Archive for » February, 2009 «

A Great Government is What Makes America Great
25
February
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“My fellow citizens, never forget: We are Americans. And like my dad said years ago, Americans can do anything.” (Jindal, 2/24/09)

What makes America great?  Is it the greatness of Americans?  Is it some special LOST-island-like quality about the land we inhabit?  Or is it our values and their expression in our system of government?  While geography, natural resources, and immigration have most certainly affected our history (often for the better), what makes America great is that we are a nation of laws, not of men, where values are institutionalized in the government; chief among them is freedom.

Freedom is more than just freedom to…  It’s also freedom from…  Freedom from constant fear about personal safety or random acts of violence; freedom from oppressive search and seizure; freedom from crippling exogenous, uncontrollable financial ruin; and freedom of access to lifesaving health care.

“Republicans believe in a simple principle: No American should have to worry about losing their health care coverage, period. We stand for universal access to affordable health care coverage.” (Jindal, 2/24/09)

Really?  Just as long as it doesn’t involve a government guarantee??  I think this depends on what your definition of “universal access” is.  If by “universal access” you mean that anyone who can afford to pay for it can get access, then you do not mean “universal”.  If you mean by “universal access” that you can get lifesaving care, but you’ll end up losing your house in the mountain of resulting debt, then you do not mean “freedom of access”.

“What we oppose is universal government-run health care. Health care decisions should be made by doctors and patients, not by government bureaucrats.” (Jindal, 2/24/09)

Again, what this really means is that health care decisions should be made by doctors, patients, and for-profit insurance companies trying to spend as little on your treatment as possible.  This, again, is a false freedom.  The freedom to have someone make a profit-based decision about your health is far less free than a government bureaucracy being involved.  The freedom of a doctor is limited by the profit motives of an insurance company.

Reject false dichotomies between freedom and government involvement!  Freedoms are guaranteed by the government, empowered by the people.  Your freedom of speech is inalienable but enforced by the government.  The free market is built upon government security, government provided stability, government issued currency, government enforced contracts, etc.  Your freedom to drink tap water without fear is secured by a government agency.

Instead of complaining about ineffective government, work to make government better.  You have the freedom to make and keep America great.

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Reading Notes: The Irrelevance of Equilibrium Economics – Kaldor
11
February
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Reading Notes on: Nicholas Kaldor, The Irrelevance of Equilibrium Economics, in Further Essays on Economic Theory, Holmes & Meier, 1972.

Equilibrium Economics, as embodied by Walras and Debreu (where equilibria of competing forces determine observed economic states), is “barren and irrelevant.”

Assumptions of economics, unlike hard sciences, are not based on observation. For example, some are unverifiable: producers maximize their profits, consumers maximize utility. Some are counter-factual: perfect competition never exists, markets are not impersonal, economic actors never act from perfect knowledge.

Equilibrium economics wasn’t intended to describe reality, but it is often asserted as the description of how individuals act in a decentralized market to maximal outcomes. Neoclassical economics takes this view as the axiomatic starting point for all other theories.

This sort of economic theory started as a first-draft approach that was buttressed by intellectual scaffolding (“assume perfect competition for now… we’ll deal with the real world when we understand the theory better…”), but instead of removing such unrealistic scaffolding, more and more was added, such that now, economics is even more divorced from the real world than ever before-more filled with arbitrary assumptions than previously-in order to satisfy the modern demand for logical cohesion.

“In fact, equilibrium theory has reached the stage where the pure theorist has successfully (though perhaps inadvertently) demonstrated that the main implications of this theory cannot possibly hold in reality, but has not yet managed to pass his message down the line to the textbook writer and to the classroom.”

… To be Continued …

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This Margaret Mead Believes
08
February
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Anthropologist Margaret Mead’s essay for This I Believe praises the intrinsic human oneness that unites us all as well as the culture in which we are raised that separates us.  If we are to be one human race, we must learn about the differences and similarities of the human cultures that so shape us.

She writes:

I believe that human life is given meaning through the relationship which the individual’s conscious goals have to the civilization, period and country within which one lives. At times, the task may be to fence a wilderness, to bridge a river or rear sons to perpetuate a young colony. Today, it means taking upon ourselves the task of creating one world in such a way that we both keep the future safe and leave the future free.

You can read or listen to her whole essay here.

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Value and Distribution in the Classical Economists and Marx – Garegnani
07
February
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Reading Notes on Value and Distribution in the Classical Economists and Marx - by P. Garegnani, Oxford Economic Papers 26, 1984, 291-325.

Theories of value and distribution that seek to explain distribution and prices by means of price equilibrium between the forces of supply and demand.  Keynes refuted the idea that a competitive economy tends toward an equilibrium between the supply and demand of labor, creating an equilibrium wage.  

Another refuted idea (by Sraffa and Robinson) is that factors of production can be measured independently of distribution, challenging assumptions that distribution is governed by supply and demand of said factors.

The classical surplus theory, as expressed by Quesnay, states that the (agricultural) produce beyond what is required to pay the wages of the laborers and provide for the next year’s crop are social surplus and available to the society to dispose of without jeopardizing social survival.  Production and distribution are linked because the subsistence of the laborer is required for production and reproduction.  Smith extended Quesnay’s surplus to apply to all production, not just agricultural production, making profit the equivalent of social surplus.

Thus, the surplus is the share of the product going to non-laborer classes of society.  Wages are determined by the habits of the country as the assign what constitutes subsistence.  Ricardo argued that any rise in the wages of agricultural laborers would be absorbed by an increase in population or that the new standard of living would become permanently expected.

Adam Smith described the relationship of workmen and masters in wage disputes as unequal: masters can hold out longer in such disputes than workers as workers have a more immediate need for the masters than the masters have for the worker.  Smith saw this as keeping the average wage reluctant to rise.  Marx extended this idea to relating the average wage to the current pool of un/under-employed laborers willing to work for the lower wage.  

The common view among these economists is that the wage is governed not so much by social levels of subsistence, but rather from the institutional circumstances unrelated to social production and therefore ought to be studied separately.

(To be continued…)

 

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Four Tools For Turning The Economy Around
02
February
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Dr. DeLong has a post today that covers the four tools available to turn around a depressing economy:

  1. Inflation - Inflate your way out.  This is really bad, but preferable to another great depression.  We will do this if we have to, but it’s not that bad yet.
  2. Monetary Policy – The central bank buys government bonds to entice business to invest in production.  This is the weapon of choice, but we’ve already exhausted its possibilities.
  3. Credit Policy – The government tries new policies designed to loosen lending and get people investing in otherwise risky projects.  We’re trying this a little bit.
  4. Fiscal Policy – The government borrows and spends, directly stimulating the economy.

From Dr. Delong:

This brings us to the fourth tool: fiscal policy. Have the government borrow and spend, thereby pulling people out of unemployment and pushing up capacity utilisation to normal levels. There are drawbacks: the subsequent dead-weight loss of financing all the extra government debt that has been incurred, and the fear that too rapid a run-up in debt may discourage private investors from building physical assets, which form the tax base for future governments that will have to amortise the extra debt.

But when you have only two tools left, neither of which is perfect for the job – credit policy and fiscal policy – the rational thing is to try both, at the same time. That is what the Obama administration in the United States and other governments are attempting to do right now.

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