Sheriff Joe
DA
Brah, why you messing with these people?
They are, in now way interested in the truth.
They are, in now way interested in the truth.
Essential Economics for Politicians
- Thread starter Bruddah IZ
- Start date
-
- Tags
- finance too
Bruddah IZ
DA
If you knew the difference between deficit and debt you would know that deficits were not doubled. But debt nearly was.
Bruddah IZ
DA
As usual, Iʻm not messing with them. But the truth is. Hence Iʻoleʻs hate campaign.
Sheriff Joe
DA
You know she always iz always like this at this time of the month.
Bruddah IZ
DA
Richard Dawkins, Biological Complexity, and the Market
The complexity of the supply chains and market processes that make socks mundane to most people in the world today is nearly all unseen and, hence, unappreciated.
Monday, August 13, 2018
From page 130 of Richard Dawkins’s excellent 1995 book, River Out of Eden:
So, any new mutation is likely to have not just one effect but several. Though one of the effects may be beneficial, it is unlikely that more than one will be. This is simply because most mutational effects are bad. In addition to being a fact, this is to be expected in principle: if you start with a complicated working mechanism—like a radio, say—there are many more ways of making it worse than of making it better.
The importance of the principle to which Dawkins here refers cannot be overstated—and it applies across nearly all of existence, including human society. As complicated as is a radio, a jumbo jet, a horse, or a human body, human society is vastly more complex.
The complexity of the supply chains and market processes that make socks mundane to most people in the world today is nearly all unseen and, hence, unappreciated.
Monday, August 13, 2018
From page 130 of Richard Dawkins’s excellent 1995 book, River Out of Eden:
So, any new mutation is likely to have not just one effect but several. Though one of the effects may be beneficial, it is unlikely that more than one will be. This is simply because most mutational effects are bad. In addition to being a fact, this is to be expected in principle: if you start with a complicated working mechanism—like a radio, say—there are many more ways of making it worse than of making it better.
The importance of the principle to which Dawkins here refers cannot be overstated—and it applies across nearly all of existence, including human society. As complicated as is a radio, a jumbo jet, a horse, or a human body, human society is vastly more complex.
Bruddah IZ
DA
Think of today’s global economy. In it, literally billions of people—each with unique preferences, talents, and knowledge—each makes countless decisions daily, mostly tiny, and mostly as adjustments in response to the flow of results of (“feedback” from) the on-going decision-making of others. The complexity of the global economy is mind-boggling, and yet it works amazingly well—so well that we take it for granted and notice only its failure to satisfy the ideal that we have in our heads.-- Don Boudreaux
Bruddah IZ
DA
Ponder the seemingly simple socks on your feet. You didn’t make them. You’d have no idea how to begin to make them. Who grew the cotton? Who shipped the cotton from farm to factory? Who insured these commercial enterprises? Who designed the socks? (Yes, they are designed, as you’ll notice if you examine them with some attention.) Who supplied the funds to enable the retailer to stock the socks before you voluntarily chose to purchase them? You did none of these things. No single person did more than a tiny fraction of these things. And yet there they are, on your feet. Socks. You barely give them a first thought, much less a second thought.
Bruddah IZ
DA
The complexity of the supply chains and market processes that make socks mundane to most people in the world today is nearly all unseen and, hence, unappreciated. We can and do talk about the likes of “the textile industry,” “the retail industry,” and “consumer demand.” But these terms too easily give us the impression that we can know enough about the phenomena to which they refer. We cannot. And so we easily become fatally conceited. We demand that government intervene in this way and that into—markets put a tariff on this product, impose a minimum wage in that country, prevent price hikes for those commodities.
Bruddah IZ
DA
Ignored by the many people who clamor for simple and simplistic government ‘solutions’ to economic problems—some real, most imaginary—is the enormous complexity of the market processes into which they wish to intrude the heavy and awkward (and always grasping) hand of the state.
In other words, NO on G!!
NO on 10!!!!
In other words, NO on G!!
NO on 10!!!!
Bruddah IZ
DA
As with Dawkins’s radio, there are many more ways of making the economy worse than there are of making it better. Therefore, the wise course is to devolve decision-making down to as low as level as possible. Let each person survey his or her immediate economic surroundings and, using his or her unique knowledge and perspective, adjust. If that person adjusts in a mistaken way, the harm will be localized and he or she has a powerful incentive to get it right on subsequent tries. Private property and contract rights encourage this localized decision-making.
Bruddah IZ
DA
But state intervention is not localized; it’s systemic and large-scale. The chances that the state will get it right are slim; the unintended, unseen ill-consequences of such intervention are always almost certain to swamp whatever benefits such intervention brings.
