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1codyed
For your consideration, here is a list of articles pertaining to the recent economic troubles, each one from a free-market perspective. All the articles are categorized for easy skimming.
Check out this article from way back in 2003, when I was merely 21 years old. Oh how innocent I was!
Check out this article from way back in 2003, when I was merely 21 years old. Oh how innocent I was!
2jmcgarve
Interesting. Some of the articles, like this one:
http://mises.org/story/3111
seem to indicate that a depression is necessary and constructive, to remedy severe imbalances in the economy. This is, hm, an ascetic point of view. However, there are some points in the same article that I have to agree with:
"Without an adaptation that would increase savings, decrease consumption, and reduce imports, the US economy can only go on in the old fashion with ever more debt accumulation. But the limit of debt expansion has been reached. The financial crisis has reduced the willingness of domestic and foreign creditors to extend loans."
So, if the goal is to increase savings, decrease consumption, and reduce imports, what's the best way to do it? I think the depression approach isn't likely to work, because it will reduce savings. We need to redirect economic spending away from those things that are wasteful: War, SUVs, McMansions, and absurd rates of defense spending, and toward those things that make the society more efficient and productive: renewable energy, single payer health care, education, infrastructure, and deficit reduction. And this is best done by increasing tax rates on the wealthy, and by cutting the defense budget and agricultural subsidies. (This is certainly not the answer the article's author would choose.)
http://mises.org/story/3111
seem to indicate that a depression is necessary and constructive, to remedy severe imbalances in the economy. This is, hm, an ascetic point of view. However, there are some points in the same article that I have to agree with:
"Without an adaptation that would increase savings, decrease consumption, and reduce imports, the US economy can only go on in the old fashion with ever more debt accumulation. But the limit of debt expansion has been reached. The financial crisis has reduced the willingness of domestic and foreign creditors to extend loans."
So, if the goal is to increase savings, decrease consumption, and reduce imports, what's the best way to do it? I think the depression approach isn't likely to work, because it will reduce savings. We need to redirect economic spending away from those things that are wasteful: War, SUVs, McMansions, and absurd rates of defense spending, and toward those things that make the society more efficient and productive: renewable energy, single payer health care, education, infrastructure, and deficit reduction. And this is best done by increasing tax rates on the wealthy, and by cutting the defense budget and agricultural subsidies. (This is certainly not the answer the article's author would choose.)
3Carnophile
...seem to indicate that a depression is necessary and constructive, to remedy severe imbalances in the economy. This is, hm, an ascetic point of view.
It might be true. The occassional recession might be like sleep, unavoidable sooner or later. You can keep yourself going all night by caffeinating or coking up, but that makes the crash, which is inevitable, worse. This is a point of view with a long history.
One way of seeing how natural this is, is to seriously contemplate the opposite point of view: We can avoid all macroeconomic fluctuations so that the economy is always exactly on its long-run trend path. When the alternative is actually stated plainly like that, it doesn't seem believable. The real issue is what's the smallest amplitude of fluctautions we can sustain in a long-term sense? And are depressions like the "Great" one inevitable? (One really hopes not.)
It might be true. The occassional recession might be like sleep, unavoidable sooner or later. You can keep yourself going all night by caffeinating or coking up, but that makes the crash, which is inevitable, worse. This is a point of view with a long history.
One way of seeing how natural this is, is to seriously contemplate the opposite point of view: We can avoid all macroeconomic fluctuations so that the economy is always exactly on its long-run trend path. When the alternative is actually stated plainly like that, it doesn't seem believable. The real issue is what's the smallest amplitude of fluctautions we can sustain in a long-term sense? And are depressions like the "Great" one inevitable? (One really hopes not.)
4jmcgarve
It is probably true that there will always be a business cycle. There are things government can do to make the cycle milder, and things government can do to make the cycle worse. An economy can also acquire structural problems that are not cyclical.
In the present case, Greenspan, along with quite a few co-conspirators in Congress are guilty of trading jam tomorrow for jam today, and therefore causing the situation to become much worse. The housing bubble was seen as desirable, because so much of the economy was growing anemically if at all. Greenspan believed that there was no bubble and that if there were a problem it would self regulate (because capitalism is magical that way). The high dollar was seen as desirable, although it led to the destruction of nearly all US manufacturing and lasting and deep foreign trade deficits, because it meant that the US could buy more oil. So they kept these things going.
Business cycles occur because the economy is a dynamical system and therefore prone to oscillation as the animal spirits of entrepreneurs and speculators wax and wane.
Structural economic problems occur because powerful constituencies develop that prevent any remedy. In this country we have agribusiness, fossil fuels companies, automobile companies (and their employees), the military industrial complex, and the health provider and pharmaceutical industries, among others, as powerful constituencies that prevent our fixing the problems we have to fix. The individualistic American consumer is another such constituency.
In the present case, Greenspan, along with quite a few co-conspirators in Congress are guilty of trading jam tomorrow for jam today, and therefore causing the situation to become much worse. The housing bubble was seen as desirable, because so much of the economy was growing anemically if at all. Greenspan believed that there was no bubble and that if there were a problem it would self regulate (because capitalism is magical that way). The high dollar was seen as desirable, although it led to the destruction of nearly all US manufacturing and lasting and deep foreign trade deficits, because it meant that the US could buy more oil. So they kept these things going.
Business cycles occur because the economy is a dynamical system and therefore prone to oscillation as the animal spirits of entrepreneurs and speculators wax and wane.
Structural economic problems occur because powerful constituencies develop that prevent any remedy. In this country we have agribusiness, fossil fuels companies, automobile companies (and their employees), the military industrial complex, and the health provider and pharmaceutical industries, among others, as powerful constituencies that prevent our fixing the problems we have to fix. The individualistic American consumer is another such constituency.
5Carnophile
Business cycles occur because the economy is a dynamical system and therefore prone to oscillation as the animal spirits of entrepreneurs and speculators wax and wane.
Yes. Also for 600 million other reasons.
You used the phrase "the military industrial complex" non-ironically. Minus 10 points!
Yes. Also for 600 million other reasons.
You used the phrase "the military industrial complex" non-ironically. Minus 10 points!
