This Guy Has the Guaranteed Solution to Our Economic Crisis

I regret to say that I don't know where this came from.

"Leave it to a brainy Indian to come up with the cheapest and surest way to stimulate our economy: Immigration.

"All you need to do is grant visas to two million Indians, Chinese, and Koreans," said Shekhar Gupta, editor of 'The Indian Express' newspaper. "We will buy up all the subprime homes. We will work 18 hours a day to pay for them. We will immediately imrpove your savings rate -- no Indian bank today has more than 2 percent nonperforming loans because not paying yourmortgage is considered shameful here. And we will start new companies to crate our own jobs an jobs for more Americans."

Problem solved! The real joke is: He's almost certainly right! And of course, it will never happen, which underlines the constraints prejudice, nutty economic theories, and shortsightedness place on our future.

The Crisis of Credit Visualized--this is good!

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

Click to view a surprisingly solid explanation of what the heck went wrong to create the credit crunch we're all experiencing now -- it will help clarify a lot for you!

Mis-Using the Political System

This from the Leah Garchick gossip column in the Thurs, Feb 26, 2009 San Francisco Chronicle:

"To the grass-covered tiki barricades! As Matier and Ross reported Wednesday, friends of the Tonga Room [tiki bar at the Fairmont Hotel in San Francisco] are worried that changes to the Fairmont will result in the closing of that hallowed place. Bartender Martin Cate is rallying troops to email the city's planning department to turn down the project unless the historic Tonga Room, 'the only Polynesian restaurant in the world that has a large pool of water that is made to look like a tropical lagoon," is specifically included in plans for the renovated building.' "

This is pathetic, but exactly what our government has turned into: a special-interest bully for aesthetes. I suppose if enough of the bartender-rallied troops would go drink at the bar, it might be too profitable to be displaced in the renovation, but somehow when you are interested in how another person uses his property, you acquire an ownership interest in that property. Not in its profits and losses; especially not in the losses (unless they are a large bank or car company).  "I like your bar; I like the *idea* of your bar; don't ever close it. No, I mean--Don't ever close it. By law."

This couldn't be a more perfect example of the intended misuse of the city planning department. That aesthetic appreciation would be grounds for forcing it to be included in a design is ludicrous. 

I know you disagree with me: You think this is *exactly* what political power is about: Making sure our (our?) precious icons are preserved; making sure other people's buildings aren't painted the "wrong" color; making sure my view isn't spoiled by another property owner, even though I didn't buy the view when I bought my house.

This seems fine to you, but think: This is just a cheap (free) way for you to assert property-rights interest in other peoples' property -- without having to go to the trouble of buying property rights yourself, or paying for the changes required or forbidden, or -- God forbid! -- doing without the item, because you really, really like it.

Somehow the strength of your feelings about another person's property gives you an ownership interest in their property. How is that, exactly?

Be afraid. Every time you empower some agency of the city government to twist its powers into a novel interpretation so you can get what you want at someone else's expense, you are empowering the government, period -- you are empowering those same bureaucrats to respond in the same way to the *next* public-interest bully who comes along. Maybe it will be your property, or a property in which you actually do have a legal interest, that will be subject to this kind of bullying. Or that of your friends, or relatives, or kids when they grow up. If you don't think about the longterm consequences of accepting this kind of government, your descendants will have to live with those consequences.

You think it's fine; future governments will Do the Right Thing, no problem. The government is run by people who think the way you do. Is it? When Reagan was elected, and took hold of all the powers the government had grabbed in the name of building a better world -- and he used those powers in pursuit of *his* ideas of what a better world would be -- were you glad about that? Or, if you were a conservative, make it the Clinton administration.

You want the government to have every power to arrange the world according to *your* wishes and whims; and you never want people who don't think like you and who disagree with you to have any of those same powers. Except it doesn't work like that, does it? You can't pass the laws with the caveat, "This governmental power shall be exercised only when a liberal Democrat holds office, and shall be null and void if anybody who disagrees with me is in power." Doesn't work like that.