Finally, note, however, this important difference between a radio and human society: the radio is the result both of human action and of human design. Someone designed, planned, and built (or arranged to be built) the radio. In contrast, no one designed, planned, or built human society. Society (and the economy which is part of society) is indeed the result of human action, but it emphatically is not the result of human design. This fact about society is yet one more reason why attempts to engineer society or the economy are destined to fail—and if the engineering attempt is massive, to fail calamitously.
NO ON G!!
Finally, note, however, this important difference between a radio and human society: the radio is the result both of human action and of human design. Someone designed, planned, and built (or arranged to be built) the radio. In contrast, no one designed, planned, or built human society. Society (and the economy which is part of society) is indeed the result of human action, but it emphatically is not the result of human design. This fact about society is yet one more reason why attempts to engineer society or the economy are destined to fail—and if the engineering attempt is massive, to fail calamitously.
NO ON G!!
Bruddah IZ
DA
Economics Is the Best Mythbuster in History
History proves economics' power to bust countless popular myths.
Thursday, September 27, 2018
Donald J. Boudreaux
https://fee.org/articles/economics-is-the-best-mythbuster-in-history/?utm_medium=related_widget
But upon taking my first economics course, I learned that the popular explanations I’d long accepted were bogus. “We didn’t have energy shortages in the ’60s,” Dr. Francois told me one afternoon during her office hours. “Were oil companies less greedy ten years ago than they are now? Of course not. And if we really are running out of oil, that’s all the more reason the government should let the price rise, because letting the price rise will give those greedy oil companies stronger incentives to drill for more.” Dr. Francois concluded: “I promise you, Mr. Boudreaux, if we get rid of these price controls, we’ll get rid of these shortages.”
History has proven her to be correct.
If you get the concept you vote NO on 10.
History proves economics' power to bust countless popular myths.
Thursday, September 27, 2018
Donald J. Boudreaux
https://fee.org/articles/economics-is-the-best-mythbuster-in-history/?utm_medium=related_widget
But upon taking my first economics course, I learned that the popular explanations I’d long accepted were bogus. “We didn’t have energy shortages in the ’60s,” Dr. Francois told me one afternoon during her office hours. “Were oil companies less greedy ten years ago than they are now? Of course not. And if we really are running out of oil, that’s all the more reason the government should let the price rise, because letting the price rise will give those greedy oil companies stronger incentives to drill for more.” Dr. Francois concluded: “I promise you, Mr. Boudreaux, if we get rid of these price controls, we’ll get rid of these shortages.”
History has proven her to be correct.
If you get the concept you vote NO on 10.
Bruddah IZ
DA
Finally, the wide scope of the Fed’s activities in financial markets—including not only bank supervision and its roles in the payments system but also the interaction with primary dealers and the monitoring of capital markets associated with the making of monetary policy—has given the Fed a uniquely broad expertise in evaluating and responding to emerging financial strains.
Later that year, the housing bubble burst.
Of course, the Fed failed to prevent the current crisis – and, as I argued in Meltdown, itself bears much responsibility for what went wrong. Did that make the political class reexamine the Fed’s claims about its wondrous abilities? To the contrary, in the wake of thecrisis the Fed was given still more regulatory authority.
It seems to be a general rule: no matter how badly regulators fail, every crisis brings calls to empower them further. There appears to be nothing regulators could do to make the public consider the excluded possibility that mere “regulation” of a flawed system doesn’t make the system at root any less flawed.-- Tom Woods
Later that year, the housing bubble burst.
Of course, the Fed failed to prevent the current crisis – and, as I argued in Meltdown, itself bears much responsibility for what went wrong. Did that make the political class reexamine the Fed’s claims about its wondrous abilities? To the contrary, in the wake of thecrisis the Fed was given still more regulatory authority.
It seems to be a general rule: no matter how badly regulators fail, every crisis brings calls to empower them further. There appears to be nothing regulators could do to make the public consider the excluded possibility that mere “regulation” of a flawed system doesn’t make the system at root any less flawed.-- Tom Woods
Bruddah IZ
DA
Our talking heads who thoughtlessly call for “more regulation” as a panacea are attributing quasi-magical powers to people who in the real world tend to be unworthy of these exaggerations. As Robert Higgs puts it, “Had they been given even greater powers,budgets, and staffs, what enchantment would have transformed the regulators into smart, dogged champions of the public interest, rather than the time-serving drones and co-conspirators with the regulated firms that they have always been?” -- Tom Woods
Bruddah IZ
DA
The case of Bernie Madoff comes readily to mind. Madoff ran a scheme in which wealthy if gullible individual and institutional investors wound up losing $50 billion.
Madoff, his clients thought, was extraordinarily skilled at beating the market. In fact, all hewas doing was taking later clients’ money and using it to pay earlier clients, a scheme that required the addition of a greater and greater number of new clients over time – the definition of a Ponzi scheme.
