pg 21 "But the economy didn't grow because they consumed more. They consumed mored because the economy grew."
and pg 45 "Saving creates the capital that allows for the expansion of production."
A few years ago when I was first interested in economics I realized the fascination had a lot to do with the fact that the econ principles that made sense to me parallel'd gospel principles. Avoiding tough choices and taking the easy way out never seems to work in the gospel, and the same seems to apply in the economy, such as printing our way to prosperity. There is always a catch when it comes to the government's quick fix remedies. They are always about the pleasure now, pain later. I guess we voters are to blame, we put those kinds of politicians into power.
To continue on our last discussion, you mentioned the meth addict as analogous to our economy. I agree with that and would offer another perspective. 2 years ago the economy was at a high, or the meth addict was overdosing to the extreme. How do you heal a meth addict? I am not an expert here, but Kinlee is on some strong drugs, and the doctor's recommended method has been to ween her off them for the last year. A meth addict, or child on medication, cannot be taken off the substance without facing extreme changes which in both cases can even be fatal. My feeling, and that of many, is that we could have reached a fatal point to the economy if we had sunk much further. That is a moot point since neither of us know the consequences of the path we did not take. I would ask you, if the options were a global economy that collapsed because of massive bank-runs and loss of faith in our monetary system (back to hunting and fishing as my MBA professor described) or the bailout that we endured, which would you choose? In my mind, those were the two options, hence my pragmatic view that it was a necessary evil.
ReplyDeleteMy biggest complaint about the book so far is that it takes place on an island (vacuum) which works great in physics and libertarian ideology, but misses some of my main concerns. Just to be clear, I would love to live on the island he describes, but a little historical context throughs a wrench in the perfect meritocracy he has created. What if there were islanders that were enslaved for the first 200 years of this economic growth? Once the mistake is realized, does the government take any responsibility for leveling the playing field for them? They are 200 years behind in formal education and amassing land and wealth, thus a hands off government will perpetuate second class citizenship.
I've thought about this a lot now. When an addict is going through withdrawals I can see how "weening" them off slowly would make sense, for a variety of reasons. But, imagine the addiction requires killing some people to sustain the addict, and when the addict wants to stop he thinks he'll gradually kill fewer and fewer hosts while he weens himself. This in my mind would be ridiculous.
ReplyDeleteWhen the government privatizes gains and socializes losses by bailing out private firms, it does so at the EXPENSE of others. It would be one thing if it were the government's own resources, but it's yours and mine and anyone else that holds US dollars.
I don't doubt that if Kinlee's weening required stealing from your neighbors to provide it, and as a result your neighbors went hungry against their will, that you would at least think twice before doing it.
The most common argument against mine is that GM et tal are national players and thus we all have a stake in their survival, which is an argument that I do not buy. The stake is arbitrary, and beyond that it is the classic lesson provided by Bastiat of the Seen and Unseen. All those resources that end up going to an unprofitable (inefficient) firm such as GM could be going elsewhere, to an efficient firm. Major opportunity cost right there.
at Mormonbastiard.wordpress.com i posted a blurb about how the gov tries to play Savior by bailing people out. When Jesus bails people out, He does so with His own blood, sweat, and tears (capital?). But not so with the government. They're oh so generous with other people's resources, are they not?