At the start of the Vietnam War, the Gulf of Tonkin incident, a muddy bit of business in which a North Vietnamese ship apparently fired on an American ship "in international waters" in the Gulf of Tonkin (considerable subsequent suspicion of presidential meddling to turn this minor incident into the causus belli Johnson sought to the contrary notwithstanding), President Johnson rammed through the Senate a bill that gave him breathtakingly sweeping power to go to war without specific Congressional approval (as the Constitution would ordinarily require). Only one Senator voted against the bill, but many years later, when all this had blown up into the Vietnam War under Johnson the Democrat's successor, Nixon the Republican, and later all the subsequent undeclared wars of this country, Senator Fulbright, an antiwar Senator who voted in favor of the resolution, said he regretted his mistake. He said he had voted in expectation of what *this* President would do with the power; he should have voted with regard to what *any* President might do with the power. 

We are unwilling to think in the long term. We vote for and against politicians based on whether they act without regard to longterm consequences. We are also unwilling to just put up with  something we don't like. If we don't like it, we expect our political, governmental, bureaucratic, and judicial systems to do everything possible to fix it for us -- regardless of the consequences, the warnings of our Founders, or the intentions of the Constitution. We want what we want. Give it to us. Now.

We want the Tonga Room; the Fairmont Hotel must preserve it for us. Because we said so.

We're all idiots. We truly have the government we deserve.... It won't get better soon.

"Do You Libertarians Have a Better Idea?"

http://mises.org/story/3316

We libertarians can seem a contrary bunch -- we spend much time pointing out the foolishness and dangers in so many public policy proposals and actions by the pro-government parties (the Democrats and the Republicans) -- that it can seem like we ourselves don't have any ideas to propose instead. It's not true (mainly because nobody's listening when we start explaining what *should* be done), but it can seem that way.

The governments trillion-dollar Stimulus packages these days are, regrettably, not likely to be effective -- certainly, they won't be remotely as affective as they are expensive. 

So, you may ask -- what would you Libertarians do? We have to do SOMETHING!

Of course, the FIRST thing we have to do, in a crisis like this, is NOT DO THE WRONG THINGS that will just make everything worse. We have to resist being panicked into doing things that may help today but will make us very sorry tomorrow. 

But in addition to that, there are things we *should* do, and this article in the Mises daily blog enumerate them. (They refer to it as "Austrian" ideas -- that refers to the school of economics that Libertarians embrace, the school of economics cofounded by Ludwig von Mises and others.)

Here is the opening paragraph, in case you hesitate to click the link above:

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"Do You Austrians Have a Better Idea?"

Mises Daily by Robert P. Murphy | Posted on 2/2/2009 12:00:00 AM

A lot of people get annoyed with Austrian economists because they tend to be so dogmatic (we prefer the term consistent) and because they cloak their strictly economic claims with self-righteousness (we prefer the term morality). After a good Austrian bashing of the latest call to steal taxpayer money and waste it on something that will make a given problem worse, the stumped critics will often shout, "Oh yeah? Well do you guys have a better idea?"

Now, in truth, someone doesn't have to have a better suggestion in order to point out that a recommended strategy will exacerbate the situation. If an allergic man has been stung by a bee, I don't know what to do except rush him to the hospital and maybe scour the cupboards looking for Benadryl. But I'm pretty sure drawing blood from his leg, in order to inject it into his arm and thus "stimulate his immune system," is a bad idea on numerous accounts — not least of which, is that I'm pretty sure an allergic reaction means your immune system needs to calm down. But the point is, if a bunch of guys hold the man down — he has to be forced to endure the procedure for his own good, don't you know — I feel perfectly qualified in yelling, "Stop!"

If you grasped that analogy, you can understand my feelings about anything Paul Krugman writes.

---------------------

The author goes on to make a number of suggestions, which I will simply list. If these sound nuts to you -- and only a libertarian wouldn't think so -- I sincerely hope you will go click through and read the article to see why they aren't nuts -- but are the only sensible suggestions you are likely to hear about this crisis.

1. Do nothing. That is, Do No Harm.

2. End personal and corporate income taxes. No, really. (Did you know the government took in $1 trillion last year from other than personl and corporate income taxes? No? You have much to learn.)

3. Dismantle the Social Security system -- eventually, not right now as it would be obviously too disruptive. But head in that direction.

4. While the enormous stimulus effects of ending personal and corporate income taxes are solving our financial crisis and bringing in more tax revenues from other sources, cut federal government spending by $1 trillion, over several years. Remember that when Libertarian Party candidate Ron Paul, some years ago, was asked "If as a Libertarian you oppose income taxes, how will you pay for the government?" He responded, "Well, I wouldn't pay for *this* government...." It's true that if the government keeps increasing spending by a multiple of inflation year after year (as it has been doing for decades), you reach a point where only confiscatory taxes can bring in the needed money. This government is simply unaffordable, is the point. (Can't lose a trillion dollars, you think? Funny -- just ten years ago, the federal budget was a trillion dollars less than it is now. Think about that for a minute....)  While expenditures are being cut, raise more money by selling off the lengthy list of governmental assets the government shouldn't own at all.