The immediate and predictable response ran as follows: the Madoff fiasco shows what happens when you cut funding and personnel for the Securities and Exchange Commission (SEC), which (critics said) suffered under George W. Bush. Additional regulators and more funding would solve the problem.
Back on planet Earth, George W. Bush hadn’t cut funding or personnel for anything at all – SEC funding increased at an 11.3 percent annualized rate, as compared to 6.8 percent under Bill Clinton, and its staff grew at 1.0 percent per year, as compared with negative 1.2 percent under Jimmy Carter. So we have to entertain another theory: perhaps for all its employees and wealth, the government had simply failed. The SEC had been warned about Madoff for at least ten years, and perhaps as many as sixteen. Madoff even boasted of his family ties at the SEC. Even though it had the largest budget and largest staffin its history, it still failed to act. By contrast, Harry Markopolos, one of Madoff’scompetitors, simply examined the options strategy Madoff told his clients he was using and concluded that his alleged results had to be fraudulent. (An alert competitor has a powerful incentive to be a good regulator.)
Well, it may have taken them at least a decade of warnings, but at least the SEC finallywised up and nabbed him, right? Actually, the SEC had nothing to do with it. Madoff’sown sons turned him in after he came to them and explained what he had done. And he felt compelled to approach them with the real story in the first place only because his financial situation had begun to deteriorate so badly. Catching him had nothing to do with the SEC at all.
The very existence of the SEC lowers investors’ natural alertness – e.g., if such-and- such investment outlet were in fact a criminal Ponzi scheme, people assume the SEC would have done something about it. A private certification agency that made an error of this magnitude would be finished, never to be heard from again. Would you, dear reader, continue to rely on it? Meanwhile, other institutions would quickly gain market share atthe incompetent firm’s expense. The SEC, on the other hand, is going to get more money.
As it turns out, spending and personnel have increased dramatically, not just on the SEC, but throughout the whole arena of financial regulation: the 12,190 people in Washington, D.C., alone who are charged with overseeing American financial marketswould probably have something to say about the “unregulated” American financial system.Adjusted for inflation, spending on the regulatory agencies in charge has tripled since“deregulation” began in 1980. Boston University economist Laurence Kotlikoff came up
with a tally of 115 regulatory agencies for financial services; are we supposed to believe things would improve with 116?
--Tom Wood
Madoff, his clients thought, was extraordinarily skilled at beating the market. In fact, all hewas doing was taking later clients’ money and using it to pay earlier clients, a scheme that required the addition of a greater and greater number of new clients over time – the definition of a Ponzi scheme.
The immediate and predictable response ran as follows: the Madoff fiasco shows what happens when you cut funding and personnel for the Securities and Exchange Commission (SEC), which (critics said) suffered under George W. Bush. Additional regulators and more funding would solve the problem.
Back on planet Earth, George W. Bush hadn’t cut funding or personnel for anything at all – SEC funding increased at an 11.3 percent annualized rate, as compared to 6.8 percent under Bill Clinton, and its staff grew at 1.0 percent per year, as compared with negative 1.2 percent under Jimmy Carter. So we have to entertain another theory: perhaps for all its employees and wealth, the government had simply failed. The SEC had been warned about Madoff for at least ten years, and perhaps as many as sixteen. Madoff even boasted of his family ties at the SEC. Even though it had the largest budget and largest staffin its history, it still failed to act. By contrast, Harry Markopolos, one of Madoff’scompetitors, simply examined the options strategy Madoff told his clients he was using and concluded that his alleged results had to be fraudulent. (An alert competitor has a powerful incentive to be a good regulator.)
Well, it may have taken them at least a decade of warnings, but at least the SEC finallywised up and nabbed him, right? Actually, the SEC had nothing to do with it. Madoff’sown sons turned him in after he came to them and explained what he had done. And he felt compelled to approach them with the real story in the first place only because his financial situation had begun to deteriorate so badly. Catching him had nothing to do with the SEC at all.
The very existence of the SEC lowers investors’ natural alertness – e.g., if such-and- such investment outlet were in fact a criminal Ponzi scheme, people assume the SEC would have done something about it. A private certification agency that made an error of this magnitude would be finished, never to be heard from again. Would you, dear reader, continue to rely on it? Meanwhile, other institutions would quickly gain market share atthe incompetent firm’s expense. The SEC, on the other hand, is going to get more money.
As it turns out, spending and personnel have increased dramatically, not just on the SEC, but throughout the whole arena of financial regulation: the 12,190 people in Washington, D.C., alone who are charged with overseeing American financial marketswould probably have something to say about the “unregulated” American financial system.Adjusted for inflation, spending on the regulatory agencies in charge has tripled since“deregulation” began in 1980. Boston University economist Laurence Kotlikoff came up
with a tally of 115 regulatory agencies for financial services; are we supposed to believe things would improve with 116?
