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March 2011

"While America Slept: Public ignorance and the coming budget emergency"

A sentence to remember:

No budget analyst who has mastered fourth-grade arithmetic believes that we can regain control of our fiscal future solely through reductions in discretionary spending

Note the source.

(For an interesting opposing view on the "public ignorance" part, see Andrew Rugg's "Maybe Americans Really Are Ready for Spending Cuts".)

"The Cultural Cognition Project at Yale"

From Metafilter:

"The Cultural Cognition Project at Yale looks at the cause of polarizing debates such as: global warming, gun ownership, school shootings, terrorism, nanotechnology, public health, nuclear power, foreign wars and just about every heated thread in Internet history. In short, the polarizing issue is "risk"- the perception of risk, and the proposed solutions to risk. It turns out people see risk in polarizing ways according to where they stand on a scale of cultural beliefs.

I've noticed this, too. I see it as just one more manifestation of the thesis advanced in Thomas Sowell's A Conflict of Visions.

But that's probably just me.

"The Stock Market Is In A State Of Denial"

If the stock market were easy to figure out a lot more investors would be rich. But this commentary seems quite reasonable:

In addition let's not overlook the point that QE2, which is pouring about $3.5 billion into the economy every weekday, is due to end on June 30th, and is unlikely to be extended.  Both the economy and the market slowed significantly after the conclusion of QE1 and came back only with the announcement of QE2. At that point monetary policy becomes a headwind instead of tailwind at a time when political pressures are reining in fiscal policy as well.

In sum investors are in a state of denial similar to when they denied the dot-com boom was a serious problem in early 2000, or that subprime mortgages were a problem in 2007.  This is typical of investor behavior at tops in all publically traded markets over hundreds of years, and human behavior is not likely to suddenly change now.

"Unsustainable budget threatens nation"

Economists have been blamed for not warning about the housing crisis. Maybe fair criticism, maybe not. But here's a statement signed by 10 former chairs of the Council of Economic Advisors, warning specifcally and emphatically of the impending disaster in federal finances

As former chairmen and chairwomen of the Council of Economic Advisers, who have served in Republican and Democratic administrations, we urge that the Bowles-Simpson report, “The Moment of Truth,” be the starting point of an active legislative process that involves intense negotiations between both parties.

There are many issues on which we don’t agree. Yet we find ourselves in remarkable unanimity about the long-run federal budget deficit: It is a severe threat that calls for serious and prompt attention.

I'm not a political scientist, so I don't know whether the country and the government will respond. But, at least this time, it's clear we've been warned. 

On that point, one of the best--absolutely chilling--minutes of The Sopranos: "One thing you can never say: that you haven't been told."

Congratulations! You genius, you've totally destroyed conservative economics!

More and more I'm coming across articles like this one, "Laissez-Faire Earthquake Lessons".

Let’s hear it for building codes, health and safety regulations, mandatory standards for public education, and all sorts of helpful government intervention that would make Professor Friedman spin in his grave . . . and the Tea Party be damned.

Leave aside the excellent reply that without the vast wealth created by mostly free markets, those building codes would be worth quite little.

No, what's so objectionable about articles like this is that the author, having identified one government regulation or program that may have been beneficial, declares that this undermines conservative economics. Look: the Federal Register is running tens of thousands of pages per year. This year, governments in the U.S. are expected to spend around 6.16 trillion dollars. Any sane person knows that somewhere, someone, must be benefiting at least a little from government. A demonstration of that very obvious fact does absolutely nothing to refute Milton Friedman and conservative economics.

But hey, if you can't beat 'em, join 'em. Here's a story about how terribly corrupt the California public employee pension fund (CalPERS) has been: 

In a scathing report, a former chief executive of the California public employee pension fund was accused of pressuring subordinates to invest billions of dollars of pension money with politically connected firms.

A 17-month investigation also found that Federico Buenrostro Jr. — along with former pension fund board members Charles Valdes and Kurato Shimada — strong-armed a benefits firm to pay more than $4 million in fees to consultant Alfred J.R. Villalobos, who later hired Buenrostro.

So, all government pension funds must be corrupt! And thus do I refute publically funded pensions!

Prognosis for Cali

Not good.

Essentially, the Third California has become hostage to the coastal cities and their increasingly bizarre economic policies. Under first Arnold Schwarzenegger and now Jerry Brown, California has embraced a series of radical environmental edicts that spell disaster for the more blue-collar interior. These include dodgy land use policies designed to combat “climate change” but essentially seek to steer middle- and working-class Californians out of their cherished suburban homes and into densely packed urban apartment complexes. . . .

But such moves could have a devastating impact on the increasingly Latino, younger and less well-educated populace of the interior. Outside of the oft-promised green jobs — which Husing calls “more propaganda than economics” — it is these less privileged residents’ employment that is most likely to be exported to other states and countries, places where broad-based economic growth is still considered a worthy thing.  “By our ferocious concentration on the environment, we have created a huge issue of social justice,” Husing points out. “We are telling blue collar workers we don’t want you to have a job.”

For my prediction, I'll turn the mike over to Mr. T.

See also "Short on Funds, but Long on Pink Slips".

To solve a looming pension crisis and budget gap, city officials here said, they needed to take drastic action. And everyone agrees on one thing: they did.

Nearly half of this city’s workers were told late last week that, come September, they would probably be out of a job. Nearly every city department will be eliminated. More than a dozen tasks will be outsourced, including graffiti removal, firefighting, building maintenance and street cleaning.

Unlike the drama that played out over the last two months in Madison, Wis., the battle over public workers in this bustling suburb and upscale shopping mecca in the heart of Orange County is happening at lightning speed.

"Arid Uka’s Gratitude"

Mark Steyn, doing his wonderful thing:

Remember Kosovo? Me neither. But it was big at the time, launched by Bill Clinton in the wake of his Monica difficulties: Make war, not love, as the boomers advise. So Clinton did — and without any pesky U.N. resolutions, or even the pretense of seeking them. Instead, he and Tony Blair and even Jacques Chirac just cried “Bombs away!” and got on with it. And the Left didn’t mind at all — because, for a modern Western nation, war is only legitimate if you have no conceivable national interest in whatever war you’re waging. Unlike Iraq and all its supposed “blood for oil,” in Kosovo no one remembers why we went in, what the hell the point of it was, or which side were the good guys. (Answer: Neither.) The principal rationale advanced by Clinton and Blair was that there was no rationale. This was what they called “liberal interventionism,” which boils down to: The fact that we have no reason to get into it justifies our getting into it.

And more. (Though this is such a fat pitch down the middle, that he almost deserves no credit. Almost.)

How mean-spirited are House Republicans? So mean-spirited that they would end federally funded cowboy poetry! . . . 

Where there are taxpayer-funded cowboy poets, there must surely be cowboy-poetry festival administrators, and a Bureau of Cowboy-Poetry Festival Licensing, and cowboy-poetry festival administration grant-writers, and a Department of Cowboy Poetry Festival Administration Grant Application Processing, and Professors of Cowboy-Poetry Festival Educational Workshop Management at dozens of American colleges credentialing thousands of cowboy-poetry festival workshop coordinating majors every year.