what created the conditions leading to this most recent affront to liberty.  The most certain prediction to made is that this bill will not do what they think it will.  They insult our liberty to get who knows what ...

Stimulating Thoughts and Analysis of Stimulus

Posted: 08 Mar 2010 07:43 PM PST
Menzie Chinn invokes <http://www.econbrowser.com/archives/2010/03/whom_are_you_go.html> the CBO "estimates" to argue against those who say the stimulus didn't work. Did the stimulus help turn the economy around and create jobs? I'm skeptical on logical grounds but I confess that I do not have strong empirical evidence on my side.
But those who defend the stimulus have no empirical support either. The CBO "estimates" are not an analysis of what the stimulus actually did but rather what some predicted it would do. They have done NO independent non-partisan analysis of what actually happened.
Here is all you need to know about what the CBO actually did that Chinn and others cite:
CBO's current estimates differ only slightly from those CBO prepared in March 2009. At that time, CBO projected that in the third quarter of 2009, U.S. employment would be higher by 600,000 to 1.5 million people with ARRA than it would be without the law, and real GDP would be 1.1 percent to 3.0 percent higher. CBO's new estimates reflect small revisions to earlier projections of the timing and magnitude of changes to spending and revenues under ARRA.
And:
CBO has also examined incoming data on output and employment during the period since ARRA's enactment. However, those data are not as helpful in determining ARRA's economic effects as might be supposed, because isolating the effects would require knowing what path the economy would have taken in the absence of the law. Because that path cannot be observed, the new data add only limited information about ARRA's impact.
And the best part:
Economic output and employment in the spring and summer of 2009 were lower than CBO had projected at the beginning of the year. But in CBO's judgment, that outcome reflects greater-than-projected weakness in the underlying economy rather than lower-than-expected effects of ARRA.
As I wrote here <http://cafehayek.com/2010/02/the-great-stimulus-hoax.html> , that is one interpretation. The other is that the model doesn't work very well.