5. Cut expenses by eliminating, for example, the DEA (drug admin), which obviously doesn't do any good. And the SEC, which costs us billions but failed to catch Bernie Madoff, which is supposed to be its reason for existence. There are many other major federal programs we should think twice about, like the Dept of Education, which ensures that we'll never give a good education to our kids, especially our poor minority kids. Cut the Pentagon budget in half -- that would save a quarter-billion dollars right there. Worried that we won't have enough? Our annual budget for defense is $500 billion; China's, Russia's, France's, Iran's, Iraq's, Britain's, Italy's, Germany's, North Korea's, Japan's are all $50 billion or less each. Our defense budget is larger than the combined budgets of the next ten countries. Think twice before listening to Republicans who tell you we have to spend more, not less. 

6. End the stimulus packages. Tell the Big Three car companies, and the banks, and the investment firms: This is a capitalist country; make money, keep it; lose money, eat it. Keeping alive Undead Companies is a formula for never coming out of the recession. Just think what Ford, the only US car company that isn't broke (yet), would look like if GM and Chrysler went out of business, or drastically reduced? Ford would soar! So would Toyota and Honda, which make most of their US-bound cars right here in the U.S., with US employees.

7. Legalize all immigrants who have jobs and pay taxes. We need jobs and taxes; if they're working, that's good, not bad. 

Go for it! If you keep doing the same old things, if you keep BELIEVING the same old JERKS with the same old self-benefitting ideas, you'll keep getting the same results. Want radically different results? Take a closer look at some radical ideas -- especially ideas that weren't radical when our Founders thought them up.

Obama's Change: New Boss, Same As Old Boss

Now THIS is good!

and sad....

"If you always do what you always did, you'll always get what you always got."

    -slogan of a previous LIbertarian Party candidate for president, explaining why you shouldn't just vote Democrat or Republican again and again...

Of course, to be fair, Obama's thinking probably goes: Under Clinton, we somehow (the operative word: somehow--they don't have any idea actually *how*) had a solid economy and minimal debt with (yay Demos!) rising government spending! If we hire a bunch of Clinton's people, maybe they'll magically produce the same result! 

Even though they don't know how they produced the result last time.

This is called Magical Thinking.

Stimulus Disaster: "Obama's Wealth Destruction"

Mises Daily Commentary - Posted on 2/9/2009

President Obama is under the impression that history owes him $1 trillion right now to spend on whatever he wants. His language is strident and full of irritation that anyone would question his right to live out his personal dream of being Franklin Roosevelt to George Bush's Hoover. This, he says, is what the election was all about.

The arrogance reminds me of George Bush after 9-11, who similarly believed that history owed him a gargantuan war in the tradition of FDR. And look how that arrogance led to disgrace and loss, as he unwittingly presided over the destruction of American prosperity while searching for bugbears abroad.

It just goes to show you that the presidency is something like a drug. It makes people lose all connection to reality. Part of the reality that Obama needs to recognize is that the New Deal was a calamity far worse than the initial market downturn that began it. He needs to stop basing his policies on dumbed-down civics texts versions of events and consider the economic logic.

MORE AT: http://mises.org/story/3331

Three More Reasons to Oppose the Stimulus Package, Based on Statements By One of Its Supporters

I'll be posting a number of essays on why the stimulus package is a bad idea, why it won't work anyway, and what we SHOULD be doing. First, as a warmup, this from 'Hit & Run,' Reason.com’s staff blog

Three More Reasons to Oppose the Stimulus Package, Based on Statements By One of Its Supporters

1. Any spending bill this Mama Cass-sized should first be read by the people voting for it in Congress and by the people who will spend the rest of their lives paying for it. Supporters of the stimulus bill call it a "seismic shift in the role of government in our society." Isn't it worth taking more than what, two weeks to plow through the details? The only people who tell you to hurry up and buy now are scam artists. We're not on the Titanic, for god's sakes. Any more than we were last fall when Hank Paulson was crapping his pants on an almost hourly basis.

Read the rest here.