--Tom Wood
Bruddah IZ
DA
According to Gerald O’Driscoll, a former vice president of the Dallas Fed, “The idea that multiplying rules and statutes can protect consumers and investors is surely one of the great intellectual failures of the 20th century. Any static rule will be circumvented or manipulated to evade its application.”
Bruddah IZ
DA
Regulators failed to identify the growing problems in the U.S. economy that culminated in the crash. To the contrary, we were told things were fine and that the economy was robust. For one thing, regulators made the mistake of relying heavily on the risk assessments of a small cartel of government-approved ratings agencies that were not subject to competition. Beyond that, they either grossly misread the condition of the housing market or they simply misled the public. Alan Greenspan said in 2005 thatconditions in the housing market were actually “encouraging.” Ben Bernanke, who became chairman of the Fed the following year, declared that “our examiners tell us thatlending standards are generally sound and are not comparable to the standards that contributed to broad problems in the banking industry two decades ago. In particular, realestate appraisal practices have improved.” Bernanke admitted that a “slower growth in house prices” may be possible, but then added that he would simply lower interest rates if that were to occur.--T. Wood
Bruddah IZ
DA
One of the reasons deregulation is viewed with so much skepticism and even hostility is that disasters of various kinds have been falsely, even laughably, blamed on deregulation. For Americans over a certain age, deregulation recalls the presidency of Ronald Reagan, and in particular the sad story of the Savings and Loan institutions (S&Ls), in which 747 of those institutions failed at a cost of over $160 billion, most of which was paid by means of a federal government bailout. In the days before Reagan and his crazy deregulation spree, the story runs, everything worked fine. Then Reagan was elected, and he repealed all the laws. Society reverted to barbarism. Wolves ran free in the streets.
What actually happened was rather less cartoonish. First, so-called deregulation of theS&Ls began under Jimmy Carter, not Reagan. I say “so-called” because, as with most measures trumpeted as “deregulation,” it was not really deregulation: all throughout the process of alleged deregulation, the S&Ls’ deposits continued to be covered under government deposit insurance. Deregulation means the removal of government involvement and control. Does this sound like the removal of government involvement and control? To the contrary, it gave us the worst of both worlds – now the government- guaranteed institution was permitted to take greater risks while taxpayers remained on the hook for any losses. Not exactly the free market at work.
Under the government-established rules, the S&Ls could charge 6 percent on 30-year mortgage loans, and could offer depositors 3 percent. Since most depositors had nowhere else to go, they had to content themselves with a mere 3 percent return. But with the advent of the money-market mutual fund, ordinary people suddenly had the chance to earn higher returns than S&Ls could pay, and began pulling their money out of S&Ls in droves. Consequently, the S&Ls wanted permission to offer higher interest returns for depositors, so “deregulation” allowed them to do so. Had the original government requirements remained in place, the S&Ls would have gone under then and there.
A consensus began to form that in order to save the S&Ls, their government- established loan and deposit interest-rate requirements, as well as the kind of loans they could make, had to be modified in light of the impossible conditions under which these institutions were then being forced to operate. The S&Ls needed to be permitted to engage in riskier investments than 30-year mortgages at 6 percent. (Notice: it’s the free market’s fault when the government modifies the government-established rules of a government-established institution, while deposits continue to be guaranteed by the government. Got it?)
What actually happened was rather less cartoonish. First, so-called deregulation of theS&Ls began under Jimmy Carter, not Reagan. I say “so-called” because, as with most measures trumpeted as “deregulation,” it was not really deregulation: all throughout the process of alleged deregulation, the S&Ls’ deposits continued to be covered under government deposit insurance. Deregulation means the removal of government involvement and control. Does this sound like the removal of government involvement and control? To the contrary, it gave us the worst of both worlds – now the government- guaranteed institution was permitted to take greater risks while taxpayers remained on the hook for any losses. Not exactly the free market at work.
Under the government-established rules, the S&Ls could charge 6 percent on 30-year mortgage loans, and could offer depositors 3 percent. Since most depositors had nowhere else to go, they had to content themselves with a mere 3 percent return. But with the advent of the money-market mutual fund, ordinary people suddenly had the chance to earn higher returns than S&Ls could pay, and began pulling their money out of S&Ls in droves. Consequently, the S&Ls wanted permission to offer higher interest returns for depositors, so “deregulation” allowed them to do so. Had the original government requirements remained in place, the S&Ls would have gone under then and there.
A consensus began to form that in order to save the S&Ls, their government- established loan and deposit interest-rate requirements, as well as the kind of loans they could make, had to be modified in light of the impossible conditions under which these institutions were then being forced to operate. The S&Ls needed to be permitted to engage in riskier investments than 30-year mortgages at 6 percent. (Notice: it’s the free market’s fault when the government modifies the government-established rules of a government-established institution, while deposits continue to be guaranteed by the government. Got it?)